News

Financial Services and Fintech Update

Malta Financial Services Authority (MFSA) Updates

The implications of rights under the e-Commerce Directive as a result of the UK withdrawing from the EU

Directive 2000/31/EC of the European Parliament and the Council (the Electronic Commerce Directive), comprises a variety of activities which take place online. The Directive covers those goods and services wherein the parties supplying them need not be present together at the time the goods are supplied, or when the services are provided.

The MFSA, in light of the UK withdrawing from the EU, has issued a circular pertaining to licence holders who provide information society services within the meaning of the Directive. Licence holders who offer online services to the UK shall no longer be able to continue to operate within the provisions of the Directive, once the transitional period elapses.

Those licence holders who nevertheless wish to have access to the UK market are to immediately contact the Financial Conduct Authority and seek authorisation to continue their dealings in the UK. Licence holders are also to keep the MFSA apprised of any correspondence with the FCA on such matters.

For more information: https://www.mfsa.mt/publication/circular-on-the-implications-of-member-states-rights-under-directive-2000-31-ec-as-a-result-of-the-united-kingdom-withdrawing-from-the-european-union/

Circular on the annual information to be provided by the Retirement Scheme Administrator to its Members

Following the publication of the Pension Rules in relation to the Retirement Pensions Act of 2011, the MFSA has issued a circular to explain the requirements in Standard Licence Condition 5.1.4 and 9.5(e) of the Rules.

S.L.C. 5.1.4 of the Rules sets out the information which a Retirement Scheme Administrator, administering a non-Member Directed Scheme or a Member Directed Scheme, is required, as a minimum, to provide to its members annually and upon ad hoc request.

The circular also sets out a number of requirements for the Administrator. Indeed, the Administrator is under the obligation to provide its members with the information necessary in a clear, accurate and comprehensible manner, on a durable medium and on one document or source. Moreover, all applicable charges and fees must be disclosed to members.

As aforementioned, the Administrator is required to provide the said information annually or upon ad hoc request. The MFSA therefore expects that the Administrator is to either circulate such information on the anniversary of the Member’s joining of the scheme or else on a date selected annually by the Administrator. Moreover, the MFSA has also reminded Administrators that any material information affecting the Member’s Account, must be disclosed to the Member immediately. Such issues are to be communicated in a clear and non-misleading manner. Furthermore, a record of such communication is to be kept.

For more information: https://www.mfsa.mt/wp-content/uploads/2020/08/Circular-in-relation-to-the-annual-information-to-be-provided-by-the-Retirement-Scheme-Administrator.pdf

European Securities and Markets Authority (ESMA) Updates

ESMA confirms Securitisation Regulation Requirements

ESMA corroborates that the new regime under the Securitisation Regulation shall come into effect as of the 23rd of September 2020. Seven technical standards have been published, officially implementing the Securitisation Regulation in the Official Journal of the EU. The publication of the technical standards triggers the:

  • Opening of applications for entities to register as Securitisation Repositories; and
  • Implementation of new disclosure templates.

Indeed, ESMA has created a series of securitisation disclosure templates to better and harmonise the information made available to investors, potential investors, as well as competent authorities.

For more information: https://www.esma.europa.eu/press-news/esma-news/esma-confirms-securitisation-regulation-requirements-entry-force-23-september

ESMA Publishes List of Thresholds for Shareholder Identification

ESMA has recently published a document, in an effort to improve transparency, setting out the thresholds needed for shareholders to be identified within the different Member States (‘MSs’) of the EU.

The document comprises data collected by national competent authorities. Such data establishes:

  • The national thresholds for shareholder identification in MSs that have set up such thresholds;
  • The relevant legislation and rules; as well as
  • The indication of MSs where the revised Shareholders Rights Directive (SRDII) has not yet been enforced into national law.

The revised Directive obliges MSs to make certain that companies have the right to identify their shareholders. Companies shall have the option to establish a registered office in the territory of a Member State, in order to be allowed to petition the identification of shareholders. However, such shareholders must hold a certain percentage of shares or voting rights. Indeed, such a percentage shall not exceed 0.5%.

Presently, Malta has no threshold set out in the document.

For more information: https://www.esma.europa.eu/press-news/esma-news/esma-publishes-list-thresholds-shareholder-identification

ESMA Proposes to Further Postpone CSDR Settlement Discipline

ESMA, in its report on draft regulatory technical standards (‘RTS’), confirms the postponement of the entry into force of Commission Delegated Regulation (EU) 2018/1229 on settlement discipline (the RTS on settlement discipline). The Regulation shall now come into force in February 2021, instead of September 2020.

The COVID-19 pandemic has effectively delayed the implementation of regulatory projects and IT deliveries by Central Securities Depositories. Moreover, several market participants have also been affected. The Regulation shall include measures to prevent and address settlement failures, and shall cover:

  • Rules for the trade allocation and confirmation process;
  • Cash penalties on failed transactions;
  • Mandatory buy-ins; and
  • Monitoring and reporting of settlement fails.

For more information: https://www.esma.europa.eu/press-news/esma-news/esma-proposes-further-postpone-csdr-settlement-discipline

ESMA Publishes Call for Evidence for Review of Transparency Requirements for Equity and Non-Equity Instruments

Earlier this month, ESMA has published a Call for Evidence (‘CfE’) in an effort to further assess Commission Delegated Regulation (EU) No 2017/587 (‘RTS I’) as well as Commission Delegated Regulation (EU) No 2017/583 (‘RTS II’).

RTS I and II comprise the major implementing measures vis-à-vis the MiFID II/MiFIR transparency regimes for equity and non-equity instruments. The CfE aims to collect input and views on practical matters related to the implementation of RTS I and RTS II from market participants.

For more information: https://www.esma.europa.eu/press-news/esma-news/esma-publishes-call-evidence-in-context-review-transparency-requirements-equity

International Organization of Securities Commissions (IOSCO) Updates

IOSCO consults on outsourcing principles to ensure operational resilience

The Board of IOSCO had, in May 2020, requested feedback on proposed updates to its principles for regulated entities that outsource tasks to service providers. The Proposed Principles on Outsourcing cover fundamental precepts and comprise seven main principles.

The fundamental precepts tackle matters such as the definition of outsourcing, the assessment of materiality and criticality, their application to affiliates, the treatment of subcontracting and cross-border outsourcing. The seven main principles, on the other hand, correlate to:

  • Due diligence in the selection and monitoring of a service provider;
  • The contract with a service provider;
  • Information securities, continuity, disaster recovery and business resilience;
  • Confidentiality issues;
  • The concentration of outsourcing agreements;
  • The access to data, premises, personnel and associated rights of inspection; as well as
  • The termination of outsourcing agreements.

Comments on and responses to this consultation report must be submitted before the 1st of October 2020.

For more information: https://www.iosco.org/news/pdf/IOSCONEWS567.pdf

For more information please contact Dr Ian Gauci and Dr Cherise Abela Grech

This article is not intended to impart legal advice and readers are asked to seek verification of statements made before acting on them.