meta_id 3288076

On July 1, 2026, the Malta Financial Services Authority (MFSA) issued a circular transposing Commission Delegated Directive (EU) 2026/374 into the Conduct of Business Rulebook (COBR). The directive, which came into force on June 6, 2026, updates the Markets in Financial Instruments Directive II (MiFID II) framework governing how investment firms obtain and pay for third-party research and execution services. The directive introduces five key changes applicable to investment firms in Malta. First, it permits flexibility in payment models, allowing firms to pay for research and execution separately (unbundled) or jointly (bundled), removing previous restrictions such as Small and Medium-sized Enterprise (SME)-only bundling thresholds under MiFID II. Second, it strengthens quality and governance requirements, mandating that investment firms conduct annual research quality assessments evaluating value, usefulness, and contribution to investment decisions, with firms responsible for remedial actions where quality is inadequate. Third, it enhances rules for research payment arrangements, requiring firms using research payment accounts or structured payments to establish pre-defined budgets, maintain strong internal controls, and compile clear audit trails, while prohibiting research costs from being linked to transaction volumes. Fourth, it maintains investor protection safeguards, ensuring investment firms continue complying with best execution, conflict-of-interest rules, and fiduciary duties. Fifth, it upholds transparency requirements, obligating firms to disclose to clients whether research and execution are paid jointly or separately and how costs are structured. The MFSA amended COBR Rules R.3.49 to R.3.56 to reflect these requirements. Investment firms are encouraged to update their processes immediately to comply with the directive's requirements, which apply with immediate effect. The directive forms part of the broader EU Listing Act package aimed at strengthening EU capital markets and revitalising investment research, particularly for small and medium-sized and mid-cap companies.