Industry Update /
Ganado Advocates

MFSA supervisory priorities for the local capital markets in 2023

April 10, 2023

On 2nd March 2023, the MFSA published its supervisory priorities for 2023 which are aligned with the strategic objectives set out in the MFSA strategic statement which was also recently published. The MFSA has outlined and re-emphasised three main ongoing supervisory priorities which are deemed to be critical to its operations, namely: governance, risk and compliance; financial crime compliance; and consumer protection and education. In its supervisory priorities for 2023 document, the MFSA also sets out its high-level cross-sectoral supervisory themes applicable across the entirety of the MFSA’s supervisory functions, these are: resilience of supervised entities; digital finance and sustainable finance.The latter is especially prevalent in the capital markets sphere where there is a push both at ESMA and ESA level towards achieving a robust regulatory framework for this sector, which drive is also being closely followed by the MFSA especially in the area of green bonds. In terms of high-level supervisory priorities for the local capital markets, the MFSA intends to focus on monitoring the financial soundness of listed entities and ensuring that the necessary transparency disclosures on the matter are being made as necessary.From an admissibility to listing perspective, the MFSA’s focus remains on the assessment of the financial soundness of applicants, specifically in their review of the assumptions underlying projections and sensitivity analysis that should serve to ensure applicants would be well prepared to face any uncertainties which may arise. In terms of ongoing supervision of listed entities, the MFSA is continuing its work in line with ESMA’s European common enforcement priorities of the 2022 annual financial reports and maintains an open and ongoing dialogue with listed entities.Following the introduction of DORA, from a market infrastructures perspective, the MFSA shall be working on amending and introducing the necessary legal provisions for the implementation of such framework as well as building on previous supervisory checks relevant to this sector. From a digital finance perspective, the MFSA is in discussions with practitioners on potential developments in relation to crowdfunding platforms and DLT market structures.In terms of sustainable finance in the capital markets sphere, the MFSA is placing emphasis on the scrutiny of sustainability related disclosures. Moreover, the MFSA is monitoring implementation of the taxonomy by entities falling within the scope of Article 8 thereof and the relevant Delegated Acts, as well as following developments relating to the Corporate Sustainability Reporting Directive.The full detail of the MFSA’s 2023 supervisory priorities can be accessed here.