Market abuse self-assessment for investment services providers

Pursuant to a circular published by the MFSA on 15 November 2022, all investment services providers will need to submit an online self-assessment to determine whether the activities which they carry out fall within the scope of the Market Abuse Regulation (MAR).

Self-Assessment

The self-assessment is mandatory and will need to be submitted online by not later than 16 December 2022. Failure to provide the correct information within the stipulated deadline may be followed up by the MFSA and also taken into consideration when the MFSA carries out its own assessment of whether the company is subject to the Market Abuse Regulation.

The self-assessment questionnaire contains three main sections

• Section A – General Information: Covers the basic information in relation to the company and the individual compiling the self-assessment questionnaire.
• Section B – Overview: Serves to provide the MFSA with a list of financial instruments in which the licensed entity deals in.
• Section C – Self-Assessment: Under this section, a set of questions is included in order to enable the compiler to determine whether the entity in question falls within the scope of MAR.

The following entities need to carry out the self-assessment:

1. AIF Managers
2. Alternative Investment Funds
3. De Minimis AIF Managers
4. Investment Firms
5. Notified Alternative Investment Funds
6. Professional Investor Funds
7. Recognised Private Collective Investment Schemes
8. Retail–Maltese Non-UCITS Schemes
9. Retail–Maltese UCITS Schemes
10. Retail–Overseas Non-UCITS Schemes

Background

The Market Abuse Regulation treats any person professionally arranging or executing transactions as the first line of defence in the fight against market abuse. To this end, article 16 of the Regulation requires “any person professionally arranging or executing transactions” to have arrangements, systems and procedures for the detection and reporting of orders and transactions which may reasonably amount to insider dealing or market manipulation.

In its Q&As on MAR, the European Securities and Markets Authority (ESMA) has confirmed that the reference to a “any person professionally arranging or executing transactions” must be interpreted broadly, and “persons professionally arranging or executing transactions” thus includes buy side firms, such as investment management firms (AIFs and UCITS managers), as well as firms professionally engaged in trading on own account (proprietary traders).

To this end, and as part of its risk-based supervisory activities, the MFSA is collecting data (via the self-assessment tool) which will further assist it in determining whether the activities carried out by each investment services provider fall within the scope of MAR.