The United States Securities and Exchange Commission's (the "SEC") confirmed that they have designated the Malta Stock Exchange as a 'designated offshore securities market' (DOSM) within the meaning of Rule 902(b) of Regulation S under the Securities Act of 1933.

Regulation S provides an exemption from having to register securities with the SEC under the Act. Rule 904 of Regulation S applies to offers or sales of securities effected by persons other than the issuer of the securities, a distributor or persons acting on their behalf. An offer or sale of securities that satisfies the conditions of Rule 904 of Regulation S is deemed to occur outside the United States and therefore is not subjected to the registration requirements of the Act.

Among the conditions of Rule 904 is the requirement that the offer or sale must be made in an "offshore transaction." Rule 902(h) provides, in relevant part, that an offer or sale is made in an offshore transaction if the offer is not made to a person in the United States and (provided there has been no prearrangement in the United States) the transaction is executed in, on or through the facilities of a designated offshore securities market ("DOSM"). Rule 902(b) provides that a DOSM includes certain specific non-U.S. securities exchanges and markets listed in Rule 902(b)(1), as well as any other non-U.S. securities exchange or market designated by the SEC based upon its consideration of, among other things, the attributes specified in Rule 902(b)(2).

The business implication of the SEC's action is that equity and bond securities listed on Malta Stock Exchange and issued in Malta, that are traded on the Exchange, may now generally be resold in non-prearranged trades executed through the facilities of the MSE's trading platform without requiring that the seller forms a reasonable belief that the buyer is outside of the United States. Thus, such transactions may also be effected with U.S. persons without restrictions under the Act.

This new development is yet another step in the Exchange's internationalization strategy that resulted in a link between the Central Securities Depository and Clearstream Banking ag, the use of the Deutsche Bourse 'Xetra' trading platform, and the HMRC recognition, to name a few.

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