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ESAs Publication of Call for Advice with Respect to the Review of the PRIIPS (Packaged Retail and Insurance-Based Investment Products) Regulation

On 4 November 2021, the Authority published a circular notifying the industry that on 25 July 2021 the European Commission requested evidence concerning the multiple aspects of the packaged Retail and Insurance based investment products Regulation (PRIIPS). Such request is closely connected to the EC’s Capital Markets Union Action Plan and its future strategy for retail investments in Europe. This action plan aims to finance green and digital transitions of the continent’s economy, and also boost market-based financing in the EU to help guide a return to long-term growth. Through its strategy for retail investors, the Commission hopes that consumers will be offered increased investment opportunities and stronger investor protection on the capital markets. To this end, the ESA’s have opened a call for evidence regarding the PRIIPs regulation. Any input will feed into the ESA’s technical advice to the Commission on a review of the KIDs for PRIIPs.

For further information, reference should be made to the circular on the MFSA’s website:

https://www.mfsa.mt/wp-content/uploads/2021/11/ESAs-Publication-of-Call-for-Advice-with-Respect-to-the-Review-of-the-PRIIPS-Packaged-Retail-and-Insurance-Based-Investment-Products-Regulation.pdf

 

MFSA Conference Against Money Laundering and Financing of Terrorism

On 19 November 2021, the MFSA issued a press release informing all subject persons of its intention to carry out a two-day event to discuss proposals which would streamline EU Member States’ approach to Anti-Money Laundering/Counter Financing of Terrorism (“AML/CFT”). The aim of this EU package is to improve the detection of suspicious transactions and activities, and to close loopholes used by criminals to launder illicit proceeds or finance terrorist activities through the financial system. The proposed changes to the AML/CFT legislation and supervision include:

  1. The establishment of a new EU AML/CFT Authority;
  2. Directly applicable rules in the areas of Customer Due Diligence and Beneficial Ownership;
  3. A 6th AML Directive; and
  4. A revision of the 2015 Regulation on Transfer of Funds to trace transfers of crypto-assets.

For further information, reference should be made to the circular on the MFSA’s website:

https://www.mfsa.mt/wp-content/uploads/2021/11/Keen-Interest-in-MFSA-Conference-Against-Money-Laundering-and-Financing-of-Terrorism.pdf

 

Press Release on Corporate Governance

On 23 November 2021, the MFSA issued a press-release highlighting the importance of good Corporate Governance. In this respect, the MFSA believes that well-managed and well-run financial institutions are less likely to fail and are less likely to treat their customers and counterparties unfairly, which also instils confidence in supervisors. A firm’s adherence to legislation, regulations and codes, through good Corporate Governance, allows directors and executives to focus on growth, value creation and long-term sustainability. This is particularly important in the context of the financial crisis which showed how poor corporate governance could have a domino effect, posing a systemic risk to the financial stability of the entire global economy, one of the overriding reasons that it has received increased attention from various international bodies over the past few years.

For further information, reference should be made to the circular on the MFSA’s website:

https://www.mfsa.mt/wp-content/uploads/2021/11/Corporate-Governance-to-be-Emphasized-During-MFSA-Webinar.pdf

 

Circular to the Industry – Discussion Paper published by ESMA in relation to the European Market Infrastructure Regulation (‘EMIR’ or the ‘Regulation’)

On 23 November 2021, the MFSA published a circular informing all market participants, particularly entities who enter into derivative contracts and which fall within the scope of EMIR, namely, financial counterparties (‘FCs’) and non-financial counterparties (‘NFCs’) as defined under EMIR, that ESMA has published a Discussion Paper in relation to the clearing thresholds. Regulation (EU) 2019/834 (‘EMIR Refit’) introduced a mandate in EMIR for ESMA to periodically review the clearing thresholds and update them where necessary in order to ensure that the thresholds remain appropriate.

For further information, reference should be made to the circular on the MFSA’s website:

https://www.mfsa.mt/wp-content/uploads/2021/11/Circular-to-the-Industry-Discussion-Paper-published-by-ESMA-in-relation-to-the-European-Market-Infrastructure-Regulation.pdf

 

Circular on Updates to the Q&As (‘EMIR’ or the ‘Regulation’)

On 23 November 2021, the MFSA published a Circular informing all market participants falling in scope of EMIR that ESMA has updated its EMIR Q&A Document. These changes relate mainly to an amendment in the hedging definition, an amendment in the calculation of positions for the clearing thresholds and the reporting of a change in LEI.

For further information, reference should be made to the circular on the MFSA’s website:

https://www.mfsa.mt/wp-content/uploads/2021/11/Circular-on-Updates-to-the-QAs-on-the-European-Market-Infrastructure-Regulation.pdf

 

Circular on Markets in Financial Instruments Directive (‘MiFID II’) and Markets in Financial Instruments Regulation (‘MiFIR’)

On 24 November 2021, the MFSA published a circular informing market participants that ESMA published its Final Report on Draft Regulatory Technical Standards (“RTS”) for commodity derivatives under the MiFID II Recovery Package. In drafting the RTS, ESMA took into consideration the feedback received in the public consultation and included proposals on the application procedure for position limit exemptions, a methodology to determine position limits and position management tools for trading venues, which will contribute to stable and orderly commodity derivative markets at a time of heightened scrutiny. The final report has been submitted to the European Commission which has three months to decide whether to endorse the draft regulatory  technical standards. Accordingly, the revised MiFID II regime for commodity derivatives will apply at the end of February 2022.

For further information, reference should be made to the circular on the MFSA’s website:

https://www.mfsa.mt/wp-content/uploads/2021/11/ESMA-Publishes-Draft-Commodity-Derivative-Technical-Standards-under-MiFID-II-Recovery-Package.pdf

 

Capital Markets Union – Commission puts forward a package of legislative proposals to ensure that investors have better access to company and trading data.

On 26 November 2021, the MFSA published a Circular informing Financial Market Participants (“FMPs”) and Financial Advisors (“FAs”) that the European Commission adopted a number of measures to improve the ability of companies to raise capital across the EU and ensure that Europeans get the best deals for their savings and investments.  These include the following:

  1. The European Single Access Point (ESAP) – Which will offer a single access point for public financial and sustainability related information about EU companies and investment products, thus giving companies more visibility towards investors, opening more sources of financing;
  2. Review of the European Long-Term Investment Funds Regulations (ELTIFs) – this will make it easier for investors to invest in ELTIFs by removing the minimum €10,000 investment threshold;
  3. Review of the AIFMD – The proposal harmonises the rules related to funds that give loans to companies. This will facilitate lending to the real economy, while better protecting investors and ensuring financial stability by ensuring that there is adequate information and coordination among EU supervisors; and
  4. Review of MiFIR – enhancing transparency by introducing a European consolidated tape for easier access to trading data by all investors, giving investors access to near real-time trading data for stocks, bonds and derivatives across all trading venues in the EU, thus enhancing the level playing field between stock exchanges and investment banks.

For further information, reference should be made to the circular on the MFSA’s website:

https://www.mfsa.mt/wp-content/uploads/2021/11/Capital-Markets-Union.pdf

 

Approval of Directors of Authorised Persons

On 30 November 2021, the MFSA published a circular informing Licence Holders that where individuals licensed or otherwise approved or regulated by the Competent Authority as defined in applicable legislations (“authorised persons”) are required by law to obtain the Competent Authority’s approval prior to appointing a person as a director, no director may be appointed by such authorised person and consequently registered with the Malta Business Registry without the Competent Authority’s prior approval. For this approval the Competent Authority requires the authorised person to submit, as part of the supporting documentation to the Personal Questionnaire (“PQ”) relating to the proposed director and prior to the Competent Authority’s determination with respect to the said approval or otherwise, the following:

  1. A copy of the Board minutes proposing such person to be appointed as a director; or
  2. A copy of the minutes of the general meeting [i.e. of the shareholders], or board meeting, as applicable, appointing, subject to the Competent Authority’s prior approval, the same person as a director of the authorised person in question with effect from the date of the said approval.

For further information, reference should be made to the circular on the MFSA’s website:

https://www.mfsa.mt/wp-content/uploads/2021/11/Approval-of-Directors-of-Authorised-Persons.pdf

 

Guidance on the Submission of Involvement Suitability Assessment

On 30 November 2021, the MFSA published a circular notifying authorised individuals on changes in the way the ‘Involvement Suitability Assessments’ (ISAs) (formerly known as the “Entity Assessment”) is submitted. The changes will enable Licence Holders to send sensitive data directly to the MFSA. Furthermore, in situations where Board members are simply changing positions within the same Board, a submission of the ISA is not required but only a notification via email to the MFSA.

For further information, reference should be made to the circular on the MFSA’s website:

https://www.mfsa.mt/wp-content/uploads/2021/11/Guidance-on-the-Submission-of-Involvement-Suitability-Assessment.pdf

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