CHAPTER 3
MEMBERSHIP OF THE EXCHANGE
Membership
3.00.01 Membership of the Exchange shall consist of persons licensed in terms of the Investment Services Act to carry out the functions of a stockbroker for the purchase and sale of securities quoted on a recognised investment exchange and have been so licensed by the Exchange.
Application for Membership
3.00.02 Subject to the provisions of the Act and the Statute every candidate for admission to Membership must submit an application in writing to the General Manager as set out in Appendix I to this Chapter.
3.00.03 Such application for Membership must be accompanied by an application to authorise at least one trader to carry out trading on the Exchange on behalf of the Member.
3.00.04 The application to authorise a trader/s must be submitted to the General Manager of the Exchange in conjunction with the application for Membership as set out in Appendix II to this Chapter.
3.00.05 Any Member may make further applications in respect of trader/s following the initial application as deemed appropriate.
3.00.06
Under normal circumstances, the
Exchange shall admit to Membership persons who qualify in terms of bye-law
3.00.01, and exceptionally the Central Bank of
3.00.07 The responsibility for the observance of all provisions relating to the Member and his authorised trader/s shall rest jointly and severally with the Directors of such Member.
Notification of pending
applications
3.00.08 Once an application for Membership and /or traders has been received by the Exchange, such application will be notified on the Notice Board of the Exchange in terms of the Statute. Such Notice shall remain posted for the period as stipulated in the Statute within which time any person may make written submissions to the Exchange in respect of such application.
Approval of Applications
for Membership and Trader/s
3.00.09 The Council will consider such applications for Membership and for trader/s within six weeks of the notification date provided that all requirements as outlined below have been satisfied and relevant confirmations have been received from the Competent Authority.
3.00.10 The Council will notify that it has approved such applications as outlined in Appendix III of this Chapter.
3.01.00 Representation of the Member
Each Member must nominate one or more Directors or senior officers of the Member to represent the Member, when communicating with the Exchange, whether verbally or in writing, on all matters concerning trading and ancillary matters. All such communication will be dealt with between the General Manager and the nominated individual/s.
3.02.00 Compliance Officer
Each Member must appoint a Compliance Officer to deal with the Member’s regulatory issues and in particular continuing obligations. Communication on such matters will be between the Compliance Officer and the Compliance Office of the Exchange.
3.03.00 Application Procedure
Application - Membership
3.03.01
An applicant wishing to apply
for Membership must do so on the form as prescribed in bye-law 3.00.02. Such
form including all relevant declarations must be duly signed as appropriate and
must be completed in full by all applicants with the exception of the Central
Bank of
3.03.02 The application for membership must be accompanied by :
(i) an application for the authorisation of at least one trader duly completed and signed;
(ii) appropriate Membership and trader fees in terms of Council Notice 1 [Fees and other Charges];
(iii) any other documentation which the Exchange may require from time to time.
3.03.03 Prior to issuing the appropriate licence the Exchange must receive confirmation that the prospective Member has pledged an amount as may be determined by the Council from time to time, but not less than a minimum of ten thousand Maltese Liri [Lm10,000] by Maltese Government securities, any other Maltese Lira fixed interest security listed on the Exchange or a recognised bank guarantee in favour of the Malta Stock Exchange.
3.03.04 For the purposes of the above bye-law, any Government Security to be used as all or part of the minimum deposit will be valued at 90% of the last quoted market value. Any other fixed interest security used for such purpose may be valued at a lesser percentage than 90%, but not less than 75% of the last quoted price.
Traders
3.03.05 All prospective traders must undergo the requisite training on the Exchange’s current trading system and other related systems and successfully complete the relevant written test prior to authorisation being granted.
3.03.06 Membership will only be granted should at least one of the prospective traders nominated have successfully completed the relevant written test.
3.03.07 Subsequent applications for traders other than those accompanying an application for Membership must be accompanied by the relevant fees and duly signed by representatives of the nominating Member.
3.04.00 Rejected
Applications
Disclosure
3.04.01 Should the Council, following due consideration, reject an application for Membership, the Council shall inform the rejected applicant in writing, giving reasons for such rejection.
3.04.02 An applicant whose application for Membership has been rejected by the Council may not re-apply for membership before the lapse of twelve calendar months from the date of such rejection.
3.04.03 The provisions of bye-laws 3.04.01 and 3.04.02 shall likewise apply to applications to authorise traders.
3.05.00 Resignation
Notification
3.05.01 A Member wishing to resign Membership shall do so in writing to the Council. A notice shall be posted forthwith on the Notice Board of the Borza and shall remain so posted for a period of one calendar month from date of notification.
3.05.02 The Members of the Exchange, including the Member intending to resign shall within the period of notification as stipulated above advise the Council of any outstanding obligations, debts or commitments of the Member intending to resign and of any outstanding dealings and transactions in which such Member may be concerned in connection with his activities as a Member of the Exchange.
3.05.03 A Member shall retain all his obligations and liabilities arising under the Act, the Statute and the Bye-laws unless the Council has discharged such Member therefrom.
3.05.04 In the case of a trader no longer representing a Member on the Exchange, such Member must inform the Council in writing of such occurrence. In such cases, the provisions of Bye-laws 3.05.01 and 3.05.03 shall likewise be applicable to the trader concerned.
Re-admission
3.05.05 The Member who has resigned his Membership may re-apply for admission subject to the conditions applicable to admission of new Members prevailing at the time of re-application.
3.05.06 A Member may re-nominate a trader who has resigned and may re-apply for re-authorisation of such trader subject to the conditions applicable to authorisation of traders prevailing at the time of re-application.
3.06.00 Suspension and Revocation of Membership
3.06.01 The Council shall revoke or suspend Membership should
(i) the Member no longer hold a licence to act as a stockbroker under the Investment Services Act (Cap 370);
(ii) if it is the opinion of the Council, that such Member is no longer a fit and proper person to remain a Member of the Exchange;
(iii) if it is in the opinion of the Council, that the Member no longer fulfils the requirements of, or has failed to satisfy or comply with or has contravened any provisions of the Statute or Bye-laws or in purported compliance with any such provisions has furnished the Council with false, inaccurate or misleading information;
(iv) the Council deem that the Member has acted in a manner which is detrimental to the Exchange, its Members or the public in general; and
(v) the Member be undergoing any criminal investigation.
The Council may also suspend or revoke Membership in any circumstances as may be provided for in the Statute and the Bye-laws.
3.06.02 Suspension shall not be for a period exceeding that stipulated in the Statute.
3.06.03 During such period of suspension the Member and his authorised traders may not continue with the business of stockbroking on the Exchange.
Suspension and revocation of authority granted to a trader
3.06.04 The Council may revoke or suspend the authority granted to a trader if:
(i) it is the opinion of the Council that such trader is no longer a fit and proper person to remain a trader on the Exchange;
(ii) it is in the opinion of the Council that the trader no longer fulfils the requirements of, or has failed to satisfy or comply with or has contravened any provisions of the Statute or Bye-laws or in purported compliance with any such provisions has furnished the Exchange with false, inaccurate or misleading information;
(iii) the Council deems that the trader has acted in a manner which is detrimental to the Exchange, its Members or the public in general; and
(iv) the trader be undergoing any criminal investigation.
The Council may also suspend or revoke authority to a trader in any circumstances as may be provided for in the Statute and the Bye-laws.
3.06.05 Suspension of a trader shall not be for a period exceeding that stipulated in the Statute in respect of Members.
3.06.06 During such period of suspension, the trader may not continue representing the Member having nominated him on the Floor of the Exchange.
Notification
3.06.07 Before suspending or revoking Membership or the authority granted to a trader the Council shall give the Member written notice stating the reasons for such revocation or suspension of Membership or authority granted to a trader.
3.06.08 Notice of revocation or suspension of Membership or authority granted to a trader shall be recorded and posted on the Notice Board of the Exchange.
3.06.09 Revocation of a suspension order issued to a Member or a trader shall be recorded and posted accordingly on the Notice Board of the Exchange.
3.06.10 No Member whose Membership or trader whose authority has been revoked may re-apply for Membership or for authority to trade on behalf of a Member.
Discipline
3.06.11 Where in the opinion of the Council the Member has contravened or failed to comply with the provisions of the Statute and the Bye-laws but should not have his Membership revoked or suspended, the Council may take any other disciplinary measures as provided for in the Statute including public censure or an administrative penalty.
3.07.00 Powers of Investigation
Power to request information
3.07.01 The Exchange shall have the power to investigate all matters relating to trading and ancillary operations to ensure compliance with the Act and the Bye-laws and other relevant rules and regulations and to ensure the orderliness of the market. In the course of such investigations, the Exchange may request any Member or authorised trader
(i) to furnish the Exchange at such place and in such form as it may specify, such information and documentation as it may require;
(ii) to furnish the Exchange with any information or documentation as it may require, verified in such manner as it may specify; and
(iii) to attend before the Exchange, or before a person appointed by it, at such time and place as it may specify to answer questions and provide such information and documentation as it may require.
Right of entry
3.07.02 In the course of any investigation relevant to trading and ancillary operations, the Exchange may authorise any officer, employee or other person to enter the premises occupied by the Member for the purpose of obtaining therefrom the information or documents required or otherwise for the purpose of the investigation and of exercising any of the powers conferred by the relevant rules and regulations.
3.08.00 Members’ Staff
Compliance
3.08.01 A Member shall ensure that all its officers and staff comply with the Act, Statute and Bye-laws.
Register of Members and
Traders
3.08.02 The Exchange shall maintain a Register of Members and their authorised traders in terms of the Statute.
3.08.03 The Member shall inform the Exchange immediately of any change in its Directors and officers as initially submitted in his application for Membership.
3.08.04 Notwithstanding the provisions of the above bye-law the Member shall submit to the Exchange on an annual basis, within one month of end of the financial year of the Member, an updated list of all Directors, officers and employees of the Firm.
3.08.05 A Member shall report immediately to the Exchange any employee who has been suspended or dismissed from its service for dishonesty.
3.09.00 Conduct of Business
Code of Conduct for Members
3.09.01 Members must promote high standards of integrity and fair dealing and should act with due skill, care and diligence in providing a service which he provides or holds himself willing to provide and shall, at all times during the conduct of his business, conform in all respects with the “Code of Conduct for Members” as outlined in Appendix IV to this Chapter.
3.09.02 Non-compliance with any of the provisions laid out in the “Code of Conduct” shall render Members liable to any penalty stipulated in the Statute and Bye-laws.
3.10.00 Restrictions on Members’ Dealing
No permission shall be granted to a Member to bid in his own interest as principal during the first trading session of dealing in a security newly admitted to trading.
3.10.01 The Exchange may continue to withhold permission to deal in such security if it is considered that the market in such security has not yet settled.
3.11.00 Keeping of Records
3.11.01 For the purposes of complying with the provisions of these Bye-laws, every Member shall keep records in sufficient detail to show particulars of its trading activities including :
(i) All monies received and paid by the Member, including money paid to and disbursed from, a clients’ account; and
(ii) all purchases and sales of securities transacted by the Member firm on behalf of clients, the charges and credits arising from such transactions, and the names of the buying and selling clients.
3.11.02 A Member shall retain for a period of not less than ten years all books of accounts and other records required to be kept in pursuance of the foregoing provisions of these Bye-laws.
3.11.03 Where any matter that is intended to be used in connection with the keeping of records, referred to in these Bye-laws is recorded or stored by means of a mechanical device, an electronic device or any other means in an illegible form, a Member who willfully :
(i) records or stores in that device matter that he knows to be false or misleading; or
(ii) destroys, removes or falsifies matter that is recorded or stored in that device; or
(iii) fails to record or store matter in that device with intent to falsify any entry made or intended to be complied, wholly or in part, from that matter
shall be subject to disciplinary action as the Exchange shall think fit. A Member which procures any person to act in any of the above mentioned manner shall be deemed to have violated the bye-law itself and shall be subject to such disciplinary action as the Exchange shall think fit.
3.11.04 Every Member shall make all books of accounts and other records required to be kept in pursuance of the foregoing provisions of the Bye-laws available to the Exchange for inspection or audit by any auditor appointed by the Exchange, when required by the Exchange to do so.
3.11.05 Every Member shall maintain a progressive record of all purchases and sales effected daily as a memoranda record and it shall indicate clearly those purchases paid for by the Member on behalf of a client.
Members’ Clients’ Accounts
3.11.06 A Member shall maintain and keep one or more clients’ accounts at one or more licensed banks designated or evidenced as such into which it shall pay only such amounts which have been received from, or on behalf of, clients for the settlement of purchases of securities.
3.11.07 A Member shall retain in a bank’s clients’ account those amounts due to clients until the amounts are either paid to the clients or in accordance with the clients’ instructions; or until the funds are required to settle the purchase of securities on behalf of clients.
3.11.08 A Member having received monies which must be paid into a bank’s clients’ account in accordance with the foregoing Bye-laws shall do so immediately, or at the latest the following working day.
Members not to make false
or misleading reports
3.11.09 A Member shall not intentionally record or provide the Exchange with any account, return, submission or other information that is false or misleading.
3.12.00 Transitory Provisions
For the purposes of these Bye-laws, individual Members and Accredited Representatives licensed under the Malta Stock Exchange Act 1990 [Cap 345] shall be deemed to be authorised as “traders” under the Act.
3.13.00 Waiver of Bye-laws
The Exchange may waive any of the preceding bye-laws under this Chapter upon approval by the Competent Authority.