Malta looking at broadening financial services sector

Malta is constantly on the lookout for new opportunities to increase the breadth and depth of its financial services infrastructure, not least its securities markets, finance minister Edward Scicluna said.

He noted that Malta has been consistently featured in the top 20 tier of the World Economic Forum Competitiveness Index with respect to the regulation of securities exchanges.

Scicluna was speaking during an ESAFON international conference hosted by the Malta Stock Exchange titled 'Sustaining Economic Growth through new Financial Centres and Boutique Exchanges' on Thursday 3 October.

The minister pointed out that at the same time, Malta has constantly kept its legislation under review in order to create new space for more specialised markets to develop and to bring more companies and instruments to the market, the more recent of which include the European Wholesale Securities Market (EWSM).

"The Malta Financial Services has also recently reviewed its Listing Rules to allow the admission of alternative company listings with the objective of bringing smaller companies to the attention of wholesale investors," Scicluna added.

This market caters for companies with initial paid up share capital which may be as low as €50,000, including companies with a young track record, provided the regulator is satisfied that investors have the necessary details to arrive at an informed decision.

Admissibility to listing granted on the ACL would be considered as admissibility to listing on a regulated market within the meaning of the Markets in Financial Instruments Directive.

The minister also said that the Malta Stock Exchange, together with the Listing Authority, are working on the setting up of a Second Tier Market which would qualify as a Multilateral Trading Facility and that a proposal to this effect will be issued for consultation in due course. It is envisaged that the Multilateral Trading Facility would be operated by the Malta Stock Exchange as a separate market.

"Initiatives such as these can be instrumental in allowing a move away from full reliance on bank financing and providing for a more dynamic market. They also provide an exit route for earlier stage investors, allowing them to redeploy their capital, while setting new objectives entrepreneurs can aspire to," Scicluna said.

Turning to international developments and opportunities, Scicluna noted that beyond EU borders, market operators around the globe are involved in numerous initiatives to bring the benefits of transparent markets to areas and market sectors that have not traditionally benefitted from the capital markets.

"While SMEs continue to provide fertile ground for new business, there is indeed more that boutique exchanges can aspire to than the size and scalability of business. One only has to look at what is happening in various parts of the world to get a feel of the amount and variety of new projects showing up in this space," Scicluna said.

"The trend for sustainable investing is indeed making progress on a number of fronts through regulatory and business measures designed to improve disclosure and the quality of information on the environmental, social and governance features of listed companies."

Prof. Scicluna underlined that as a relatively new financial centre in the EU, Malta has a lot to offer to financial operators seeking to make headway in a world that is still struggling to come out of crisis.

"Malta is a country that has demonstrated extraordinary resilience throughout. That it has managed to do so is mainly due to its diversified, services-oriented economy which is underpinned by a reliable and transparent regulatory environment and a competitive and skilled labour force."

"It is home to over 50 credit and financial institutions, including a good number of payment and electronic money institutions which operate in the new economy. Over 600 investment funds and around 200 investment managers and other investment service providers also operate in Malta. Insurance activities, pensions administration and trust services are also well established on the island."

"This, together with the new capital market structures coming on stream should provide the ideal conditions for boutique exchanges and technology-based market platforms to succeed. Malta is indeed a market opportunity that should be carefully considered," Scicluna concluded.