Investment Services Act (Cap. 370), article 34

34. Where the parent undertaking of an investment firm licensed under this Act is a mixed-activity holding company, the compete nt authority may supervise transactions between such investment fi rm and the mixed-activity holding compa ny and the subsidiaries of the latter, and require the said investment firm to have in place adequate risk management processes and interna l control mechanisms, including sound reporting and accounting procedures to identify, measure, monitor and control those transactions. Amended by: L.N. 46 of 1999; XVII. 2002.154; XIII. 2004.80. Substituted by: XX. 2007.82. Amended by: L.N. 251 of 2013; L.N. 147 of 2014; XXXI. 2017.66. FIRST SCHEDULE (Article 2) Investment Services and Activities 1. Reception and Transmission of Orders in relation to one or more instruments The reception from a p erson of an order to buy, sell or subscri be for instruments and the transmission of that order to a third p arty for execution. Substituted by: XXXI. 2017.66. 2. Execution of orders on behalf of clients Acting to conclude agreements to buy or sell one or more instruments on behalf of clients and includes the conclusion of agreements to sell instruments issued by an investment services licence holder or a credit institution at the moment of their issuance. 3. Dealing on own account Trading against proprietary capital resulting in conclusion of transactions in one or more instruments. 4. Management of Investments Managing or agreeing to manage assets belonging to another person if those assets consist of or include one or more instru ments 74 CAP. 370.] INVESTMENT SERVICES or the arrangements for their management are such that the pers on managing or agreeing to manage those assets has a discretion to invest any of those assets i n one or more instruments. Cap. 403. Management of Investments may al so constitute the selection or agreement to select, on a discretionary basis, instruments by reference to which benefits are w holly or partly payable under a contract of insurance falling within class III - linked long te rm of the Second Sch edule to the Insurance Business Act . Collective portfolio management of assets, belonging to a colle ctive investment scheme, where the arr angements for their management are such that the person managing or agreeing to manage those asset s has discretion to invest in any mova ble and, or immovable property. 5. Trustee, Custodian or Nominee Services (a) Acting as trustee, custodian or nominee holder of an instrument, or of the assets represented by or otherwise connected with a n i n s t r u m e n t , w h e r e t h e person acting as trustee, custodian or nominee holder is so doing as part of his providing any investment service in paragraphs 1, 2, 3, 4 or 6 of this Schedule; Cap. 331. Provided that for the purposes of this sub-paragraph any person who is authorised or otherwise exempt from authorisation in the terms of article 43 or 43A of the Trusts and Trustees Act s h a l l n o t b y v i r t u e o f holding such assets be required to have a licence in terms of this sub-paragraph if such person does not provide an investment service and delegates all activities which are invest ment services in terms of this Act to a person who is licensed to provide such services; or (b) Holding an instrument or the assets represented by or otherwise connected with a n instrument as nominee, where the person acting as nominee is so doing on behalf of another person who is providing any investment service in this Schedule or on behalf of a client of such person, and such nominee holding is carried out in relation to such investment service: Provided that for the purp oses of this paragraph any person who is authorised or otherwise exempt from authorisation in the terms of article 43 or 43A of the Trusts and Trustees Act shall not by virtue of holding such assets be required to have a licence in terms of this Act. (c) Acting as trustee or custodian in relation to a collective investment scheme. 6. Investment Advice Giving, offering or agreeing to give, to persons in their capacity as investors or potential invest ors or as agent for an investor or potential investor, a personal recommendation in respect of one or more transactions relating to one or more instruments. INVESTMENT SERVICES [CAP. 370. 75 For the purposes of th is paragraph, a "personal recommendation" shall mean a recommendation pres ented as suitable for the perso n to whom it is addressed, or which is based on a consideration o f the circumstances of that person, and must constitute a recommendation to take one of the following steps: (a) to buy, sell, subscribe for, exchange, redeem, hold or underwrite a particular instrument; (b) to exercise or not to exercise any right conferred by a particular instrument to buy, sell, subscribe for, exchange, or redeem an instrument; Cap. 403. (c) to select one or more instruments by reference to which benefits are wholly or partly payable under a contract of insurance falling within the meaning of class III - ‘linked long term’, of the Second Schedule to the Insurance Business Act . A recommendation is not a personal recommendation if it is issued exclusively through distribution channels or to the publ ic. 7. Underwriting of instruments a nd, or placing of instruments on a firm commitment basis The underwriting or placing of instruments such that the person providing the service assumes the risk of bringing a new securi ties issue to the market by buying the issue from the issuer thereby guaranteeing the sale of a certa in number of shares to investor s 8. Placing of Instruments wit hout a firm commitment basis The marketing of newly-issued s ecurities or of s ecurities which are already in issue but not listed, to specified persons and w hich does not involve an offer to the public or to existing holders of the issuer’s securities’ - without ass uming the risk of guaranteein g the sale of a certain number of shares by buying the relative secur ities from the issuer. 9. Operation of a Multilateral Trading Facility The operation of a multilateral system which brings together multiple third party buying and selling interests in instrument s - in the system and in accordance with non-discretionary requirement s - in a way that results in a contract. 10. The reception, transmission, and submission of a bid relating to emission allowances The reception, transmi ssion, and submission of a bid by a perso n on any auction platform which auc tions emission allowances with in the meaning of Commission Regulation (EU) No 1031/2010 of 12 November 2010 on the timing, administration and other aspects o f auctioning of greenhouse gas e mission allowances pursuant to Directive 2003/87/EC of the European Parliament and of the Council establishing a scheme for greenhouse gas emissions allowances trading within the C ommunity, as may be amended from time to time. 76 CAP. 370.] INVESTMENT SERVICES Added by: XXXI. 2017.66. 11. Operation of an Organised Trading Facility The operation of an OTF whereby multiple third-party buying and selling interests in bonds, structured finance products, em ission allowances or derivatives are ab le to interact in the system in a way that results in a contract. Amended by: L.N. 191 of 1998; XVII. 2002.155; L.N. 318 of 2006. Substituted by: XX. 2007.83. Amended by: XXXI. 2017.67. SECOND SCHEDULE (Article 2) Instruments 1. Transferable Securities. Those classes of securities which are negotiable on the capital market and include: (a) shares in companies and other securities equivalent to shares in companies, partner ships or other entities, and depository receipts in respect of shares; (b) bonds or other forms of securitised debt, including depository receipts in res pect of such securities; (c) any other securities giving the right to acquire or sell any such transferable securiti es or giving rise to a cash settlement determined by reference to transferable securities, currencies, in terest rates or yields, commodities or other i ndices or measures. 2. Money Market Instruments. Those classes of instruments which are normally dealt in on the money market, such as treasury b ills, certificates of deposit a nd commercial papers and excluding instruments of payment. 3. Units in collective investment schemes. 4 Options, futures, swaps, forward rate agreements and any other derivative contracts relating to securities, currencies, interest rates or yields, emission allowances or other derivative instru ments, financial indices or financial measures which may be settled physically or in cash. 5. Options, futures, swaps, forwards and any other derivative contracts relating to commodities that must be settled in cash or may be settled in cash at the option of one of the parties othe r than by reason of default or o ther termination event; Cap. 345. 6. Options, futures, swaps, and any other derivative contracts relating to commodities, that can be physically settled provide d that they are traded on a regulated market, within the meaning of th e Financial Markets Act a Multilateral Trading Facility, or an Organised Trading Facility, except for wholesale energy product s INVESTMENT SERVICES [CAP. 370. 77 traded on an Organised Trading Facility that must be physically settled; 7. Options, futures, swaps, forwards and any other derivative contracts relating to commoditie s, that can be physically settl ed, are not for commercial purposes, are not included in article 6 of this Schedule, and, which have the characteristics of other derivative instruments. 8. Derivative instrum ents for the transfer of credit risk. 9. Rights under a contract for differences or under any other contract the purpose or intended purpose of which is to secure a profit or avoid a loss by refere nce to fluctuations in the valu e or price for property of any description or in an index or other f actor designated for that purpose in the contract. Substituted by: XXXI. 2017.67. 10. Options, futures, swaps, forward rate agreements and any other derivative contracts rela ting to climatic variables, frei ght rates or inflation rates or other official economic statistics that must be settled in cash or may be settled in cash at the option of one of the p arties other than by reason of default or other termination event, as well as any other derivative contracts re lating to assets, rights, obli gations, indices and measures not otherwi se mentioned in this Schedule, which have the characteristics of other derivative financial instrume nts, having regard to whether, inter alia , they are traded on a regulated market, OTF, or an MTF; 11. Certificates or other instr uments which confer property rights in respect of any instrume nt falling within this Schedul e. 12. Foreign exchange acquired or held for investment purposes. Added by: XXXI. 2017.67. 13. Emission allowances consisting of any units recognised for compliance with the requirements of Directive 2003/87/EC (Emissions Trading Scheme). Added by: XXXI. 2017.68. THIRD SCHEDULE (Article 2) Ancillary Services 1. Safekeeping and administra tion of financial instruments for the account of clients, including custodianship and related services such as cash, collateral management and excluding maintaining securities accounts at the top tier level; 2. Granting credits or loans to an investor to allow him to carry out a transaction in one or more financial instruments, w here the firm granting the credit or loan is involved in the transac tion; 3. Advice to undertakings on capital structure, industrial strategy and related matters and advice and services relating t o mergers and the purchase of undertakings; 4. Foreign exchange services where these are connected to the 78 CAP. 370.] INVESTMENT SERVICES provision of investment services; 5. Investment research and financial analysis or other forms of general recommendation relati ng to transactions in financial instruments; 6. Services related to underwriting; 7. Investment services and act ivities as well as ancillary services of the type included under Section A or B of Annex 1 related to the underlying of the derivatives included under poi nts (5), (6), (7) and (10) of Section C of MIFID where these are connected to the provision of investment or ancillary services.