Malta Stock Exchange reports record profits

The Malta Stock Exchange (MSE) posted a record after tax net income of €2.53 million, an increase of 50%, on the back of significant revenue growth and a decline in operating expenses in the year ending 2016.

Out of eight revenue streams, all but one showed year on year increases. The revenue generated from listing fees and dematerialisation services generated the largest increases. On the cost side, a significant cost-cutting exercise was initiated and strict protocols were implemented to reduce and manage spending. Operating expenses decreased by 4.3% in 2016 even as wage costs and capital expenditures increased. The Exchange anticipates the potential for continued annual operating expense decreases into 2019.

Admissions registered an increase of 12% over 2015, bringing the number of listings to 295 with 44 corporate issuers, varying between bonds and equity. It is expected that this positive trend continues into 2017, particularly with Prospects, a financial market launched in 2016 specifically designed to cater to the financing needs of small to medium sized enterprises (SMEs).

The National Capital Markets Strategic Plan (NCMSP) was also launched in November 2016. The Plan consists of 23 initiatives comprising the listing and trading of exchange traded funds (ETFs), real estate investment trusts (REITs), warrants, securitised products, as well as the development of Sharia compliant financial instruments.

Other initiatives include the promotion of the new SME market, Prospects, and fiscal incentives aimed at increasing listings. Such initiatives include a 2-year, 25% rebate for new main board listings.

Another initiative is the formation of the Malta Stock Exchange Institute and the promotion of professional training programmes as well as financial markets education to the general public.

The Malta Stock Exchange is also preparing for the setting up of a regulated wholesale market, called the Institutional Securities Market (ISM), which will for the first time in the Exchange’s history expose it to the international financial markets, enabling the MSE to compete for international institutional business including securitised debt, structured products, warrants and wholesale bonds.

One of the key initiatives of the National Capital Markets Strategic Plan was the extension of the trading hours. On April 18th 2017, after twenty-five years of a trading schedule limited to three hours daily, the Malta Stock Exchange doubled the session time to a six hour trading window closing the day at 15:30hrs. It is envisaged that this change will also help to improve market liquidity across the markets operated by the Exchange.

In the third quarter of 2016 three new stock brokerage firms were admitted to the Exchange. It is anticipated that 2017 sees another three applicants joining the list. This is a considerable achievement when one considers that before 2016, the last broker member admitted was in 2013.

The Exchange has also been a frontrunner on the technology front. It has formed a Block Chain Committee to actively explore opportunities within the FinTech sector. It has also developed E-portfolio, an initiative which allows the Exchange’s 70,000 account holders to access their accounts online and view their activity in real-time. This technological enhancement has not only contributed to a substantial reduction in costs but is also part of the Exchange’s Corporate Social Responsibility Strategy towards implementing “greener” business operations.

Over the last year there have been a number of capital projects, such as the inauguration of the Exchange’s first offsite business continuity centre which incorporates state of the art server technology. Another project realised in 2016 was the installation of a new 19 meter ticker and video wall and the complete refurbishment of the reception and seating lounge at the entrance of the Exchange. Another project completed in 2016 was the restoration of the Garrison Chapel’s façades, and the replacement of 4 portico columns on the Upper Barrakka side of the building.

MSE Chairman Mr Joseph Portelli said: “The Board and I are very proud of the Exchange’s record positive results and the many constructive initiatives taken in 2016. The Board is also very grateful for the dedication and commitment of the management and staff of the Malta Stock Exchange.”