The implementation of the European market infrastructure regulation in Malta : a critical analysis

Abstract

The aim of this research is to analyse the implementation of European Market Infrastructure Regulation by Maltese banks. A qualitative research method was used to provide an in-depth understanding of the challenges encountered by the banks in implementing EMIR. The research question revolved around both the obligations covered by EMIR and the way implementation process was carried out by banks in Malta. The primary data was collected through semi-structured interviews with various bank managers and also with the MFSA representative. An overarching theme that emerged from the interviews is that because of banks’ limited resources the implementation of EMIR by banks in Malta proved to be extremely challenging. Moreover, the study reveals the need for several changes in internal operational processes, data management and changes in practices. Reporting is the most challenging obligation for banks, as it requires high frequency of reporting of different reports. The Central Clearing obligation and the Risk Management Techniques are not as complex as reporting although they also incur additional costs, which can undermine the competitive edge, particularly in the case of small banks, who cannot apply economies of scale. Other findings related to the local implementation process of EMIR were the paucity of information delivered by the MFSA to banks prior to the coming into force of EMIR, which meant that they were not fully prepared, and the MFSA’s inadequate supervision of banks during the implementation process. The dissertation concludes by putting forward a number of several recommendations for a better implementation of EMIR requirements to facilitate compliance with EMIR obligations and mitigate the cost and other burdens of EMIR implementation.