Financial Services Regulation |  May 10, 2016

MFSA Circular: Consultation Process on the Conduct of Business Rulebook

By means of a circular issued on the 5th of May 2016, the Malta Financial Services Authority (“MFSA”) brought to the attention of the industry that:

  • the Commission adopted the MiFID II Delegated Directive (“Directive”) regarding the safeguarding of financial instruments and funds belonging to clients, product governance obligations and the rules applicable to the provision or reception of fees, commissions or any monetary or non-monetary benefits; and
  • the European Commission adopted the draft MiFID II regulation on organizational requirements and operating conditions for investment firms (“Regulation”).

The MFSA noted that certain provisions included in the Directive and Regulation may affect the contents of the Conduct of Business Rulebook (“Rulebook”) which the MFSA is in the process of updating and has stated that it “will update the industry in due course”.
The purpose of this Rulebook is to set out the regulatory requirements of regulated persons, insofar as their conduct with their clients is concerned. More information on the Conduct of Business Rulebook can be found here.

The Conduct of Business Rulebook is aimed at persons licensed under the Investment Services Act and also to those carrying on insurance activities in accordance with the Insurance Business Act or the Insurance Intermediaries Act. Persons licensed as credit institutions selling or advising clients on structured deposits also fall within the ambit of this Rulebook.

The chapters in the Rulebook concerning Sales Process and Best Execution are currently in their consultation phase and any comments on these chapters are to be sent to the MFSA by the 31st May 2016.

The consultation document can be found here.

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