Banking Package

• Transposition and Implementation of the Banking Package

Following the publication of the Capital Requirements Regulation 3 (the ‘CRR3’) and the Capital Requirements Directive 6 (the ‘CRD6’) on 19 June 2024, the Malta Financial Services Authority (the “Authority”) is working on the transposition and implementation of the provisions. In this regard, the Banking Act is currently being amended alongside various subsidiary legislation and banking rules. Further details on the transposition, and on the uptake or otherwise of the national discretions will be provided in a public consultation that the Authority intends to undertake over the next months.

Meanwhile, the Authority published a Dear CEO letter as a feedback letter on the findings of the Dear CEO letter issued in June 2024 which aimed to gauge the institutions’ preparedness to changes being brought about by the CRR3 rules.

• New Regulations in the Official Journal of the EU

The following Regulations have been published in the Official Journal of the EU:

• On 31 October 2024, Commission Delegated Regulation (EU) 2024/2795 amending Regulation (EU) No 575/2013 (the “CRR”) regarding the date of application of the own funds requirements for market risk, thereby postponing the requirements of the Fundamental Review of the Trading Book (FRTB) by one (1) year to 1 January 2026.
• On 27 December 2024, Commission Implementing Regulation (EU) 2024/3117 laying down the implementing technical standards with regard to supervisory reporting of institutions and repealing Commission Implementing Regulation (EU) 2021/451. The Regulation lays down uniform reporting formats, the frequency and dates of reporting by institutions to the Authority, within Article 415 paragraphs 3 and 3a, and Article 430 paragraphs 1 to 4, 7 and 9 of the CRR. The Regulation shall apply from 28 June 2025.

National Implementation of the Markets in Crypto-Assets (MiCA) Regulation

Notwithstanding the direct applicability of the MiCA Regulation, the Markets in Crypto-Assets Act, 2024 (Act No. XXXVI of 2024), published mid-November 2024, replicates certain directly applicable provisions concerning obligations on third parties and clarifies the conditions under which the MFSA is the competent authority among other foreign competent authorities appointed under the MiCA Regulation.

Furthermore, the aforementioned national provisions will regulate issuers of asset-referenced tokens, e-money tokens and other crypto-assets, as well as crypto-asset service providers, which form part of a new category of authorised and notified persons and supplement the provisions of the MiCA Regulation with regards to the appeals, offences and confidentiality obligations.

In consideration of the role of the MFSA as the competent authority in the context of the Markets in Crypto-Assets Act, the Markets in Crypto-Assets Act (Fees) Regulations, 2024 (L.N. 295 of 2024) designate the applicability, the amount and the nature of the fees due to the Authority during the exercise of its powers, ensuring proportionality in respect of specific criteria.

As part of the Implementation of MiCA, the Virtual Financial Assets (Amendment No.2) Regulations, 2024 (L.N. 296 of 2024) was also published with the purpose of amending and replacing the existing legislation, i.e. Virtual Financial Assets Regulations, which will cease to apply as the provisions of the MiCA Regulation enter into force.

National Implementation of the Digital Operational Resilience Act (DORA)

Based on the DORA Regulation, as accompanied by the DORA Amending Directive, and following the Consultation Document on the National Implementation of the DORA Regulation and the transposition of the Amending Directive, the necessary legal measures to implement the DORA Regulation have been published as follows:

• The Malta Financial Services Authority Act (Cap. 330) (Digital Operational Resilience Act (DORA)) Regulations, 2024 (L.N. 166 of 2024). This legal instrument implements the DORA Regulation in the national legal framework;
• The Data Reporting Services (Amendment) Regulations, 2024 (L.N. 255 of 2024). This legal instrument nationally implements amendments required to Regulation (EU) No 600/2014 by virtue of amendments emanating from the DORA Regulation.

Updates to Banking Rules

On 7 October 2024 the Authority published amendments to Banking Rules BR/20 and BR/24 as follows:

• BR/20 was updated to implement the European Banking Authority’s (‘EBA’) Guidelines on Overall Recovery Capacity (‘ORC’) (EBA/GL/2023/06), published in July 2023. The EBA developed these Guidelines to achieve a harmonised approach for the determination and assessment of the ORC. Requirements for credit institutions were implemented through the addition of a new section (‘Part V’) to the existing Rule.
• BR/24 on Internal Governance was amended to implement the EBA Guidelines on the benchmarking of diversity practices including diversity policy and gender pay gap (EBA/GL/2023/08), published in December 2023. The Guidelines’ objective is to achieve a higher level of transparency regarding the EBA’s work on the topic of diversity and gender equality and is expected to improve the quality of the collected data and raise awareness amongst all stakeholders.

Further to the above, Banking Rule BR/24 was also amended as part of the transposition of DORA as explained in the Circular published on the MFSA Website on 4 December 2024.

Circulars Issued and Published by the MFSA

A number of Circulars applicable to credit institutions were published by the Authority, accessible on the dedicated MFSA webpage. Institutions are expected to keep note of and address any MFSA Circulars and publications applicable to them.