Regulatory Updates

MFSA Circulars

05/08/2019     Call for Evidence – Impact of the inducements and costs and charges disclosure requirements under MiFID II

MiFID II was recently revised and has thus clarified, strengthened and expanded the scope of the costs and charges disclosure requirements. Following this, the European Commission is now required to submit a report to the European Parliament and the Council of the European Union on the impact of the inducement disclosure requirements under the revised Directive.

For this reason, the European Commission has requested advice from ESMA which in turn has published a call for evidence in order to seek input from market participants.

Market participants are invited to assist ESMA in preparing advice to the European Commission through the provision of comments on this call of evidence and in particular on the specific questions published. 

Link to Circular can be found here.

08/08/2019     European Single Electronic Format (ESEF) updates on XBRL web portal

The RTS on ESEF specifies that issuers with securities admitted to trading on a regulated market prepare their Annual Financial Reports (AFRs) for financial years beginning on or after 1 January 2020, in the Extensible Hypertext Markup Language (‘xHTML’) format. Where issuers prepare IFRS consolidated financial statements, the eXtensible Business Reporting Language (‘XBRL’) is to be used to mark up the said IFRS consolidated financial statements.

XBRL, currently being the sole markup language considered appropriate to mark up financial statements, has a specific ‘ESEF’ tag on its web portal which displays updates on ESEF.

Link to Circular can be found here.

MFSA Circulars

12/08/2019     Technical Remarks about the MiFID II Phase 2 First Round of Testing

Following the Authority’s notice on the availability of the MiFID II phase 2 testing portal through the Manages File Transfer solution and the updates on the TREM XML schema version 1.1.0 go-live dates, the MFSA has added a further update on this matter, particularly by providing technical remarks about the first round of the testing portal.

The Authority has invited entities wishing to undergo testing for MiFID II Phase 2 and would like to make use of the MFSA testing portal to submit the required files.

Once such files are submitted in relation to MiFID II Phase 2, these are validated and feedback is provided on the outcome.

Link to Circular can be found here.

20/08/2019     Conduct of Business Rulebook Revisions

The Authority has effected changes to the Conduct of Business Rulebook (‘Rulebook’) originally issued on the 20th December 2017.

The changes carried out to the Rulebook, were inter alia in relation to ESMA’s Renewal of its restriction on the marketing, distribution or sale of contracts for differences to retail investors, as well as amendments to include certain conduct of business requirements applicable to insurance undertakings and/or intermediaries.

This circular has provided a comprehensive table which summarises the key amendments made.

Link to Circular can be found here.

MFSA Circulars

23/08/2019     Update to Part BI: Rules applicable to Investment Services Licence Holders which qualify as MiFID Firms (“the Rules”)

The Authority has announced that it has updated certain sections of the Rules. In this respect, this circular is split into three sections.

The first section addresses CRR Local Firms (“Local Firms”) by stating which parts of the Rules such Firms have to adhere to. The chapters from the Rules applicable to Local firms are outlined in the circular and include inter alia prudential requirements, organisational requirements and record keeping, reporting and disclosure requirements.

The second section deals with the requirements for Investment Services Firms distributing or intending to distribute contracts for differences (“CFDs”) and/or rolling spot forex contracts and/or carry out binary options trading.

The final section outlines miscellaneous changes to the Rules which include changes in nomenclature so as to be consistent with EU Regulation No 575/2013 – the Capital Requirements Regulation (“CRR”), as well as changes in relation to contractual agreements governing capital instruments and other regulatory reporting requirements.

Link to circular can be found here.

MFSA Consultation Document

28/08/2019     Rules on Equity Release Financial Products

In April 2019, the Authority had informed the general public that it was working on the regulatory framework that needs to be in place for it to regulate the Equity Release Financial Products.

The Equity Release Financial Products Regulations, 2019 (L.N. 193 of 2019) (“Regulations”) has been published and will come into force on the 1st of September 2019. the purpose of the Regulations is to regulate this product which provides a solution for the elderly enabling them to enjoy their retirement in their own home whilst releasing part of the equity built over the years in such home.

Given that such product shall target pensioners and these consumers are deemed to be vulnerable people, the Authority shall have specific conduct of business rules on Equity Release with the objective being to protect the interest of these consumers.

These Rules shall be applicable to credit and financial institutions offering this product to Consumers and will include requirements on disclosures; sales practices; complaints handling, record keeping and Registration Requirements.

Closing date of Consultation: 10 September 2019.

Link to circular can be found here.

MFSA Consultation Document

28/08/2019    Rules on Equity Release Financial Products

Kindly refer to Asset Management – Part 3

Link to Circular can be found here.

MFSA Consultation Document

LN 193 of 2019    BANKING ACT (CAP.371) / FINANCIAL INSTITUTIONS ACT (CAP.376) - Equity Release Financial Products Regulations, 2019

This Legal Notice provides an optional solution to the elderly to better enjoy their retirement through the use of equity release credit agreements. These agreements shall enable consumers to release part of the equity they have in their residential home and exchange it for a sum deriving from its future sale. The creditor may not seek repayment of the credit until the occurrence of the death of the consumer or his/her move to long-term care. These regulations further provide for, inter alia, (i) the competent authority; (ii) the promotion of measures supporting the education of consumers in relation to equity release financial products; (iii) the obligations of the creditor; (iv)

property valuation; and (vi) rights and obligation of the consumer.

Link to Legal Notice can be found here.

MGA News Alert

28/08/2019     MGA sets up a Commercial Communications Committee and publishes Guidelines

In order to ensure that the Gaming Commercial Communications Regulations (S.L.583.09) (“Regulations”) are being adhered to, the MGA has set-up the Commercial Communications Committee to review commercial communications brought to its attention and assessing any possible breaches.

Furthermore, in order to provide guidance on the interpretation of such Regulations, the MGA has issued the Commercial Communications Guidelines. These guidelines are aimed at providing guidance to any person offering licensable game/s and to persons who collaborate in any way or provide any service to or on behalf of such persons.

Link to article can be found here.

08/08/2019     European Single Electronic Format (ESEF) updates on XBRL web portal

The RTS on ESEF specifies that issuers with securities admitted to trading on a regulated market prepare their Annual Financial Reports (AFRs) for financial years beginning on or after 1 January 2020, in the Extensible Hypertext Markup Language (‘xHTML’) format. Where issuers prepare IFRS consolidated financial statements, the eXtensible Business Reporting Language (‘XBRL’) is to be used to mark up the said IFRS consolidated financial statements.

XBRL, currently being the sole markup language considered appropriate to mark up financial statements, has a specific ‘ESEF’ tag on its web portal which displays updates on ESEF.

Link to Circular can be found here.