Investment Services are regulated by the Investment Services Act (Cap. 370 of the Laws of Malta) [“ISA”] as amended by Act XVII of 2002. This law establishes the regulatory framework for two types of licences namely Investment Services Licences and Collective Investment Schemes Licences.
The Investment Services Act, the Regulations and Investment Services Rules also incorporate the transposition of EU legislation in this area, including the Markets in Financial Instruments Directive (Directive 2004/39/EC) and the UCITS Directive (Directive 2009/65/EC) and any related updates and legislative developments. The Malta Financial Services Authority [MFSA] is responsible for the licensing, regulation and supervision of Investment Services Providers, Collective Investment Schemes and Regulated Markets.
When considering whether to grant or refuse a licence, the MFSA is legally required to have regard to three criteria set out in the law:
(a) the protection of investors and the general public;
(b) the protection of the reputation of Malta taking into account Malta’s international commitments;
(c) the promotion of competition and choice;
In addition, when considering an application for an investment services licence or a collective investment scheme licence, the MFSA takes into account the reputation and
suitability of the applicant and of all other relevant parties closely connected with the scheme. In this respect MFSA’a approach to authorization and the fit and proper test which potential applicants and license holders must satisfy on a continuous basis, can be accessed through this link (www.mgimalta.com/ refer our other write up)
Investment Services Licence
An investment services licence is required when the following activities are carried
out in relation to an ‘instrument’ when:
(1) dealing as principal or agent;
(2) arranging deals;
(3) management of investments;
(4) providing trustee, custodian or nominee services;
(5) providing investment advice;
(6) providing stock broking services.
The term ‘instrument’ is defined in the ISA and covers a wide range of investments and financial products, including shares, bonds and other securities and foreign exchange dealings. For a detailed description of Malta based funds which are licensed, registered and regulated locally, please refer to the following link (www.mgimalta.com/ refer to our other write up)