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Publication of the Prevention of Financial Markets Abuse Rules

On 2 June 2022 the Authority issued a Circular addressed to market participants falling in scope of the Market Abuse Regulation (“MAR”), including, market operators and investment firms operating a trading venue, disclosing market participants any persons professionally arranging or executing transactions and persons discharging managerial responsibilities within issuers and persons closely associated with them. With effect from the date of the circular, the current Prevention of Financial Markets Abuse Guidance Notes will cease to exist and will be replaced by the Prevention of Financial Markets Abuse Rules. These rules delineate the requirements which market participants are to refer to and comply with within the context of MAR, the Regulatory and Implementing Technical Standards and ESMA Guidelines.

The new rules have been divided into five titles dealing with: (i) General Requirements; (ii) Requirements applicable to issuers and persons acting on their account; (iii) Requirements applicable to Persons Discharging Managerial Responsibilities (“PDMRs”) within an Issuer and Persons Closely Associated with them; (iv) Requirements applicable to market operators, investment firms operating a trading venue and any person professionally arranging or executing transactions; and (v) Requirements applicable to Commodity Derivatives markets or related spot markets.

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

https://www.mfsa.mt/wp-content/uploads/2022/06/Publication-of-Prevention-of-Financial-Markets-Abuse-Rules.pdf

 

Positive Results Seen by MFSA in Fighting Money-Laundering

On 16 June 2022, the MFSA published a newsletter notifying the public that the integration of Anti-Money Laundering / Combatting the Financing of Terrorism (AML/CFT)into the supervisory priorities of the MFSA has yielded positive results. In this respect, AML/CFT has become more fully integrated into the Authority’s operations, not only at the point where an entity is authorised, but also on an ongoing basis through its supervision to ensure that business models and controls outlined art the initial stages are working on a practical basis.

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

https://www.mfsa.mt/publication/positive-results-seen-by-mfsa-in-fighting-money-laundering/

 

ESMA Reports on Supervision of Costs and Fees in Investment Funds

In 2021 ESMA undertook a Common Supervisory Action (“CSA”) on costs and fees for investment funds within member states. The aim of such CSA was to assess, foster and enforce the compliance of supervised entities with key cost-related provisions in the UCITS framework, in particular the obligation to not charge investors any undue costs. ESMA’s final report, published on 31 May 2022, provides supervised entities with suggestions for improvements on the application of the ESMA supervisory briefing on the supervision of costs in UCITS and AIFs. These suggestions include:

  • performing an independent analysis of the fee structures once those have been established;
  • Ensuring that the notion of ‘undue costs’ is primarily assessed against what should be considered to be the best interest of the fund and its investors;
  • Ensuring that investors are adequately compensated in all cases where they were charged ‘undue costs’ and fees and also in cases where calculation errors resulted in the financial detriment to investors; and

Stricter follow up measures by National Competent Authorities in relation to instances where there is lack of policies and procedures on Efficient Portfolio Management Techniques.

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

https://www.mfsa.mt/wp-content/uploads/2022/06/ESMA-Reports-on-Supervision-of-Costs-and-Fees-in-Investment-Funds.pdf