Malta Stock Exchange. Compliance and Market Operations

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1 Malta Stock Exchange Compliance and Market Operations 1

2 Introduction Membership The Trading System Market Surveillance Continuing Obligations 2

3 Setup The Exchange and how it operates CSD Members Trading System 3

4 Membership requirements Membership of the Exchange shall consist of persons 1. licensed in terms of the Investment Services Act (Cap. 370 of the Laws of Malta); or 2. European Investment Firms, either directly or indirectly; or deemed by the Exchange to be fit and proper, to have sufficient level of trading ability and competence, to have sufficient financial resources and, where applicable, adequate organizational arrangements. 4

5 What are the membership requirements of the MSE? Application for Membership must be made to the Exchange - (Chapter 3 Appendix 3.1) Application for Traders - (Chapter 3 Appendix 3.2) Upon Membership the Members and their appointed traders are bound to conduct their business in compliance with all applicable rules and regulations. 5

6 Trading Trading Cycle Overview Clients Contract Notes Settlement Cheques/Notices Registration Advices Members Terminals Contract Note Data Trading System Market Control Transaction Info. CSD Clearing & Settlement SWIFT Messages 6

7 The Trading Session 09:30 hrs 09:30 hrs 09:55 hrs 10:30 hrs 10:45hrs 12:30hrs Regular Market Pre-open Off-Exchange Deal Reporting Open Treasury Bill Market Open Regular Market Put-through Session Open Regular Market Put-through Session Close Treasury Bill Market Close Regular Market Open Regular Market Close Off-Exchange Deal Reporting Close 7

8 Trading Session - The Regular Market Allocation Pre-Open All orders are deemed to have same time priority All orders are queued according to price Special Terms orders are not queued in the Regular Market, therefore they do not participate in the opening algorithm Market orders cannot be posted during pre-open Engine calculates the opening price immediately before the At the Open stage. 8

9 Trading System - The Trading Session Allocation At the Open 1. Opening price is calculated and orders are matched in following order:- 1. Orders at better than opening price are matched (market imbalance) 2. Cross Priority 3. Shared board lot 9

10 Trading System - Trading Session Open Continuous Trading Orders are queued in price-time priority Orders are matched on FIFO basis New orders may be posted Orders may be changed/ cancelled (Changing orders may affect priority- (Chapter 4) 10

11 Trading - Trading Settlement Cycle DVP Settlement Securities Cash T+ 3 T+ 3(working days) Right to sell next day (T+1) 11

12 Trading Session Off Off-exchange Trade reporting and Validation system Client places order with licensed intermediary Intermediary arranges deal (choice of settlement venue) Deal is registered at the Intermediary's office Deal Reported to:- Off-exchange Trade Reporting and Validation system Trade information published to the market 12

13 Trading Session - Clearing & Settlement Netting Basis Trader- 10,000 worth of purchases 9,000 worth of sales Therefore net amount to be settled by Trader 1,000 13

14 Trading System - Clearing & Settlement Trader - 8,000 worth of purchases 12,000 worth of sales Therefore net amount received by Trader 4,000 Responsibility for settlement of funds lies with Member Firm 14

15 Trading System - Clearing & Settlement General Contract Note Information Security Consideration Trading Date Charges Settlement Date Purchase / Sale Amount Price Market Value Any interest due/owed (in case of bonds) Transaction Bank Commissions 15

16 Trading System - Clearing & Settlement Additional Information in the case of Government Stocks Corporate Bonds Accrued: cumulative interest from day after last div date up to settlement day which is added to the market value or Rebate Interest: cumulative interest from settlement day up to day before next-div date which is deducted from the market value 16

17 Accrued /Rebate Interest Malta Government Stocks (MGS) (Coupon /2) X Amount X Actual No of days held Actual no of days from last div to next div 17

18 Accrued / Rebate Interest Corporate Bonds Coupon X Amount X Actual No of days held 365 Days 18

19 Trading Surveillance Company Announcements (Chapter 5 MFSA Listing Rules) Connected persons - Issuer (Chapter 5 MFSA Listing Rules) MSE Members & Staff (Code of Conduct Appendix 3.4 MSE Bye-laws) MSE Staff (MSE Code of Conduct and Ethics Policy) 19

20 Thank you 20