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Suppliment tal-Gazzetta tal-Gvern ta’ Malta Nru. 20,774, 27 ta’ Jannar , 2022
Taqsima  B
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L.N. 29 of 2022
INVESTMENT SERVICES ACT
(CAP. 370)
Investment Services Act (Supervisory Consolidation) (Capital 
Requirements Directive) (Amendment) Regulations, 2022
IN EXERCISE of the powers conferred by article 12 of the
Investment Services Act, the Minister responsible for the regulation of
Financial Services, acting on the advice of the Malta Financial
Services Authority, has made the following regulations:
Title and 
commencement.
L.N. 495 of 
2021. 1. (1) The title of these regulations is the Investment
Services Act (Supervisory Consolidation) (Capita l Requirements
Directive) (Amendment) Regulations, 2022, and these regulations
shall be read and construed as one with the Investment Services Act(Supervisory Consolidation) (Capital Requirements Directive)
Regulations, hereinafter referred to as the "principal regulati ons".
(2) These regulations shall come into force on such date as the
Minister may establish by notice in the Gazette.
Amends 
regulation 2 of 
the principal 
regulations.2. In the proviso of regulation 2 of the principal regulations
the definition "financial institution" shall be substituted by the
following:
"Provided that the entities referred to in point (1) and in
points (3) to (24) of Article 2(5) of the CRD shall be treated as
financial institutions;".
Amends regulation 3 of 
the principal 
regulations.3. Regulation 3 of the principal regulations shall be
substituted by the following:
3. (1) The competent authority shall exercise
supervision on a consolidated basis:
(a) where the parent undertaking is a
parent credit institution established in Malta or in
another Member State or an EU parent credit
institution supervised by the competent authority
on an individual basis;
(b) where a parent undertaking is a parent
investment firm establishe d in Malta or in another
Member State or an EU parent investment firmand at least one of its subsidiaries is a credit
institution supervised by the competent authority:
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Provided that, where there are several credit
institutions, the competent authority shall exercise
supervision on a consolidated basis where it supervises
the credit institution with the  largest balance sheet total;
(c) where the parent of a credit institution
supervised by the competent authority on an
individual basis is a parent financial holdingcompany established in Malta or in another
Member State, a parent mixed financial holding
company established in Malta or in another
Member State, an EU parent financial holding
company or EU parent mixed financial holdingcompany;
(d) where two or more institutions
authorised in the European Union, one of which is
a credit institution supervised by the competent
authority, have the same parent financial holdingcompany established in Malta or in another
Member State, parent mixed financial holding
company established in Malta or in anotherMember State, EU parent financial holding
company or EU parent mixed financial holding
company, and:
(i) the competent authority
supervises the credit in stitution, which is the
only credit institution within the group; or
(ii) the competent authority
supervises the credit institution with the
largest balance sheet total, where there are
several credit institutions within the group:
Provided that, for the purposes of this
paragraph, the term "institution" shall include credit
institutions and investment firms;
(e) where consolidation is required
pursuant to Article 18(3) or (6) of the CRR and
the competent authority supervises the credit
institution with the largest balance sheet total.
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Amends 
regulation 6 of 
the principal 
regulations.4. Immediately after  sub-regulation 6(3) there shall be added
the following new sub-regulations:
"(4) Where the competent authority is the consolidating
supervisor, and a fina ncial holding company or a mixed financia l
holding company that has been granted approval in accordance
with Article 21a of the CRD is established in a Member State
other than Malta, the co-ordination and co-operationarrangements referred to in sub-regulations (1) and (2) shall a lso
be concluded with the European regulatory authority where theparent undertaking is established.(2) By way of derogation from sub-regulation
(1)(b), (d)(ii) and (e), the competent authority shall bethe consolidating supervisor where it supervises on an
individual basis one or more investment firms within a
group, and the sum of the balance sheet totals of thosesupervised investment firms is higher than that of the
investment firms supervised on an individual basis by
any other European regulatory authority, and there areno credit institutions in the group.
(3) In particular cases, the criteria referred to in
sub-regulation (1)(a), (b),  (d) and (e) may be waived by
common agreement of the competent authority with theother relevant European regulatory authorities and a
European regulatory authority may be appointed to
exercise supervision on a consolidated basis where theapplication of the criteria referred to in the said sub-
regulation (1)(a), (b), (d) and (e) would be
inappropriate, taking into account the credit institutionsor investment firms concerned and the relative
importance of their activities in the relevant Member
States, or the need to e nsure the continuity of
supervision on a consolidated basis by the same
European regulatory authority. In these cases, before
such decision is taken the EU parent institution, the EUparent financial holding company, the EU parent mixed
financial holding company or the institution with the
largest balance sheet total, as applicable, shall have theright to be heard.
(4) The competent authority shall notify the
Commission and the EBA without delay of any
agreement falling within sub-regulation (3).
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(5) Where the competent authority is not the
consolidating supervisor, but a financial holding company or a
mixed financial holding company has been granted approval inaccordance with Article 21a of the CRD and is established in
Malta, the co-ordination and co-operation arrangements referred
to sub-regulations (1) and (2) shall be concluded with theEuropean regulatory authority acting as the consolidating
supervisor.".
Amends 
regulation 7 of the principal 
regulations.5. Regulation 7 of the principal regulations shall be amended
as follows:
(a) immediately after sub-regulation (2) thereof, there
shall be added the following new sub-regulation:
(b) in sub-regulation (5) thereof:
(i) in paragraph (a) thereof, the words "financial
holding company; and" shall be substituted by the words
"financial holding company;"; and
(ii) immediately after para graph (b) thereof, there
shall be added the following new paragraph:
"(c) Malta is the Member State where a
financial holding company or a mixed financialholding company that has been granted approval in
accordance with Article 10CA of the Act isestablished.".
Amends 
regulation 8 of 
the principal regulations.6. Regulation 8 of the principal regulations shall be"(2A) In order to facilitate the tasks referred to in
sub-regulation (1) and regulations 4(1), 5(1), 6(1), and
6(2), where the competent authority is the consolidating
supervisor, it shall also establish colleges of supervisors
where all the cross-border subsidiaries of an EU parentinstitution, an EU parent fin ancial holding company or an
EU parent mixed financial holding company have their
head offices in third countries:
Cap. 330.Provided that the third countries’ regulatory
authorities are subject to conf identiality requirements that
are equivalent to the requirements laid down in the Malta
Financial Services Authority Act and any other applicable
law.".
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substituted by the following:
Joint decisions on 
specific prudential 
requirements."8. (1) The competent authority, whether it is
the consolidating supervisor or the competent authority
responsible for the supervision of subsidiaries of an EU
parent institution, an EU parent financial holding
company or an EU parent mixed financial holdingcompany which are inve stment firms, shall do
everything within its power to reach a joint decisionwith the other European regulatory authorities:
S.L. 370.15.(a) on the application of Articles 73 and
97 of the CRD as transposed in the Investment
Services Rules and in Investment Services Act
(Supervisory Review) Regulations to determinethe adequacy of the consolidated level of own
funds held by the group of institutions with
respect to its financial situation and risk profileand the required level of own funds for the
application of point (a) of Article 104(1) of the
CRD as transposed in the Investment ServicesAct (Supervisory Review) Regulations, each
entity within the group of institutions and on a
consolidated basis;
S. L. 370.15.(b) on measures to address any significant
matters and material findi ngs relating to liquidity
supervision, including relating to the adequacy of
the organisation and th e treatment of risks as
required pursuant to Article 86 of the CRD as
transposed in the Investment Services Rules and
relating to the need for institution-specific
liquidity requirements in accordance with Article105 of the CRD as transposed in the Investment
Services Act (Supervisory Review) Regulations.
S. L. 370.15.(c) on any guidance on additional own
funds referred to in Article 104b(3) of the CRD as
transposed in the Investment Services Act(Supervisory Review) Regulations.
(2) Where it is the consolidating supervisor, the
competent authority shall submit –
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S. L. 370.15.(a) for the purpose of sub-regulation
(1)(a), a report containing the risk assessment of
the group of institutions in accordance with
Article 104a of the CRD as transposed in the
Investment Services Act  (Supervisory Review)
Regulations to the other relevant European
regulatory authorities;
(b) for the purpose of sub-regulation
(1)(b), a report containing the assessment of the
liquidity risk profile of t he group of institutions in
accordance with Articles 86 and 105 of the CRDas transposed in the Investment Services Rulesand in the Investment Services Act (Supervisory
Review) Regulations, to the other relevant
European regulatory authorities;
(c) for the purpose of sub-regulation
(1)(c), a report containing the risk assessment ofthe group of institutions in accordance with
Article 104b of the CRD as transposed in the
Investment Services Act  (Supervisory Review)
Regulations, to the other relevant European
regulatory authorities.
(3) The joint decisions referred to in sub-
regulation (1) shall be reached within four (4) months
from submission of the reports referred to in sub-regulation (2):
S. L. 370.15.Provided that the joint decisions
referred to in sub-regulation (1) shall also duly
consider the risk assessment of subsidiaries
performed by the competent authority and, orrelevant European regulatory authorities in
accordance with Articles 73, 97, 104a and 104b of
the CRD as transposed in the Investment ServicesRules and in the Investment Services Act
(Supervisory Review) Regulations.
(4) Where the competent authority is the
consolidating supervisor, it shall provide the EU parent
institution concerned with the joint decisions referred toin sub-regulation (1), which shall be set out in a
document containing the full reasons for the decisions.
In the event of disagreement, the competent authorityshall, at the request of any of the other European
regulatory authorities concerned, consult the EBA:
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Provided that the competent authority, when
it is the consolidating supervisor, may consult the EBA
on its own initiative.
S.L. 370.15.(5) In the absence of such a joint decision
within the time period referred to in sub-regulation (3)
and, or regulation 8, a decision on the application of
Articles 73, 86, 97, 104(1)(a), 104b and 105 of the CRDas transposed in the Investment Services Rules and in
the Investment Services Act (Supervisory Review)
Regulations shall be taken by the competent authority,
where it is acting as the con solidating supervisor, on a
consolidated basis, after duly considering the risk
assessment of subsidiaries  performed by the relevant
European regulatory authorities:
Provided that:
(a) if, at the end of the time period
referred to in sub-regulation (3), any of the
European regulatory authorities concerned have
referred the matter to the EBA in accordance withArticle 19 of Regulation (EU) No 1093/2010, the
competent authority shall defer its decision and
await any decision the EBA may take inaccordance with Article 19(3) of the said
Regulation. The competent authority shall take its
decision in conformity with the decision of theEBA. The time period referred to in sub-
regulation (3) shall be deemed to be the
conciliation period within the meaning ofRegulation (EU) No 1093/2010;
(b) where the competent authority is not
acting as consolidated supervisor but is
responsible for the superv ision of subsidiaries of
an EU parent institution or an EU parent financial
holding company or an EU parent mixed financial
holding company, it may refer the matter to the
EBA in accordance with Article 19 of Regulation(EU) No 1093/2010. The matter shall not be
referred to the EBA after the end of the time
period referred to above in sub-regulation (3) orafter a joint decision has been reached.
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S.L. 370.15.(6) Where the competent authority is not the
consolidating supervisor but is responsible for the
supervision of a subsidiary of an EU parent credit
institution or an EU parent financial holding company
or an EU parent mixed financial holding company,which is a credit institution, and in the absence of a
joint decision in terms of this  regulation within the time
period referred to in regulation 8, the competent
authority shall decide on the application of Articles 73,
86, 97, 104(1)(a), 104b and 105 of the CRD as
transposed in the Investment Services Rules and in the
Investment Services Act (Supervisory Review)
Regulations on an individual or sub-consolidated basis,after duly considering the views and reservations
expressed by the consolidating supervisor:
S.L. 370.15. Provided that if at the end of the time period
referred to in regulation 8 and as transposed in the
Investment Services Act (Supervisory Review)Regulations, any of the European regulatory authorities
concerned have referred the matter to the EBA in
accordance with Article 19 of Regulation (EU) No1093/2010, the competent authority shall defer its
decision and await any decision that the EBA shall take
in accordance with Article 19(3) of the said Regulation.The competent authority shall take its decision in
conformity with the decision of the EBA. The time
period referred to above shall be deemed to be theconciliation period within the meaning of the said
Regulation:
(7) Where the competent authority is not acting
as consolidated supervisor but is responsible for the
supervision of subsidiaries of an EU parent institutionor an EU parent financial holding company or an EU
parent mixed financial holding company, it may, in the
event of any disagreement, refer a dispute to the EBAon its own initiative but prior to a joint decision being
made, provided that no referral shall be made once the
time period specified in regulation 8 has expired.
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(8) (a) The decisions taken by the competent
authority referred to in this regulation shall be set out in
a document containing fully reasoned decisions and
shall take into account the risk assessment, views and
reservations of the competent authority or the otherEuropean regulatory authorities, as applicable,
expressed during the time period referred to in sub-
regulation (3).
(b) The competent authority shall provide
the document referred to above to the European
regulatory authorities concerned and to the EU
parent institution. Where the EBA has beenconsulted, the competent authority shall consider
its advice and explain any significant deviation
therefrom.
(c) The joint decisions referred to in sub-
regulation (1) and the decisions taken by thecompetent authority or European regulatory
authorities in terms of regulation 8 shall be
recognised as determinative and shall be appliedby the competent authority, where applicable.
(9) The decisions referred to in sub-regulation
(1) and any decision taken in terms of sub-regulations
(5) and (6) shall be updated on an annual basis or, in
exceptional circumstances, where the competentauthority is responsible for the supervision of
subsidiaries of an EU parent institution or an EU parent
financial holding company or an EU parent mixedfinancial holding company which are credit institutions,
it may make a written and fully reasoned request to the
consolidating supervisor to update the decision on theapplication of Article 104(1)(a), Article 104b and
Article 105 of the CRD as tr ansposed in the Investment
Services Act (Supervisory Review) Regulations. In
those exceptional circumstances, such update may be
addressed on a bilateral basis between the competent
authority and the consolidating supervisor:
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Amends 
regulation 9 of the principal 
regulations7. Immediately after sub-regulat ion 6 of regulation 9 of the
principal regulations, there shall be added the following new sub-
regulation:
"(6A)  The competent authority shall cooperate closely
with the financial intelligence units and authorities entrusted
with the public duty of supervising the obliged entities listed  in
points (1) and (2) of Article 2(1) of Directive (EU) 2015/849 for
compliance with the said Directive within their respective
competences and shall provide them with information relevantfor their respective tasks under the CRD as transposed in Malte se
Law, the CRR and under Directive (EU) 2015/849, provided thatsuch co-operation and information exchange do not impinge onan on-going inquiry, investigation or proceedings in accordance
with the criminal or administr ative law of the Member State
where the competent authority, financial intelligence unit or
authority entrusted with the public duty of supervising the
obliged entities listed in points (1) and (2) of Article 2(1) of
Directive (EU) 2015/849 is located.".
Amends 
regulation 11 of 
the principal regulations.8. Immediately after sub-regulation (1) of r egulation 11 of the
principal regulations, there shall be added the following new sub-
regulation:
"(1A) Where, pursuant to regulation 3, the consolidating
supervisor of a group with a parent mixed financial holdingcompany is different from the coordinator determined in
accordance with Article 12 of Directive 2002/87/EC, the
consolidating supervisor and the co-ordinator shall co-operatefor the purpose of applying the provisions of the Act, and any
regulations or Rules made thereunder transposing the
requirements of the CRD, and under the CRR, on a consolidatedbasis. In order to facilitate and establish effective co-operation,
the consolidating supervisor and the co-ordinator shall havewritten co-ordination and co-operation agreements in place.".Provided that, where the competent
authority is the consolidating supervisor, it shall updatethe decisions at the request of the European regulatory
authorities responsible f or the supervision of
subsidiaries of an EU parent institution, or an EU parent
financial company, or an EU parent mixed financial
holding company. The competent authority may address
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Amends 
regulation 20 of 
the principal regulations.9. Sub-regulation (2) of regulation 20 of the principal
regulations shall be substituted by the following:
"(2) Where a mixed financial holding company is subject
to equivalent provisions under the Act and any regulations or
Rules made thereunder transposing the requirements of the CRD,and under Directive 2002/87/EC, in particular in terms of risk-
based supervision, the competent authority may, as consolidatin g
supervisor, after consulting the other European regulatory
authorities responsible for the supervision of subsidiaries, ap ply
only the latter Directive to that mixed financial holdingcompany.".
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Amends 
regulation 20 of 
the principal regulations.9. Sub-regulation (2) of regulation 20 of the principal
regulations shall be substituted by the following:
"(2) Where a mixed financial holding company is subject
to equivalent provisions under the Act and any regulations or
Rules made thereunder transposing the requirements of the CRD,and under Directive 2002/87/EC, in particular in terms of risk-
based supervision, the competent authority may, as consolidatin g
supervisor, after consulting the other European regulatory
authorities responsible for the supervision of subsidiaries, ap ply
only the latter Directive to that mixed financial holdingcompany.".
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