Late in January 2021, the Malta Financial Services Authority published amendments to the Conduct of Business Rulebook (the “Rulebook”) targeting the securities sector. The amendments may be summarised as follows:
i. Transactions by retail clients involving subordinated eligible liabilities:
With respect to subordinated eligible liabilities issued on or after the 28th of December 2020, prior to offering such instruments to retail clients, MiFID firms must conduct a suitability test, and this, irrespective of the type of investment service and irrespective of the nature of the transaction in question. This suitability assessment needs to be done in line with the standard set forth in MiFID II and also needs to be documented by the respective MiFID firm.
MiFID firms are also encouraged to note that, in the event that it is deemed that a specific product is suitable for a retail client, if the financial instrument portfolio of that retail Client does not, at the time of the purchase, exceed EUR 500,000, the MiFID firm shall ensure, on the basis of the information provided by the client, that at the time of the purchase, the initial investment amount invested in one or more liabilities instruments considered as Subordinated Eligible liabilities, is at least EUR 10,000. When noting the value of the portfolio, MiFID firms shall include cash deposits and financial instruments but shall exclude and financial instruments that have been given as collateral.