Maltese Investments Service Providers (ISPs)
The regulatory framework governing the provision of investment services in or from Malta is set out primarily in the Investment Services Act, Chapter 370 of the Laws of Malta (ISA). The ISA is accordingly intended to comprehensively regulate the provision of investment services whilst securing adequate investor protection.
In turn, the domestic regulator, the Malta Financial Services Authority (MFSA), has issued Investment Services Rules with a view to, inter alia, achieving the full and proper implementation of the provisions of the MiFID Framework and the MiFID Implementing Directives.
The MFSA is additionally responsible to supervise the investment services sector and to authorise the players in the market, including investment advisors, managers, brokers and custodians. In fact, any person seeking to provide investment services in or from Malta would require a valid licence issued by the MFSA.
Categories of licences
The ISA recognises and regulates four principal categories of Investment Services licence:
|Category 1a||Licence holders are authorised to receive and transmit orders in relation to one or more instruments and/or provide investment advice and/or place instruments without a firm commitment basis but not to hold or control clients’ money or customers’ assets – this Category excludes managers of collective investment schemes.|
|Category 1b||Licence holders are authorised to receive and transmit orders and/or provide investment advice in relation to one or more instruments and/or place instruments without a firm commitment basis, only for professional clients and/or eligible counterparties, but not to hold or control clients’ money or customers’ assets.|
|Category 2||Licence holders are authorised to provide any investment service and to hold or control clients’ money or customers’ assets, but not to operate a multilateral trading facility or deal for their own account or underwrite or place instruments on a firm commitment basis.|
|Category 3||Licence holders are authorised to provide any investment service and to hold and control clients’ money or customers’ assets.|
|Category 4a||Licence holders are authorised to act as trustees or custodians of collective investment schemes.|
|Category 4b||Licence holders authorised to act as custodians to: (a) third country Alternative Investment Funds (AIFs) marketed in Malta; or (b) AIFs which have no redemption rights exercisable during the five year period from the date of initial investment and which generally do not invest in assets that must be held in custody in terms of applicable Investment Services Rules.|
The licence process typically involves the following three phases:
generally involving preliminary meetings with the MFSA resulting in the submission of a draft application together with supporting documentation, and the review thereof by the MFSA;
marked by the issuance of an ‘in principle’ approval for issuance of an investment services licence by MFSA and the finalisation of any outstanding matters; and,
- Post-Licencing/Pre-Commencement of Business Phase –
involving the completion of any post licencing matters prior to formal commencement of business.
The MFSA may be expected to provide its ‘in principle’ approval within twelve to twenty weeks from receipt of a licence application together with properly completed and submitted accompanying documentation.