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Publication of Revised Application Forms for Alternative Investment Funds (“AIFs”) and Undertakings for Collective Investment in Transferable Securities (“UCITS ”)

Further to the circular issued by the MFSA on 18 March 2022, on 5 May 2022 the Authority announced that it has revised the Application Forms for applicants seeking authorisation as AIFs and UCITS, which are now accessible via Forms AA35 and AA37, respectively.

The Authority has implemented such modifications in order to ensure that the application form focuses on the operating model of the collective investment scheme in question.

The MFSA will continue to accept submissions by Applicants using the previous application form for Funds (Form AA07) until 3 June 2022. As from 6 June 2022, only Form AA35 and Form AA37 will be accepted by the MFSA for Applicants seeking authorisation either as an Alternative Investment Fund or otherwise as a UCITS Scheme. Applications completed via Form AA07 should continue to be submitted through the LH Portal under the respective dropdown heading specifically created for each regulatory regime.

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

https://www.mfsa.mt/wp-content/uploads/2022/05/Publication-of-Revised-Application-Forms-for-Alternative-Investment-Funds-and-Undertakings-for-Collective-Investment-in-Transferable-Securities.pdf

MFSA Issues Guidance Note on Administrative Penalty Calculations

On 9 May 2022, the Authority published a Guidance Note outlining the principles and processes it would use when calculating an administrative penalty for breaches of regulatory requirements. The Guidance Note is not binding on the Authority, but clearly outlines the method that could be used by the MFSA to assess the impact and seriousness of a potential breach, and includes detailed tables and case studies to explain how an administrative penalty is calculated.

In this respect, the MFSA has a certain degree of discretion in determining the amount of administrative penalty is appropriate in each case whereby the Authority considers a number of factors including, inter alia, the size and financial strength of the licence holder, the degree of impact or seriousness of the breach and the level of cooperation with the MFSA.

For further information, reference should be made to the press release and Guidance note on the MFSA’s website;

https://www.mfsa.mt/wp-content/uploads/2022/05/MFSA-Issues-Guidance-Note-on-Administrative-Penalty-Calculations.pdf

Clarification note addressed to MiFID II investment firms operating on a Freedom of Services (“FoS”) Cross-Border basis on conduct related disclosures in the financial return reporting and other important regulatory clarifications

On 11 May 2022, the MFSA published a circular the purpose of which is to clarify several common issues which the MFSA has identified when reviewing the MiFID Firms Quarterly Reporting return. The issues identified are the following:

(i)                  The MFSA noted several cases where Investment firms have reported inaccurate Client figures in the passporting survey – In this respect, Investment firms are guided to consider the habitual residence of the client, based on the information collected as part of the initial KYC undertaken at onboarding to ensure that the data provided is accurate and factual; and

(ii)                The MFSA has also come across certain investment firms claiming to resort to Article 42 of MiFID II on Reverse Solicitation so as to be exempted from the requirements of Article 39 of MiFID II and thereby use this as a basis to service clients either within the EU/EEA area and/or outside of it – In this regard, the MFSA would like to remind investment firms that the ‘reverse solicitation’ exemption applies only in the scenario where retail client or professional client located in the EU initiates at its own exclusive initiative the provision of an investment service or activity by a third-country firm.

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

https://www.mfsa.mt/wp-content/uploads/2022/05/Clarification-Note-addressed-to-MiFID-II-Investment-Firms-Operating-on-a-Freedom-of-Services-FoS-Cross-Border-Basis.pdf

Amendments to the Investment Services Rulebooks to Transpose and Implement EU Directives, Regulations and EBA Guidelines

On 23 May 2022 the Authority published as circular the purpose of which is to communicate several amendments that have been made to the Investment Services Rulebooks in order to transpose a number of Commission Delegated Regulations and EU Directives.

These changes include, inter alia, the transposition of the (“Environmental, Soca ESG-UCITS Delegated Directive, the ESG-AIFM Delegated Regulation, the ESG-MiFID Delegated Regulation, transposition of the KIDS-UCITS Directive, reference to the Acquisitions Directive as well as relevant updated to the Investment Firms rulebook in view of the publication in all EU languages of the EBA Guidelines on internal governance for investment firms and the Guidelines on sound remuneration policies.

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

https://www.mfsa.mt/wp-content/uploads/2022/05/Amendments-to-the-Investment-Services-Rulebooks-to-Transpose-and-Implement-EU-Directives-Regulations-and-EBA-Guidelines.pdf

Feedback Statement on the Establishment of a Settlement Policy

Further to the Consultation Document on the Establishment of a Settlement Policy issued by the Authority on 14 December 2021 wherein the MFSA proposed a number of principles which it intends to adopt in relation to the settlement process, on 1 June 2022 the Authority published its feedback statement on the main comments received in relation to such to settlement agreements. Following an examination of the feedback received, the Authority will proceed with finalising the Settlement Policy and to get it approved. Once approved such Settlement Policy will be posted on the MFSA’s website and made public.

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

https://www.mfsa.mt/wp-content/uploads/2022/06/Feedback-Statement-on-the-Establishment-of-a-Settlement-Policy.pdf