L.S. 370.43 Regolamenti dwar Investment Services Act (Provision of Investment Services and Activities by Third-Country Firms))

(1)The title of these regulations is the Investment Services Act (Provision of Investment Services and Activities by Third-Country Firms) Regulations. Citation, scope.

(2)The purpose of these regulations is to implement Article 4

(1)paragraphs 3, 10, 11 and 30, and Articles 39 to 43 of MIFID as herein defined, and they shall be interpreted and applied accordingly. 2. requires:

(1)In these regulations unless the context otherwise "the Act" means the Investment Services Act; "ancillary services" means any of the services listed in the Third Schedule to the Act; "branch" means a place of business other than the head office which is a part of an investment firm, which has no legal personality and which provides investment services and, or activities and which may also perform ancillary services for which the investment firm has been authorised; all the places of business set up in the same Member State or EEA State by an investment firm with headquarters in another Member State or EEA State shall be regarded as a single branch; "Directive 97/9/EC" means Directive 97/9/EC of the European Parliament and of the Council of 3 March 1997 on investorcompensation schemes, as amended from time to time; "investment firm" means any person, other than persons to whom MiFID does not apply in terms of Article 2 of the said directive, whose regular occupation or business is the provision of any one or more core investment services to third parties on a professional basis; "MiFID" means Directive 2014/65/EU of the European Parliament and of the Council of 15 May 2014 on markets in financial instruments and amending Directive 2002/92/EC and Directive 2011/61/EU, as amended from time to time, and includes any implementing measures that have been or may be issued thereunder; Interpretation. Cap. 370. 1 2 [ S.L.370.43 INVESTMENT SERVICES ACT (PROVISION OF INVESTMENT SERVICES AND ACTIVITIES BY THIRD- COUNTRY FIRMS) "MiFIR" means Regulation (EU) No 600/2014 of the European Parliament and of the Council of 15 May 2014 on markets in financial instruments and amending Regulation (EU) No 648/2012, as may be amended from time to time, and includes any implementing measures, implementing technical standards, regulatory technical standards, guidelines and similar measures that have been or may be issued thereunder; "overseas regulatory authorities", in relation to third-country firms, means the national authorities of a third country which are empowered by law or regulation to supervise third-country firms; "professional client" means a client meeting the criteria laid down in Annex II of MiFID; "retail client" means a client who is not a professional client; "third country" means a country which is not a Member State or an EEA State; "third-country firm" means a firm that would have qualified as a credit institution providing investment services or performing investment activities, or as an investment firm, if its head office or registered office were located within the Union rather than in a third country.

(2)Words and expressions used in the Act shall, in these regulations, have the same meaning as is assigned to them in the Act. Licensing of a branch of a thirdcountry firm established in Malta. 3.

(1)A third-country firm intending to provide investment services or perform investment activities in or from Malta, with or without any ancillary services to retail clients or to professional clients, within the meaning of Section II of Annex II of MiFID, shall establish a branch in Malta.

(2)The branch of a third-country firm intending to provide investment services or perform investment activities in or from Malta in accordance with sub-regulation

(1)shall be licensed in terms of article 3 of the Act.

(3)Without prejudice to any provisions of the Act and any regulations and rules made thereunder, the branch of third-country firm shall only obtain a licence from the competent authority if the following conditions are fulfilled: (

1. a)the provision of services for which the thirdcountry firm requests licensing is subject to authorisation and supervision in the third country where the firm is established and the requesting third-country firm is properly authorised, whereby the overseas regulatory authority pays due regard to INVESTMENT SERVICES ACT (PROVISION OF INVESTMENT SERVICES AND ACTIVITIES BY THIRD- COUNTRY FIRMS) [ S.L.370.43 3 any FATF recommendations in the context of anti-money laundering and countering the financing of terrorism; (
2. b)cooperation arrangements, that include provisions regulating the exchange of information for the purpose of preserving the integrity of the market and protecting investors, are in place between the competent authority and the overseas regulatory authority of the country where the firm is established; (
3. c)branch; sufficient initial capital is at free disposal of the (
4. d)one or more persons are appointed to be responsible for the management of the branch and they all comply with the requirements applicable to the management body prescribed in Investment Services Rules and, or Conduct of Business Rules, as applicable, issued by the competent authority in terms of the Act; (
5. e)the third country where the third-country firm is established has signed an agreement with Malta which fully complies with the standards laid down in Article 26 of the OECD Model Tax Convention on Income and on Capital and ensures an effective exchange of information in tax matters, including, if any, multilateral tax agreements; (
6. f)the firm belongs to an investor-compensation scheme authorised or recognised in accordance with Directive 97/9/EC. 4. An application for a licence shall be submitted by the third-country firm in accordance with article 5 of the Act. Moreover the third-country firm intending to obtain licensing for the provision of any investment services or the performance of investment activities with or without any ancillary services in or from Malta through a branch shall also provide the competent authority with the following: (
7. a)the name of the overseas regulatory authority responsible for the supervision of the third- country firm in the third country concerned: Provided that when more than one overseas regulatory authority is responsible for supervision, the details of the respective areas of competence shall be provided; (
8. b)all relevant details of the third-country firm (name, legal form, registered office and address, members of the management body, relevant shareholders) and a programme of operations setting out the investment services and, or activities as well as the ancillary services to be provided and the organisational structure of the branch, including a description of any outsourcing to third parties of essential operating Application for a licence and obligation to provide information. Amended by: L.N. 21 of 2022. 4 [ S.L.370.43 INVESTMENT SERVICES ACT (PROVISION OF INVESTMENT SERVICES AND ACTIVITIES BY THIRD- COUNTRY FIRMS) functions; (
9. c)the name of the persons responsible for the management of the branch and the relevant documents to demonstrate compliance with requirements prescribed in the applicable Investment Services Rules and, or Conduct of Business Rulebook as applicable, issued by the competent authority in terms of the Act; (
10. d)information about the initial capital at free disposal of the branch. Granting of a licence and nonapplication of article 6

(1)(a)(ii) of the Act. Amended by: L.N. 21 of 2022. 5.

(1)Without prejudice to article 6 of the Act, the competent authority shall only grant a licence to the third-country firm which intends to establish its branch in Malta when it is satisfied that: (

1. a)the conditions prescribed under regulation 3 of these regulations are fulfilled; and (
2. b)the branch of the third-country firm will be able to comply with the provisions referred to in regulation 6 and with the provisions of regulation 7A.

(2)The provisions of article 6

(1)(a)(ii) of the Act, shall not apply in the licensing of a branch of a third-country firm. Obligations of the branch of the thirdcountry firm. 6. The branch of the third-country firm authorised in accordance with sub-regulation

(1)above, shall comply with the obligations laid down in Articles 16 to 20, 23, 24, 25 and 27, Article 28

(1), and Articles 30, 31 and 32 of MiFID, as transposed in regulations issued under the Act or in Investment Services Rules or in Conduct of Business Rules issued by the competent authority in terms of the Act and in Articles 3 to 26 of the MiFIR and the measures adopted pursuant thereto. Supervision by the competent authority. Amended by: L.N. 72 of 2023. 7.

(1)The branch of the third-country firm shall be subject to the supervision of the competent authority.

(2)The competent authority shall not impose any additional requirements on the organisation and operation of the branch in respect of the matters covered by MiFID and any branch of a third-country firm shall not be treated more favourably than European Union firms.

(3)The competent authority shall notify ESMA on an annual basis of the list of branches of third‐country firms active in Malta. INVESTMENT SERVICES ACT (PROVISION OF INVESTMENT SERVICES AND ACTIVITIES BY THIRD- COUNTRY FIRMS) [ S.L.370.43 7A. The branch of the third‐country firm that is authorised in accordance with regulation 5 shall report to the competent authority referred to in regulation 7 the following information on an annual basis: (a) the scale and scope of the services and activities carried out by the branch in Malta; (b) for third‐country firms performing the activity listed in point

(3)of Section A of Annex I to MiFID, their monthly minimum, average and maximum exposure to EU counterparties; (c) for third‐country firms providing one or both of the services listed in point

(6)of Section A of Annex I to MiFID, the total value of financial instruments originating from EU counterparties underwritten or placed on a firm commitment basis over the previous 12 months; (

1. d)the turnover and the aggregated value of the assets corresponding to the services and activities referred to in point (a); (
2. e)a detailed description of the investor protection arrangements available to the clients of the branch, including the rights of those clients resulting from the investor‐compensation scheme referred to in paragraph (
3. f)of regulation 3

(3); (

1. f)their risk management policy and arrangements applied by the branch for the services and activities referred to in paragraph (a); (
2. g)the governance arrangements, including key function holders for the activities of the branch; (
3. h)any other information considered by the competent authority to be necessary to enable comprehensive monitoring of the activities of the branch: Provided that upon request, the competent authority shall communicate the following information to ESMA: (
4. a)all the authorisations for branches authorised in accordance with regulation 5

(1)and any subsequent changes to such authorisations; (

1. b)the scale and scope of the services and activities carried out by an authorised branch in Malta; (
2. c)the turnover and the total assets corresponding to the services and activities referred to in point (b); (
3. d)the name of the third-country group to which an an authorised branch belongs: Provided further that the competent authority referred to in regulation 7

(1)shall cooperate closely with the competent authorities of entities that are part of the same group to which branches of third-country firms authorised in accordance with regulation 5

(1)belong, and ESMA and EBA, to ensure that all activities of that group 5 Reporting obligations of the branch of the thirdcountry firm. Added by: L.N. 21 of

1. Amended by: L.N. 72 of 2023; L.N. 155 of
2. 6 [ S.L.370.43 Provision of services at the exclusive initiative of the client. Amended by: L.N. 21 of
3. INVESTMENT SERVICES ACT (PROVISION OF INVESTMENT SERVICES AND ACTIVITIES BY THIRD- COUNTRY FIRMS) in the European Union are subject to comprehensive, consistent and effective supervision in accordance with the MIFID, the MiFIR, the CRR, the IFR, the CRD, and the IFD. 8.

(1)Where a retail client or professional client, established or situated in Malta, initiates at its own exclusive initiative the provision of an investment service or activity by a third-country firm, the requirement for licensing under regulation 3 shall not apply to the provision of that service or activity by the third-country firm to that person including a relationship specifically relating to the provision of that service or activity: Without prejudice to intragroup relations, where a third‐country firm, including through an entity acting on its behalf or having close links with such third‐country firm or any other person acting on behalf of such entity, solicits clients or potential clients in Malta, it shall not be deemed to be a service provided at the own exclusive initiative of the client.

(2)An initiative by such clients shall not entitle the thirdcountry firm to market new categories of investment products or investment services to that client otherwise than through the branch, where one is required in accordance with Maltese law. Power of competent authority to cancel or suspend a licence. 9. Without prejudice to article 7 of the Act, the competent authority may at any time cancel or suspend a licence issued to a thirdcountry firm where such a firm: (

1. a)months; does not make use of the licence within 12 (
2. b)expressly renounces the licence or has provided no investment services or performed no investment activity for the preceding six months; (
3. c)has obtained the licence by making false statements or by any other irregular means; (
4. d)no longer meets the conditions under which licensing was granted; (
5. e)has seriously and systematically infringed the provisions adopted pursuant to MiFID governing the operating conditions for investment firms and applicable to third-country firms. INVESTMENT SERVICES ACT (PROVISION OF INVESTMENT SERVICES AND ACTIVITIES BY THIRD- COUNTRY FIRMS) [ S.L.370.43 10.

(1)Where a person falling within the scope of these regulations fails to comply with any provisions of such regulations or any rules issued thereunder further implementing such regulations, the competent authority may, by notice in writing and without recourse to a court hearing, impose on such person an administrative penalty and other administrative measures in accordance with the provisions of the Investment Services Act and Banking Act (MiFID and MiFIR Administrative Penalties, Measures and Investigatory Powers) Regulations.

(2)A right of appeal to the Financial Services Tribunal shall lie from the decisions which the competent authority shall take under these regulations and the provisions of article 19 of the Act shall apply mutatis mutandis. Administrative Penalties, other administrative measures and appeals. S.L. 370.40; S.L. 371.19. 7