FINANCIAL SERVICES (MARKETS IN FINANCIAL …

1 FINANCIAL SERVICES (Markets in FINANCIAL instruments ) 2006-32. FINANCIAL SERVICES (MARKETS IN FINANCIAL . instruments ) ACT 2018. Principal Act Act. No. 2006-32 Commencement Assent Amending Relevant current Commencement enactments provisions date LN. 2010/007 ss. 2(1) & (3), 10(5) to (9), 10A & 10B. 2012/173 ss. 2, 6(9), 8(1) & (2), 15(1), 23(5)(b), 25(1), (3) & (3A), 27(4) & (4A), 31(3A), 36(8) & (8)(e), 41(3) & (4), 42(7A), 47, 48(1)(b) & (7), 59(3) &. (4), 54(1A), (4) & (5), 56(a) & (b) LN. 2017/135 Long Title, ss. 1 120, & 2 English sources: None cited Transposing: Directive 85/611/EEC Directive 2004/39/EC. Directive 92/49/EEC Directive 2004/109/EC.

2 Directive 93/6/EEC Directive 2005/60/EC. Directive 93/22/EEC Directive 2005/68/EC. Directives 98/26/EC Directive 2006/48/EC. Directive 2000/12/EC Directive 2006/49/EC. Directive 2002/83/EC Directive 2007/44/EC. Directive 2002/87/EC Directive 2009/65/EC. Directive 2003/6/EC Directive 2010/78/EU. Directive 2003/41/EC Directive 2014/65/EU. Directive 2003/71/EC. EU Legislation/International Agreements involved: Government of Gibraltar ( ). 2006-32 FINANCIAL SERVICES (Markets in FINANCIAL instruments ). ARRANGEMENT OF SECTIONS. Section PART 1. PRELIMINARY. 1. Title and commencement. 2. Interpretation. 3. Scope. 4. Exemptions. 5. Exempt local firms.

3 PART 2. AUTHORISATION AND OPERATING CONDITIONS FOR. INVESTMENT FIRMS. Conditions and procedures for authorisation 6. Requirement for authorization. 7. Scope of authorization. 8. Grant or refusal of authorisation: procedure. 9. Initial capital endowment. 10. Membership of investor compensation scheme. 11. Management body. 12. Shareholders and members with qualifying holdings. 13. Withdrawal of authorization. Proposed acquisitions 14. Notification of proposed acquisitions. 15. Assessment period. 16. Assessment. Organisational and product governance requirements 17. Organisational requirements. 18. Product governance: firms manufacturing FINANCIAL instruments .

4 19. Product governance obligations for distributors. 20. Telephone and other records. Safeguarding of client FINANCIAL instruments and funds 21. Safeguarding of client FINANCIAL instruments and funds. 22. Depositing client FINANCIAL instruments . 23. Depositing client funds. 24. Use of client FINANCIAL instruments . 25. Inappropriate use of title transfer collateral arrangements. Government of Gibraltar ( ). FINANCIAL SERVICES (Markets in FINANCIAL instruments ) 2006-32. 26. Governance arrangements concerning the safeguarding of client assets. 27. Reports by external auditors. 28. Algorithmic trading. 29. Trading process and transaction finalisation in an MTF and OTF.

5 30. Specific requirements for MTFs. 31. Specific requirements for OTFs. Operating conditions for investment firms: general provisions 32. Regular review of conditions for initial authorization. 33. General obligation in respect of on-going supervision. 34. Conflicts of interest. Investor protection: general principles 35. General principles and information to clients. Inducements 36. Inducements. 37. Inducements: advice on an independent basis or portfolio management. 38. Inducements in relation to research. Provisions to ensure investor protection 39. Assessing suitability and appropriateness and reporting to clients. 40. Provision of SERVICES through another investment firm.

6 41. Obligation to execute orders on terms most favourable to the client. 42. Client order handling rules. Tied agents 43. Obligations of investment firms when appointing tied agents. 44. Register of tied agents. 45. Revocation of registration. Transactions with eligible counterparties 46. Transactions executed with eligible counterparties. market transparency and integrity 47. Monitoring compliance with MTF and OTF rules etc. 48. Suspension and removal of FINANCIAL instruments from trading on an MTF or OTF. Government of Gibraltar ( ). 2006-32 FINANCIAL SERVICES (Markets in FINANCIAL instruments ). SME growth markets 49. SME growth markets.

7 Rights of investment firms 50. EEA firms providing SERVICES in Gibraltar. 51. EEA firms establishing branches in Gibraltar. 52. Gibraltar firms providing SERVICES in other EEA States. 53. Gibraltar firms establishing branches in other EEA States. 54. Access to regulated markets. 55. Access to CCP, clearing and settlement facilities and right to designate settlement system. 56. Central counterparty, clearing and settlement arrangements for MTFs. Provision of investment SERVICES and activities by third-country firms through the establishment of a branch 57. Third-country firm to establish branch. 58. Grant of authorization. 59. SERVICES provided at the client's exclusive initiative.

8 60. Withdrawal of authorization. PART 3. REGULATED MARKETS. 61. Authorisation and applicable law. 62. Requirements for the management body of a market operator. 63. Requirements relating to persons exercising significant influence over the management of the regulated market . 64. Organisational requirements. 65. Systems resilience, circuit breakers and electronic trading. 66. Tick sizes. 67. Synchronisation of business clocks. 68. Admission of FINANCIAL instruments to trading. 69. Suspension and removal of FINANCIAL instruments from trading on a regulated market . 70. Access to a regulated market . 71. Monitoring compliance with regulated market rules and other legal obligations.

9 72. Provisions regarding CCP and clearing and settlement arrangements. 73. List of regulated markets. PART 4. Government of Gibraltar ( ). FINANCIAL SERVICES (Markets in FINANCIAL instruments ) 2006-32. POSITION LIMITS AND POSITION MANAGEMENT CONTROLS. IN COMMODITY DERIVATIVES AND REPORTING. 74. Position limits and position management controls in commodity derivatives. 75. Position reporting by categories of position holders. PART 5. DATA REPORTING SERVICES . Authorisation procedures for data reporting SERVICES providers 76. Requirement for authorization. 77. Scope of authorization. 78. Procedures for granting and refusing requests for authorization.

10 79. Withdrawal of authorisations. 80. Requirements for the management body of a data reporting SERVICES provider. Conditions for APAs 81. APA organisational requirements. Conditions for CTPs 82. CTP organisational requirements. Conditions for ARMs 83. ARM organisational requirements. PART 6. COMPETENT AUTHORITY. Designation, powers and redress procedures 84. Designation of competent authority. 85. Supervisory powers. 86. Sanctions for specified infringements. 87. Publication of infringement. 88. Cease and desist order. 89. Suspension or withdrawal of authorization. 90. Prohibition order. 91. Suspension from market participation. 92.