Recently, Malta has entered into force new rules for regulating the securities market in order to make it even more transparent. The updated rules regulate transactions related to the transformation of liquidity and maturity, as well as the relationship in the financial markets.
These include lending with securities or raw materials, as well as borrowing securities or commodities, repurchase or sale operations. The new rules are quite severe and are designed to bring more order into securities financing operations.
Violators of the rules will face heavy fines and many troubles associated with administrative responsibility. In this article, we offer a brief analysis of the new regulation of the securities market in Malta. Forewarned is forearmed!
New rules, new fines
This year we saw an active position of regulators in relation to the securities market in Malta. We can hardly say that this position is unfriendly but certainly more clear and structured with respect to securities financing operations.
The main feature of the recently enacted rules is that the Malta Financial Regulatory and Supervisory Authority (MFSA) is endowed with additional powers. Now, the MFSA has the right to impose fines and take administrative measures for violating the requirements for securities financing operations. Violators await, in particular:
- the person in charge and the nature of the violation will be made public;
- a permit for securities-related activities in Malta will be revoked or suspended;
- fine amounting three times the profit or loss that was avoided in the result of the violation;
- administrative fines in the amount of EUR 5,000,000 for individuals;
- legal entities will be fined in the amount from 5,000,000 EUR to 10% of the total annual turnover for failure to fulfill reporting and supervisory obligations under SFTR or from 15,000,000 EUR or up to 10% of the total annual turnover for failure to comply with the conditions for the reuse of financial instruments received under a pledge agreement.
The regulator will take into account all relevant circumstances of the violation, including the period of its duration, as well as the degree of involvement of the persons responsible.
Now, any MFSA decision imposing an administrative fine or other measures in connection with violations provided for under the regulation of securities financing operations in the EU must be published. All decisions may be appealed to the Financial Services Tribunal.
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Key Regulators in the EU
In the EU, securities financing is regulated by ESMA, which sets out the requirements for the verification, comparison, and publication of financial reporting, access and data collection (SFT) transaction reporting data by trade repositories (TRs). The regulation of securities finance operations in the EU (SFTR) is a key element of EU legislation in this area.
The current rules for regulating the securities market in Malta are aimed at increasing the transparency of transaction reporting. SFTR will require participants in both the financial and non-financial markets to report the details of their securities finance operations (SFTs) to the approved European Trade Repository (TP). For more detailed information, you can order a consultation on the new regulation of the securities market in Malta from our specialists. Contact us directly by filling out the form below.