In an extensive feature carried by the August edition of the FTSE Global Markets publication, MFSA Chairman Professor Joseph Bannister looks into the recent positive developments in the asset management sector, which has stepped up as general trading conditions continued to ease and growth began its slow return in the larger European economies.
Commenting on these developments, the MFSA Chairman noted that "growth and new licences were registered across the range of the industry. The fund services infrastructure in Malta continued to build up in 2013, with the issuance of more investment services licences predominantly at Category 2 level." This means that much of the new fund and funds services activity is, in fact, in line with European AIFMD regulation.
The fund management and fund services sector in Malta continues to grow at a sustained manner, with FTSE Global Markets quoting recent data which shows that the past three years, 80% of foreign direct investment into Malta has been in financial services.
FTSE investigates the benefits of Malta as a financial jurisdiction, highlighting the greater credibility when compared to past years through the interaction of a number of trends: "The jurisdictions financial stability was tested like others during the financial crisis, but the island withstood the global financial turmoil relatively well. The conservative policies which Maltese financial institutions adopted in the running of their business, with regards to lending policies and borrowing in a traditional retail funding model, have in fact safeguarded Malta's financial stability from systemic events, adversely encountered in other economies."
Focusing on the funds sector, the report notes what it describes as a "concerted effort to encourage fund inflows, through a flexible regulatory regime which also incorporates all current EU financial regulation.
The MFSA uses both formal regulation and requirements based on a flexible and regularly expanding rulebook. The regulator works in a very open and transparent basis and all companies seeking to establish themselves in Malta must meet personally with the regulator. This proactive approach is more formally referred to as 'innovation through regulation'.
FTSE reports that the MFSA licensed 135 new Collective Investment Schemes—including sub-funds—a slight increase over the previous year. While the number of PIFs (at least last year) remained at almost the same level as in 2012, the number of new licensed UCITS funds doubled over the same period. Additionally, there were 188 non-Malta domiciled funds administered by Malta-based fund administration companies at the end of last year, a 31% increase. Retirement pension schemes were the most popular, rising by 88% in number over the year.
In the interview, Prof Bannister also highlights the substantial challenges which the jurisdiction – and the industry as a whole – will be facing in the coming months, as incoming European regulation will have important connotations. " They aim to lay the foundations for a more stable, robust and competitive finance industry", adding: "Confidence is the critical element, and fundamental to the EU's ability to remain globally competitive in financial services", explained the MFSA Chairman. FTSE also highlights the important conduct of business regulatory regime which is currently being undertaken with particular regard to the investment services sector, a review which is described by Professor Bannister as "a challenge for us all to apply the new regimes and keep an eye open for threats and opportunities that arise from implementation and revision across Europe.
The full article is available on: http://bit.ly/1y1Bywp
AIFMD offers potential for increased business to Investment Service Providers
Besides the in-depth discussion on the financial industry, which included the above interview with the MFSA Chairman, in a separate article in the same issue of FTSE Global Markets, the journal also dwells into the opportunities provided by Europe' s Alternative Investment Fund Management Directive (AIFMD) which offers potential for increased business to investment ser-vices providers working in Malta.
"AIFMD rules on marketing of alternative funds offer an incentive for managers based outside Europe to consider a domicile within the EU in order to gain immediate and guaranteed access to the directive's 'passport' for distribution to sophisticated investors throughout the 27-member union."
The report notes how a number of financial services firms are setting up new sales operations overseas that are targeting asset gatherers outside of the EU, which can make use of Malta's cooperative funds regime, lower cost location and its suitability for managers starting out with resource constraints.
This article is available on: http://bit.ly/1ww1jcO
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