S.L. 575.4 Art. 10Auction mechanics.

(1) The format of the auction used by the

Accountant General to issue Malta Government Stocks both in a combined issuance as well as via auction only is through a multiple price auction and in both cases are subject to the same auction mechanics. The auctions are held on a bid price basis where the successful bidders pay the price that they bid.

(2) Participation in the auction is open to all eligible investors by direct bidding. Competitive bids at auctions must be submitted on the prescribed application form, and are to be sent electronically on the fax number prescribed by the Treasury Department on the application form, by e-mail on the e-mail addresses prescribed on the application form, or by such other means as may be determined by the Accountant General.

(3) Unless otherwise notified, each competitive bid must be made for one amount and at one definite clean price, to be submitted for €100 nominal and in multiples of one Euro cent (€0.01), and quoted to two (2) decimal places for a nominal amount not below or above the minimum and maximum (if applicable) amounts and in round multiples thereof as established in the offering circular.

(4) There is no limit to the number of bids which any one participant can bid in the auction as long as the total nominal value of the bids submitted does not exceed the maximum limits which may be fixed for specific participation levels (auction tiers) in the auction. Bids at different prices must be made on separate application forms.

(5) The Accountant General shall publish a price guidance in close proximity to the auction when a fixed rate Malta Government Stock is launched via auction only.

(6) Bids may be submitted at any time from the opening of the bidding window, up to the published deadline after which no further bids can be accepted. Bids (or offers) cannot be amended or withdrawn after the time announced for the closure of the auction.

(7) After the designated bidding deadline has passed, the Accountant General shall check whether bidders have adhered to the terms of prospectus and shall input the bids into his own allocation systems. The Accountant General reserves the right to reject any competitive bid or any part of any competitive bid on any grounds whatsoever. Subject to this, competitive bids shall be ranked in descending order of price and the Stock shall be allotted to applicants whose competitive bids are at or above the lowest price at which the Accountant General decides that any competitive bid should be accepted (the ‘lowest accepted price’ / ‘cut-off price’).

(8) The bids equal or higher than such cut-off price shall be satisfied in full, unless the total amount of such bids exceeds the amount which the Accountant General has decided to issue. In the latter case, bids higher than the cut-off price shall be accepted in full whilst bids at the lowest accepted price (cut-off price) shall be allotted as far as practicable on a pro rata basis in order to bring the total allocations in line with the amount to be issued as decided by the Accountant General.

(9) The pro rata shall be worked out in relation to the residual nominal amount available for allotment at the cut-off price and the amount of each tendered bid at the cut-off price, rounded down to the nearest €1,000, such that allocations on a pro rata basis are in multiples of €1,000 nominal of Malta Government Stock. The bidder shall accept any portion of the sum allotted at the same price as that tendered for the whole amount.

(10) Malta Government Stocks auctions shall normally settle on the second business day after the auction, in accordance with the T+2 convention. All successful bidders are expected to match the Accountant General’s settlement instructions as specified on the acceptance form, and to meet their commitments by matching the consideration amount to the nearest Euro cent on the day and in good time as specified on the application form or acceptance form.

(11) The Accountant General shall not be bound to accept any successful offer unless payment in respect of the offer is made on the time specified on the application form or acceptance form.

(12) The auction results shall be published by a press release and on the Treasury’s website as soon as reasonably practicable once all the necessary calculations, allocations and checks have been performed internally by the Public Debt Management Directorate.

(13) The published results of the auction shall include details of the auction highest, average and lowest accepted prices, the gross redemption yields equivalent to these prices; they shall also include the total nominal value of all bids received, including those rejected in whole or in part on account of price, and the ratio of the total value of bids received to the amount on offer (the ‘cover ratio’).

(14) The Accountant General reserves the right not to allot all of the Malta Government Stock(s) on offer at an auction if he judges bids to be at an unacceptably deep discount to the prevailing market level and therefore not at fair value.