Malta Stock Exchange
Compliance and Market Operations
1
April 2011
Introduction
Membership
The Trading System
Market Surveillance
Continuing Obligations
2
April 2011
Setup
The Exchange and how it operates
CSD
Trading
System
Members
3
April 2011
Membership requirements
Membership of the Exchange shall consist of persons
1.
2.
3.
licensed in terms of the Investment Services Act
(Cap. 370 of the Laws of Malta); or
European Investment Firms, either directly or
indirectly; or
3.00.01.03 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
April 2011
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
April 2011
Trading – Trading Cycle Overview
Clients
Contract Notes
Settlement
Cheques/Notices
Members’
Terminals
Registration Advices
Contract Note
Data
Trading
System
Transaction Info.
CSD
Clearing & Settlement
Market Control
SWIFT Messages
6
April 2011
The Trading Session
09:30 hrs
• Regular Market Pre-open
• Off-Exchange Deal Reporting Open
• Treasury Bill Market Open
09:30 hrs
• Regular Market Put-through Session Open
09:55 hrs
• Regular Market Put-through Session Close
10:30 hrs
• Treasury Bill Market Close
10:45hrs
• Regular Market Open
12:30hrs
• Regular Market Close
• Off-Exchange Deal Reporting Close
7
April 2011
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
April 2011
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
April 2011
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
April 2011
Trading - Trading Settlement Cycle
DVP Settlement
Securities
T+ 3
Cash
T+ 3(working days)
Right to sell next day
(T+1)
11
April 2011
Trading Session – 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
April 2011
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
April 2011
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
April 2011
Trading System - Clearing & Settlement
General Contract Note Information
Security
Consideration
Trading Date
Charges Transaction
Bank
Commissions
Settlement Date
Purchase / Sale
Amount
Price
Market Value
Any interest due/owed (in case of bonds)
15
April 2011
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
April 2011
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
April 2011
Accrued / Rebate Interest –
Corporate Bonds
Coupon X Amount X Actual No of days held
365 Days
18
April 2011
Trading Surveillance
Company Announcements (Chapter 5 MFSA Listing Rules)
Connected persons - Issuer
MSE Members & Staff
MSE Staff
(Chapter 5 MFSA Listing Rules)
(Code of Conduct Appendix 3.4 MSE Bye-laws)
(MSE Code of Conduct and Ethics Policy)
19
April 2011
Thank you
20
April 2011