Supervision & Transparency

Reporting to Central Bank

Investment firms must keep records of all data relevant to each transaction and financial instrument, which they execute on their own account or on behalf of a client for five years.  They must make that data available to the Central Bank on inspection at any time.  They must include in their records the transactions executed on behalf of a client, all information and details of the client’s identity and the information required on the prevention of money laundering.

Unless exempted, an investment firm that executes a transaction in financial instruments on a regulated market shall report details of the transaction to the Central Bank or its nominees not later than the following working day.  The Central Bank is to establish necessary arrangements in order to ensure that upon receipt by the Bank of a report above, it transmits the information to the competent authority of the most relevant market in terms of liquidity for those financial instruments.

Where reports are made to the Bank or its nominee by the market operator of a regulated market or the operator of a trade matching or reporting system, the Bank may exempt the investment firms from the obligation to report the transaction.

The report is to include names and numbers of the instruments bought and sold, quantity of instruments, date and times of execution, transaction prices and means of identifying the investment firm concerned.  The manner in which the reports are to be made to be prescribed.

Compliance Monitoring

Investment firms and market operators operating an MTF are to establish and maintain effective arrangements and procedures relevant to the MTF for the regular monitoring of its users’ compliance with its rules.

They are to monitor transactions undertaken by users that breach their rules, disorderly trading conditions, and potential market abuse and report the same without delay to the Central Bank. They are to provide full assistance to the Central Bank in investigating and prosecuting market abuse.

Systematic Internaliser

A systematic internaliser in shares admitted to trading on a regulated market is to publish a firm quote for any shares in respect of which there is a liquid market and it is a systematic internaliser.  It shall disclose quotes to the systematic internaliser’s clients on request for any of the shares for which there is no liquid market.

The Regulation does not apply to systematic internalisers that only deal in shares for sizes above certain standard market size.  A systematic internaliser shall make public its quotes on a regular and continuous basis during normal trading hours and in a manner that is easily accessible to other market participants on a reasonable commercial basis.

A systematic internaliser may update its quotes at any time and withdraw them with the permission of the bank under exceptional market conditions.  A systematic internaliser may execute an order from a professional client at a better price in justified cases if the price falls within a public range close to market conditions, and the order is larger than an order customarily undertaken by a retail investor.

A systematic internaliser may execute orders from professional clients at prices different from quoted prices if they involve execution in several securities as part of one transaction or are subject to conditions other than the market price.  The Central Bank shall monitor whether investment funds regularly update bids and offers above, maintain prices reflecting the prevailing market conditions, and comply with their obligations above with respect to price.

A systematic internaliser may select, on the basis of its commercial policy and, in an objective, non-discriminate way, the investors to whom it gives access to its quotes. It must have and must make available to clients clear standards for governing access to its quotes and may refuse to enter or may discontinue business relationships with clients on the basis of commercial considerations such as risk relating to credit or counterparty risk or final settlement of a transaction.

Certain Disclosures

An investment firm that, on its own account or on behalf of clients, enters transactions in shares admitted to trading on a regulated market outside a regulated market or on an MTF shall make public the volume and price in those transactions and the time when the transactions were concluded, without delay, on reasonable commercial terms and in a manner easily accessible to market participants.

An investment firm or market operator is to make public any current bid not for prices advertised through the systems of the investment firm or the market operator, as the case may be in respect of shares admitted to trading on a regulated market and the depth of the trading interest at those prices, on reasonable commercial terms and on a continuous basis during normal trading hours.  The Central Bank may grant a waiver based on a market model or the type and size of the order.

If operating an MTF, an investment firm or market operator, for shares admitted to trading on a regulated market shall make public the price, volume and time of the transactions carried out under its systems as soon as possible, on reasonable commercial terms and in a manner easily accessible to other market participants. This does not apply to transactions made public under systems of a regulated market.

On application, the Central Bank may permit the investment firm or operator to defer making public the price, volume and time of the transactions if it considers this appropriate based on the type and size of the transactions.  It may grant an application for deferment of transactions that are large in scale compared with transactions of normal size for the shares in question.

Auditors Report on Adequacy

Investment firms and market operators of regulated markets must ensure that external auditors report at least annually to the Bank on the adequacy of the firm’s arrangements under the Regulation. The auditor must report promptly any fact or decision concerning the firm or market operator of which the auditor becomes aware while carrying on the audit of the investment firm or an undertaking having close links with the firm which constitutes or indicates a material breach of

• Regulations or
• of any condition, code, guideline, notice or direction under the Regulations;
• affects or may affect the continuous functioning of the market;
• leads to the auditor’s refusal to certify the accounts or to express reservations.

A disclosure in good faith does not constitute a breach of contractual or legal restrictions on the disclosure of information.  A person making a disclosure in good faith is protected.