In a recent circular, the MFSA has set out the approach it will be adopting for the concept of “ancillary activities” under the Directive 2014/65/EU of the European Parliament and of the Council of 15 May 2014 on markets in financial instruments (MiFID II).

The MFSA has declared that it will be transposing the provisions of Section B of Annex I of MiFID II in the Maltese Investment Services Act, thus rendering these activities as licensable activities.

The Authority considers an activity to be “ancillary” if it is subordinate to the main activity. The provision of the activity must be temporary in nature and must not be such as to lead to a situation where the licenced entity will not be able to carry out the core activity in the absence of the ancillary activity.

The following will be considered as “ancillary activities” to the main business of investment services licence holders:

  • Safekeeping and administration of financial instruments for the account of clients, including custodianship and related services such as cash/collateral management and excluding maintaining securities accounts at the top tier level;
  • Granting credits or loans to an investor to allow him to carry out a transaction in one or more financial instruments, where the firm granting the credit or loan is involved in the transaction;
  • Advice to undertakings on capital structure, industrial strategy and related matters and advice and services relating to mergers and the purchase of undertakings;
  • Foreign exchange services where there are connected to the provision of investment services;
  • Investment research and financial analysis or other forms of general recommendation relating to transactions in financial instruments;
  • Services relating to underwriting;
  • Investment services and activities as well as ancillary services of the type included under Section A or B of Annex I related to the underlying of the derivatives included under points (5), (6), (7) and (10) of Section C where these are connected to the provision of investment or ancillary services.

As from 1st March 2017, new applicants for an investment services licence will be required to indicate whether they intend to conduct an ancillary activity. Current licence holders are required to provide the Authority with information on whether they are providing any ancillary activities and to indicate which ancillary activities are being provided.

Once the revised Act comes into force, licenced entities providing ancillary activities which have not been disclosed to the Authority will be considered to be in breach of the Investment Services Act and may be subject to regulatory action.

For more information or if you have any questions, please feel free to contact Dr Cherise Abela on

Disclaimer: This article is not intended to impart legal advice and readers are asked to seek verification of statements made before acting on them.

Disclaimer This article is not intended to impart legal advice and readers are asked to seek verification of statements made before acting on them.
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