Part
I
6.01.01
The
Malta Stock Exchange (the Operator) shall establish and maintain a system (MaltaClear) for the purpose of clearing and settlement of
transactions in financial instruments admitted to the Official List of the
Malta Stock Exchange, transactions traded on the MATS as well as any other
financial instruments’ transactions as may be specified and agreed to by the Operator.
6.01.02
The
Operator shall ensure that the necessary financial support or
guarantees, including but not limited to the provision of overdraft
arrangements, settlement guarantee funds and collateralised securities in its
favour, are in place in order to maintain the financial integrity and continued
operations of MaltaClear.
6.01.03
All
transactions effected on MATS shall be settled through
MaltaClear. Clearing and settlement of any
transactions in financial instruments admitted for trading on the Malta Stock
Exchange but that are not effected on MATS may also be settled through MaltaClear if so agreed to by the transacting parties and
accepted by the Operator.
6.01.04
All
transactions complying with the criteria established in 6.01.03 above shall be
considered to be MaltaClear
transactions.
6.01.05
The Operator shall ensure that any data relating to MaltaClear Participants or their Executing Banks shall
remain confidential. However, the
Operator shall not be prohibited from publishing any
aggregated data or statistics.
6.01.06
The Operator shall make all possible contingency arrangements
it deems necessary, including the suspension or replacement of any of the
arrangements contained in these Bye-laws and
Appendices, by manual procedures and/or alternative automated procedures, in
order to ensure that settlement finality is achieved when a failure occurs in
any of the arrangements described in these Bye-laws and the Appendices.
Ownership of
Financial Instruments
6.01.07
The transfer of ownership of financial instruments
dealt in MaltaClear
transactions shall be in accordance with the provisions of “Transfer of Listed
Financial Instruments Regulations, 2004” (LN 287 of
2004 as amended by Act IV of 2005) and is complete for all purposes of law upon
the payment, in full and final settlement of the consideration where such
payment is effected on Settlement Day, through a Payment System approved and
authorised by the Central Bank of Malta.
6.01.08
The
Payment Systems approved and authorised by the Central Bank of Malta for the
purpose of funds settlement of MaltaClear
transactions as well as the procedures for such settlement for each of the said
Payment System are as detailed in Part II of this Chapter.
Delivery versus
Payment (DVP)
6.01.09 All transfers of MaltaClear transactions shall be done on a DVP basis where the final settlement of financial instruments occurs if the final settlement of funds occurs.
6.01.10
Financial instruments’
settlement of MaltaClear transactions shall be effected gross on a trade-by-trade basis on
Settlement Day within security accounts held at the MSE’s CSD or on financial instruments
accounts held at other CSDs where specific agreements
between the respective CSDs have been entered into.
6.01.11
Funds
settlement of MaltaClear transactions and the net amounts arising from
these transactions, calculated in accordance with Bye-law 6.01.13, shall be
effected through, and in accordance with the rules, of any of the authorised Payment
Systems indicated in Part II and of this Chapter.
6.01.12
Immediately following the close
of a MATS Trading Session and upon the submission by MATS of the relevant data, MaltaClear
shall calculate for each Participant the net payment due or owed on Settlement
Date.
6.01.13
The net amount is calculated by
converting the considerations of each Participant’s transactions within the said
Trading Session into one claim or
one obligation of claims and obligations resulting from such transactions with
the result that only the net claim can be demanded or the net obligation be
due.
6.01.14 Funds settlement for individual MaltaClear transactions on a gross, trade-for-trade, basis may also be effected through any of the MaltaClear Payment Systems shown in Part II of this Chapter, if so agreed to by the transacting parties and accepted by the Operator. The consideration of such transactions shall be excluded from the calculation of the net amounts as computed in accordance with Bye-law 6.01.13 above.
6.01.15
Should a Participant fail to ensure that his
relevant Settlement Account is appropriately funded by the cut-off time as
stipulated in the Bye-Laws of the relevant Payment System as shown in Part II
of this Chapter, the Operator reserves the right to draw on any facilities and
guarantees made available in accordance with Bye-law 6.01.02 in order to ensure
that finality of settlement is achieved.
6.01.16 The defaulting Participant shall be liable to pay relevant bank charges and any other penalties that the Operator may deem appropriate in terms of the ‘Penalties’ Bye-laws below.
6.01.17 The Exchange reserves the right to call in the security deposited in terms of Article 3(iii)(c) of the Statute appended to the Financial Markets Act (Cap. 345 of the Laws of Malta) or any other such deposit in the case where the MaltaClear Participant is an authorised intermediary, in part or in full, in order to effect settlement.
6.01.18 Should a MaltaClear participant not regularise the position of his Settlement Account and remains in default, the Operator may suspend or even terminate his participation in MaltaClear in terms of ‘Suspension and termination of MaltaClear Participant’ Bye-laws below.
Settlement
Cycle
6.01.19 All MaltaClear transactions settle on a rolling settlement cycle of not more than (T+3), where “T” is trading day and “3” indicates three normal business days following trading day during which funds settlement can take place, and with shorter settlement periods if so agreed to by the transacting parties and with the Operator.
6.01.20 The Operator shall publish at least annually by means of Council Notice, the Settlement Calendar and updates thereof in respect of MaltaClear. MaltaClear shall operate on all days when the Operator is open for business in terms of the Settlement Calendar.
Registration
6.01.21
The entries in the register of holders as held at the
CSD will take place on Settlement Day when, upon confirmation from MaltaClear that settlement finality has been achieved, the
CSD shall forthwith amend the registers of the financial instruments to reflect
the MaltaClear transactions.
Point of entry into Maltaclear
6.01.22
Pursuant to Paragraph 8 of CBM Directive No. 2, for
the purposes of Maltaclear transactions, the moment of entry of a transfer
order into Maltaclear shall be deemed to be :
(i)
the point of execution of a trade on MATS for
on-exchange transactions; and
(ii)
the point of
validation of a transaction for off-exchange transactions.
6.01.23 The provisions of CBM
Directive No. 2 shall apply in relation to Maltaclear transactions from the
moment of point of entry
of a transfer order into Maltaclear as defined in bye-law 6.01.22
above.
Blocking of Sold Balances -
MATS Transaction
6.01.24 Upon confirmation of a MATS Trade, the CSD shall immediately block the appropriate amount of listed financial instruments registered in the relevant seller’s MSE Account thereby effectively preventing the relevant amount of transacted securities from being used for further disposal or charging by title of usufruct or as collateral by pledge or otherwise for the period of the settlement cycle in MaltaClear.
6.01.25 Financial instruments blocked through a MATS Trade shall not preclude a seller from enjoying the rights of or interests in the relevant blocked financial instruments until final settlement.
Buyer’s Right of Forward
Transmission - MATS Transaction
6.01.26 At the close of the MATS trading session in which a purchase of financial instruments has been executed, the CSD shall record relevant amount of financial instruments in the buyer’s MSE account indicating the acquisition of the right of forward transmission. The buyer may re-sell and alienate the said acquired right in the MATS trading session following the MATS trading session in which the said purchase of financial instruments has been executed.
6.01.27 In addition, until final settlement a buyer shall only have acquired a corresponding right for the forward delivery of the relevant financial instruments if he discharges his payment obligation on Settlement Day.
Participation in MaltaClear
6.01.28 A person will be considered a Participant of MaltaClear, and all the authorised Payment Systems shown in Part II, by the Operator if he satisfies all of the following criteria:
(i) is a Member of
the Malta Stock Exchange in terms of Article 3 of the Statute appended to the
Financial Markets Act (Cap.345 of the Laws of Malta)
or an authorised intermediary in terms of Council Directive 93/22/EEC of the
(ii) maintains an active bank account with one or more Executing Bank eligible as participant in the approved Payment Systems indicated in Part II of this Section. These accounts shall be maintained by the Participant exclusively for MaltaClear purposes and the details of these accounts shall be communicated in writing to the Operator;
(iii) in the event of termination, suspension or in any way inactivation of any of these accounts the Participant shall promptly advise the Operator in writing of such fact. In the case where the Participant had indicated only one settlement account in a particular Payment System the Participant shall forthwith make provisions for the opening of a suitable alternative;
(iv) accepts full responsibility for the discharge of all obligations arising from participation in MaltaClear and must comply with all the relevant obligations and operational procedures as laid down in the MaltaClear rules;
(v) gives appropriate authorisation to the Operator, where required by the specific Payment System shown in Part II, in accordance with the ‘Direct Debit Agreement’ attached in Appendix I to this Chapter, to debit his Settlement Accounts.
6.01.29 Notwithstanding Bye-law 6.01.28 above a person may be considered by the Operator to be a Participant of MaltaClear, and all the authorised Payment Systems shown in Part II, if he satisfies the participation criteria of any other payment system approved by the Central Bank of Malta in accordance with the directives issued in terms of the Central Bank of Malta Act (Cap.204).
Responsibilities of Participants
6.01.30 MaltaClear Participants shall be responsible for complying at all times with MaltaClear rules.
6.01.31 MaltaClear participants shall assume full responsibility for any consequences arising from lack of coverage of liquidity resources or financial instruments. Furthermore, MaltaClear Participants shall be responsible for remitting to the seller, as soon as possible, the consideration received through his Executing Bank in respect of settlement of MaltaClear transactions.
Suspension and termination of MaltaClear
Participant
6.01.32 The Operator may, in its absolute discretion, suspend with immediate effect a Participant from further participation in MaltaClear on account of:
(i) the suspension from Membership of the Exchange of a Participant or of any other licence or authorisation that is required under any relevant law for the said participant to carry on the business of a Member of the Exchange or of an authorised intermediary, or
(ii) non-compliance with any one or more of the requirements for such participation as set out by the Operator.
6.01.33 Notification of such suspension for any of the reasons given in Bye-law 6.01.32 above shall be communicated in writing to the MaltaClear Participant who shall have five (5) working days from the date of notification of suspension to apply in writing to the Council giving his reasons why the Operator should reconsider its decision.
6.01.34 The Council shall reply to any such application as mentioned in Bye-law 6.01.33 above, within five (5) working days.
6.01.35 The Council’s determination of the application for reconsideration submitted in terms of Bye-law 6.01.33 above shall be in writing and shall be served on the applicant.
Voluntary termination of
participation
6.01.36 Subject to any obligations already assumed in respect of other Participants, a MaltaClear Participant may terminate his participation in MaltaClear upon giving the Operator three (3) months advance written notice of such intention to terminate participation. Such termination shall not, however, become effective until full and final settlement of any obligations already assumed by the retiring Participant under the MaltaClear rules.
6.01.37
Upon notification of a
Participant’s intention to terminate his participation
the Operator shall immediately notify all other current Participants, the MFSA
and the Central Bank of
6.01.38 Termination of participation shall not effect or prejudice any liability for debts and dues or any obligation incurred in terms of the rules of MaltaClear.
6.01.39 In the case of a Participant’s voluntary termination of participation, the Council shall have the right without prejudice to any other rights available to it at law, to retain or call in the security deposited in terms of Article 3 (iii) (c ) of the Statute appended to the Financial Markets Act (Cap.345 of the Laws of Malta) or any other security deposited by an authorised intermediary and to place such monies or other sums realised thereby to such reserve or other account as the Council may deem appropriate and use any such monies to discharge the liabilities of the said Participant towards other participants and any remaining balances shall be refundable to the said Participant.
Penalties
6.01.40 The Operator shall impose such penalties on MaltaClear Participants by way of sanctions against any breach of the relevant rules as may be presented.
6.01.41 Notification of any such penalty shall be communicated to the MaltaClear Participant in writing who shall have five (5) working days from date of such notification to apply for reconsideration by the Council. An application for reconsideration shall mutatis mutandis follow the procedure as outlined in Bye-laws 6.01.33 and 6.01.35 above.
6.01.42 Should the MaltaClear Participant not make such application as outlined in Bye-law 6.01.40 above the penalty shall be considered to have been accepted by the participant.
6.01.43 In addition to the above, the Council shall have the power without prejudice to any other rights available to it at law, to retain or call in the security deposited in terms of Article 3 (iii) (c) of the Statute appended to the Financial Markets Act. (Cap. 345 of the Law of Malta) or any other security deposited by an authorised intermediary and to place such monies or other sums realised thereby to such reserve or other account as the Council may deem appropriate and to use such monies to discharge any liabilities arising from any breach of these rules by a clearing and settlement system Participant and any remaining balance should be refundable to the said Participant.
Part II
Approved Payment Systems
Section
A
LmClear
Funds Settlement of MaltaClear transactions
Denominated in Maltese Lira through MaRIS (LmClear)
6.02.01 The Operator shall set-up, maintain and operate a Payment System (LmClear).
6.02.02 This Section, together with Bye-laws contained in Part I of this Chapter and the relevant Appendices, shall be the formal arrangement between the Operator, the Settlement Agent, Participants and their Executing Banks and shall constitute the common rules and standardised arrangements for the settlement of MaltaClear transactions denominated in Maltese Lira between Participants.
6.02.03 Each MaltaClear Participant shall maintain one or more active accounts with one or more banks (Executing Banks), into which funds are deposited by either the Participant or the Operator for the sole purpose of Settlement of MaltaClear transactions as defined in Bye-law 6.01.03 and denominated in Maltese Lira. These account/s shall be designated ‘Name of MaltaClear Participant – Lm Settlement Account’.
6.02.04 An Executing Bank appointed by the Participants in accordance with Bye-law 6.02.03 must be a participant of MaRIS, a RTGS system operated by the Central Bank of Malta (the Settlement Agent), and must comply with the eligibility criteria and other conditions as outlined in the operating rules of MaRIS.
6.02.05 An Executing Bank appointed by the Participants in accordance with Bye-Law 6.02.03 must have entered into an ‘Executing Bank Direct Debit Agreement’ with the Operator as shown in Appendix II to this Chapter.
6.02.06 The Operator shall participate in MaRIS and shall open an MSE MaltaClear Settlement Account within MaRIS for the sole purpose of deposit and withdrawal of funds in respect of settlement of MaltaClear transactions as defined in Bye-law 6.01.03 and denominated in Maltese Lira.
6.02.07 Settlement of funds between Participants of all MaltaClear transactions shall be deemed to be final upon the transfer, in full and final settlement within MaRIS, of the relevant funds between the Settlement Accounts held by the Executing Banks and the Operator within MaRIS.
6.02.08 The MaltaClear participant shall authorise the Operator to debit his Settlement Account/s held with the Executing Bank/s by means of a “Participant’s Direct Debit Authorisation Form” as shown in Appendix I to this Chapter.
6.02.09
The
Operator shall inform each MaltaClear Participant of
the relevant balances to be settled resulting from the day’s transactions and
also of the Settlement Accounts to be utilised in accordance with the
procedures and timetable as laid down by the Exchange.
6.02.10
Should
a MaltaClear Participant require that a different
Settlement Account other than that indicated be used for settlement or should
such Participant require that more than one account be used, he shall inform
the Operator in accordance with the prevailing facilities the Operator has put
in place.
6.02.11 Participants shall ensure that, by the cut-off time on Settlement Day as indicated in the timetable set by the Exchange from time to time funds deposited by them into their Settlement Account/s are cleared funds in such a way as to enable the transfer into the Operator’s MaRIS Settlement account to be affected.
6.02.12 The Operator of MaltaClear shall ensure that all LmClear operating times are in line with those as stipulated in the MaRIS Operating Rules.
Section
B
NonLmClear
Funds Settlement of MaltaClear
Transactions in Non-Maltese Lira Currencies through CBM Accounts (NonLmClear)
6.03.01 The Operator shall set-up, maintain and operate a Payment System (NonLmClear).
6.03.02 This Section, together with Bye-laws contained in Part I of this Chapter and the relevant Appendices, shall be the formal arrangement between the Operator, the Settlement Agent, Participants and their Executing Banks and shall constitute the common rules and standardised arrangements for the settlement of MaltaClear transactions denominated in a currency other than Maltese Lira between Participants.
Opening, Maintenance
and Operations of Settlement accounts.
6.03.03 The Operator shall open multiple MaltaClear Settlement Accounts within the Central Bank of Malta (the Settlement Agent) for those currencies other than Maltese Lira in which settlement of MaltaClear transactions as defined in Bye-law 6.01.03 shall be effected. These accounts shall be operated by the Operator for the sole purpose of deposit and withdrawal of funds in respect of settlement of MaltaClear transactions as defined in Bye-law 6.01.03 and denominated in currencies other than Maltese Lira.
6.03.04 For each currency denomination, MaltaClear Participants shall maintain an active account with one of the Executing Banks. Funds into such accounts may be deposited by either the Participant or the Operator. These accounts shall be opened for the sole purpose of Settlement of MaltaClear transactions as defined in Bye-law 6.01.03 and denominated in a currency other than Maltese Lira and shall be designated ‘Name of MaltaClear Participant – Currency Settlement Account’.
6.03.05 In accordance with the procedures as laid down by the Exchange from time to time, the Operator shall issue the necessary instructions to Participants and the Settlement Agent in order to ensure that the transfer of funds between the respective Settlement Accounts are completed up to or on Settlement Day.
Payment of Net Amount
Due by Participants
6.03.06 The Operator shall forward to the Participants, where applicable, instructions detailing the value date, amount due, currency and account numbers to be credited in respect of settlement of MaltaClear transactions. The Participants are to pass on these instructions to their respective Executing Banks in order that the Operator’s Settlement Account/s are credited with the relevant settlement amount/s in those currencies by cut-off time on Settlement Day.
6.03.07 Participants shall ensure that, by the cut-off time on Settlement Day as laid down by the Exchange from time to time, the funds in the respective currency deposited into their Settlement Account/s are cleared funds in such a way as to enable the transfer into the Operator’s Settlement Account within the Central Bank.
Payment of Net
Amounts Owed to Participants
6.03.08 The Operator shall issue instructions to the Settlement Agent to debit the Operator’s Settlement Account/s and to credit the Settlement Accounts of the Participants held with their Executing Banks in accordance to the procedure and timetable as laid down by the Exchange from time to time.
Settlement Finality
6.03.09 Settlement of funds in the respective currencies between Participants of all MaltaClear transactions shall be deemed to be final upon confirmation of receipt of the relevant funds within the Settlement Account/s held by the Operator at the Central Bank of Malta.
Section C
6.04.01 The Operator shall set-up, maintain
and operate a Payment System (TBClear).
6.04.02
This
Section, together with the Bye-laws contained in Part
I of this Chapter and the relevant Appendices and Part II, Section A, shall be
the formal arrangement between the operator, the Settlement Agent, Participants
and their Executing Banks and shall constitute the common rules and standardised
arrangements for the settlement of treasury bill transactions.
Provided that bye-laws 6.01.26 and 6.01.27 and 6.02.09 shall not apply.
6.04.03 Funds settlement for individual MaltaClear transactions in treasury bills will take place through TBClear on a gross, trade-for-trade basis.
6.04.04 The settlement cycle in respect of TBClear is T+0 where trading day and settlement day are the same.
6.04.05 All transactions settled through TBClear shall be settled on a DVP basis where final settlement occurs if final settlement of funds occurs.
6.04.06 The Operator shall inform each MaltaClear Participant of the relevant gross amounts to be settled resulting from Treasury Bill transactions to be settled through TBClear after each and every trade so effected. The timetable as laid out by the Exchange from time to time shall apply for settlement through TBClear.
6.04.07 Should a TBClear Buying Participant not settle any of the Treasury Bill transactions in accordance with the procedures and timetable as laid down by the Exchange from time to time within TBClear, the Selling Participant will be informed that the relevant transaction has not been settled and the volume of Treasury Bills of the seller which had been previously blocked in accordance with bye-law 6.01.24 will be unblocked and will be free to trade.
6.04.08 Payments received after the cut-off time as defined by the Exchange, will not be considered for settlement of trades. These monies will be refunded back to the Participant’s executing bank. MaltaClear will endeavour to refund any payments received after the cut-off time on the same day.
6.04.09 The provisions of bye-laws 6.04.07 and 6.04.08 above are without prejudice to the obligations entered into between the buyer and the seller in respect of the trade removed from within TBClear.
Penalties
6.04.10 In the case of any failed settlement as outlined in bye-law 6.04.07 above, the Exchange shall impose the following penalties:
(i) first instance of failed settlement by a TBClear Participant– Lm 1000 penalty and suspension from TBClear until such fine is settled;
(ii) second instance of failed settlement by a TBClear Participant in same calendar year – Lm2000 penalty and suspension from TBClear until such fine is settled;
(iii) third instance of failed settlement by TBClear Partiicpant in same calendar year – Lm2000 penalty and revocation of participation in TBClear; and
(iv) any other charges as deemed appropriate.
6.04.11 The application of the penalties as outlined in bye-law 6.04.11 are without prejudice to the applicability of bye-laws 6.01.32 – 6.01.35 and bye-laws 6.01.40 – 6.01.43.