Capital Markets Regulation & Legislation

Malta has been rapidly developing as a finance centre of repute since becoming a European Union member in 2004 and adopting the Euro as the currency in 2008. A key attraction of the country continues to be its flexible yet robust regime, with a highly approachable regulatory authority.

Maltese regulation is internationally recognised for providing a secure and stable framework for prudential supervision, consumer protection, market surveillance and prevention of money laundering. The country is committed to the continuous strengthening and development of its financial sector and capital markets. Out of a total of 144 countries, The World Economic Forum Competitiveness Report 2014-2015 ranks Malta as 10th for the soundness of banks, 26th for the regulation of securities exchanges and 36th for financial market development.

Regulator and Listing Authority

The Malta Financial Services Authority (MFSA) is the single regulator for all financial services in the country. The MFSA is also the Listing Authority and approves admissibility to listing on Recognised Investment Exchanges. The MFSA takes a flexible and proactive approach through regular contact with industry players, allowing promoters to innovate and to develop new products to meet the changing investor needs, which is much-appreciated by the industry. The MFSA staff has gained considerable experience through training with other regulators and financial institutions across Europe and the US. Regulators from British authority FSA, German financial supervisory authority BaFIN and the US SEC visit Malta on a regular basis to carry out staff training. For financial services Malta has the Prospectus Directive, and the MFSA has signed a considerable number of MoUs with various non-EU jurisdictions. The regulator is also a signatory to the IOSCO and the IAIS multilateral MoUs.

Primary Market vs. Secondary Market

Primary Market: Before a financial instrument is admitted to any of the MSE’s recognised lists, the financial instruments, which are the subject of an admission application, may be offered to the public as an Initial Public Offering (IPO). The offer will be made in terms of the approved Prospectus, which stipulates the financial instrument on offer, minimum subscription amount applicable, offer price and in the case of fixed term financial instruments, coupon rates, interest dates, redemption, dates, etc.

Secondary Market: Following admission, the financial instruments may be traded on the regulated market operated by the Exchange in accordance with the market rules as laid down by the MSE.

Redomiciliation

Malta has redomiciliation legislation applicable to all types of companies, including securitisation vehicles under the Continuation of Companies Regulations. Redomiciliation of companies has taken place from both onshore and offshore jurisdictions, and in 2013 the domicile saw 111 companies relocate to Malta, with 70 per cent from non-EU countries.

EU Passport

In Malta, both the Main and the Alternative Companies lists are Regulated Markets and enjoy full passporting rights within the EU. Since becoming an EU member in 2004, Malta has experienced accelerated growth in all sectors of its financial services industry. With the introduction of passporting rights, allowing companies to establish a branch or provide services in any other EU country, many business opportunities opened up between Malta and the EU. Establishing a business in Malta provides instant access to the EU’s internal market of over 500 million people in 28 EU economies.