The following interview with MFSA Chairman Prof. Joe Bannister was first published on Country Profiler's new website focusing on the Maltese Islands: http://maltaprofile.info . This website provides insight on different economic sectors and industries.
The financial services sector section is available here: http://maltaprofile.info/section/financial-services.
The Right Model
Regulation is one of the leading factors that make a financial centre successful. What do you believe are Malta's key operating advantages in this regard?
Malta has developed a robust regulatory regime with a highly approachable regulatory authority. Over the years, the Malta Financial Services Authority (MFSA) has worked together with the industry for the implementation of major strategic objectives.
Various joint initiatives have assisted the industry in building up the capabilities and capacity required to move into new areas of business for which regulatory frameworks were being developed. The close relationship between the regulator, policy makers and industry stakeholders has enabled Malta to attract know-how, develop talent and ensure consistent levels of growth to keep the momentum going. Individual operators are also encouraged to discuss their development objectives and ongoing concerns with the regulators to ensure that they can operate smoothly and identify any possible risks early in the day.
Malta was one of the first countries to transpose the EU's Alternative Investment Fund Managers Directive (AIFMD). Can you give us a brief overview of Malta's regulatory environment in the funds sector, and what does it mean for the jurisdiction?
Alongside the Maltese Professional Investor Fund (PIF) regime, a new Alternative Investment Fund (AIF) regime has been launched. The focus this year will be on the conversion of existing licences to the new regime, a process that calls for strict liaison between the regulator and operators, particularly with the investment managers themselves. The AIFMD is also leading to noticeable shifts in the funds landscape as managers both inside and outside the EU review their strategic positioning in the light of new regulatory demands and market realities. Malta was one of the first member states to transpose the AIFMD and has built up a reputation as a European funds jurisdiction. With its recently confirmed international status as one of the sharp risers in the industry, Malta's fund industry is entering a new phase that will eventually see it consolidating its position as an investment services hub within the single market.
Malta has been proactive in expanding its regulatory framework. Which sectors and concepts are you currently looking into and why?
One of the more evident consequences of the financial crises has been a disruption in capital supply lines and capital flows, resulting in market inefficiencies. This, in turn, has a stifling effect on potential investment and growth opportunities, both in the real and the financial economy. New regulation intended to ensure greater financial stability is also changing the rules of the game in a way that generates new demand for innovative, yet more sustainable, investment products in the market. Market infrastructures will also need to be re-engineered in order to better cater for these new products, while regulatory frameworks will need to find ways of throwing wide open the windows on governance standards in order to encourage investors to return to the market. With this in mind, the MFSA has set about reviewing the conduct of business frameworks for financial intermediaries, launched improved alternative company listing rules and is strengthening asset protection regimes for securitised products.
How has the introduction of three pan-European supervisory authorities for banking, insurance & pensions, and securities & markets influenced Malta's International Finance Centre, as well as its ability to innovate and differentiate itself from competing locations?
The new pan-European supervisory authorities are part of a wider framework to ensure financial stability, reduce the likelihood and transmission of shocks within the financial system, and ensure a more standardised regulatory platform for European cross-border business. Operators will still be given space to innovate and come up with new products to suit both investors and investees. Product safety and fair distribution practices will therefore be as important a factor as creativity in the generation of capital returns. One cannot exist without the other if markets are to function efficiently and effectively. Regulation should never be seen as the antithesis of innovation, and Malta's track record to date proves this.
How do you believe Malta needs to position itself to sustain these high levels of growth into the future?
We need to keep getting better at what we have been doing and never lose sight of where we started.
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