Amendments to the Investment Services Rules

On the 3 July 2020, the Malta Financial Services Authority (the “MFSA”) notified firms classifying as MiFID firms, Fund Managers and Collective Investment Schemes  (the “Licence Holders“) that various amendments had been carried out to various Investment Services Rules (“ISRs”).

The amendments include the following:

Part A: ISRs for Investment Services Providers

The MFSA has carried out the following amendments in relation to the surrender of licence by a Licence Holders:

  1. Surrender of licence is required to be sent by means of electronic communication to the MFSA;
  2. The original licence certificate is to be returned to the MFSA before surrender;
  3. The Licence Holder is required to notify the Investor Compensation Scheme of such surrender; and
  4. Following submission of the necessary documents, the MFSA will review the documents submitted and will initiate the process for approval.

Part BI: ISRs applicable to MiFID Firms

The MFSA has carried out the following amendments in relation to ISRs applicable to MiFID Firms:

  1. General Obligations – If the Licence Holder has not commenced its business within 12 months from date of licence, the MFSA shall be informed within 6 months from the expiration of the 12 month period providing its reasons thereof and the way forward;
  2. Risk Management – All Licence Holders that are subject to the Risk Management and Internal Capital Adequacy Assessment Process shall include the operational risk factor in their risk management assessment;
  3. Supplementary Organisational Requirements – The MFSA has included another Section, namely Section 6 relating to ICT and Security Risk Management;
  4. Notifications and Approvals Requirements – Termination of employment by officials approved by the MFSA shall use their personal email and/or letterhead in order to notify the MFSA of their departure including the reasons thereof;
  5. Reporting Requirements – The requirement to submit a report of the circularisation exercise for Category 2 and Category 3 Licence Holders has been included in the ISRs. The MFSA also clarified that in respect of the due diligence requirements, the Licence Holder shall confirm that these have been met.

MFSA’s imposition of the suspension of dealings

ISR applicable to Retail Collective Investment Schemes, Alternative Investment Funds, Professional Investor Funds have been amended to include the MFSA’s power to require the suspension of the subscription, repurchase or redemption of units were it is considered in the best interest of unit holders or the public.

ESMA’s Liquidity Stress Testing Guidelines

ISRs applicable to UCITS Management Companies, Retail Collective Investment Schemes and for Alternative Investment Funds have all been amended in order to implement ESMA’s Guidelines on Liquidity Stress Testing.

Key Investor Information Document (“KIID”)

The Scheme shall submit its KIID and any amendments thereto, to the MFSA for notification purposes.

Feel free to contact us if you require any further information in relation to the ISRs.