On 21 November 2019, the Malta Financial Services Authority (the “MFSA”) issued a circular to clarify the classification of collective investment schemes as financial counterparties under EMIR rules.
EMIR Refit came into force on 17 June 2019 and introduced a number of changes, including, inter alia, a widened definition of financial counterparty and an exemption from the clearing obligation for financial counterparties with low volume of derivative trades.
The MFSA’s circular is intended to provide further clarification on the definition of financial counterparties.
EMIR Refit expanded the definition of financial counterparty to capture, inter alia, all EU Alternative Investment Schemes (“AIFs”). In this respect, Article 4 of Directive 2011/61/EU (Alternative Investment Fund Managers Directive, AIFMD) defines an AIF as collective investment undertaking, including investment compartments thereof, which: (i) raises capital from a number of investors, with a view to investing it in accordance with a defined investment policy for the benefit of those investors; and (ii) does not require authorisation pursuant to Article 5 of Directive 2009/65/EC (Undertakings for Collective Investments in Transferable Securities, UCITS).
In light of the above, the MFSA clarified that all licensed collective investment undertakings, not falling under the definition of the UCITS directive, will fall under the definition of financial counterparties of EMIR.
Accordingly, AIFs falling within scope of the AIFMD and Professional Investor Funds (PIFs) licenced by the MFSA, will be considered as financial counterparties.
A copy of the MFSA circular can be obtained by clicking here.