The Malta Financial Services Authority (MFSA) has issued a Circular notifying the financial services industry of the publication, on the 12^th June 2014, of the following directives and regulations in the Official Journal:

1. Markets in Financial Instruments Directive II [Directive 2014/65/EU] (MiFID II) and Markets in Financial Instruments Regulation[Regulation (EU) No 600/2014] (MiFIR).

The transposition of the Directive into local law must be completed by the 3^rd July 2016. MiFID II and MiFIR will apply as of the 3^rd January 2017.

2. Market Abuse Directive II [Directive 2014/57/EU] (MAD) and Market Abuse Regulation[Regulation (EU) No 596/2014] (MAR).

MAD and MAR will enter into force on the 2^nd July 2014 and Member States are required to transpose the Directive by the 3^rd July 2016.

Summarily, the salient provisions of the MiFID reform broadly consist of:

• The introduction of a market structure framework geared towards closing loopholes and ensuring that trading, wherever appropriate, takes place on regulated platforms. Accordingly, shares and non-equity instruments are subjected to a trading obligation and investment firms operating an internal matching system which executes client orders in shares, depositary receipts, exchange-traded funds, certificates and other similar financial instruments on a multilateral basis are required to be authorised as a Multilateral trading facility (MTF). Moreover, non-equity instruments are also required to trade on a new multilateral trading venue, the Organised Trading Facility (OTF).
• Establishment of a principle of transparency for non-equity instruments such as bonds and derivatives and bolstering of pre- and post-trade transparency regimes to include non-equity instruments.
• Strengthened supervisory powers and a harmonised position-limits regime for commodity derivatives to improve transparency, support orderly pricing and prevent market abuse.
• Non-discriminatory access to trading venues and central counterparties (CCPs).
• Introduction of trading controls for algorithmic trading activities, which will include the requirement for all algorithmic traders to be properly regulated and to provide liquidity when pursuing a market-making strategy.
• Enhanced investor protection achieved by introducing heightened organisational requirements, such as client asset protection or product governance, which also strengthen the role of management bodies and strengthened conduct rules such as an extended scope for the appropriateness tests and reinforced information to clients.
• Harmonisation of administrative sanctions and cooperation.
• Harmonisation of rules relative to granting access to EU markets for firms from third countries.