Malta Financial Services Authority

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Malta Financial Services Authority
Malta as a finance centre A Model Of
Stability in a Changing Landscape
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MALTA
Framework for the Development of
Financial Services
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Financial Services Legislation
Financial Services Legislation

• Primary Legislation
• Banking Act
• Financial Institutions Act
• Insurance Business Act
• Insurance Intermediaries Act
• Investment Services Act
• Special Funds Act Retirement Pensions Act
• Trustees and Trusts Act
• Malta Financial Services Authority Act
• Central Bank of Malta Act

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Financial Services Legislation

• Supporting Legislation-
• Companies (includes Limited Partnerships) Act
• Netting upon Insolvency Act
• Securitisation Act
• Prevention of Financial Market Abuse Act
• Professional Secrecy Act
• Prevention of Money Laundering Act

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Regulation

• Malta Financial Services Authority (MFSA)
• Single regulator for financial services
• Regulates banking, financial institutions,
  insurance companies, investment services
  companies, securities, stock exchanges and
  listing, trust management companies, pension
  schemes
• Autonomous public institution, self-funded
• Avoidance of Prescriptive Regulation to allow
  promoters the flexibility to operate

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Main Objectives of the MFSA

• to regulate, monitor and supervise financial
  services in Malta
• to promote the general interests and legitimate
  expectations of consumers of financial services,
  and to promote fair competition practices and
  consumer choice
• to advise the Government generally on the
  formulation of policies in the field of financial
  services, and to make recommendations to
  Government as to any action which in the opinion
  of the Authority, it would be expedient to take
  in relation to matters in respect of which the
  Authority has such duties
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MFSA - Structure
MFSA
Legal Int Affairs Unit
Board of Governors
Chairman
Board Secretary
Co-ordination Committee
Board of Management and Resources
Company Registry
Supervisory Council
Director General
Chief Operations Officer
Registrar of Companies
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Functions Board of Governors

• Board of Governors is composed of seven members
  including the Chairman. Chairman and Governors
  appointed for a period of up to five years and
  their appointment may be renewed for further
  periods of five years
• Board of Governors sets policy
• The Legal and International Affairs Unit acts
  as Secretary to the Board of Governors and the
  Co-Ordination Committee.

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Composition of the Supervisory Council
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Remit of the Supervisory Council

• Art 10. (1) of the MFSA Act states-
• The Supervisory Council shall be responsible for
  the approval of and for the issuing of licences
  and other authorisations, for the processing of
  applications for such licences and
  authorisations, and for the monitoring and
  supervision of persons and other entities
  licensed or authorised by the Authority in the
  financial services sector.

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Board of Management Resources
MFSA Act Art 11 states .....responsible for
carrying out the day-to-day management and
finances of the Authority, including business
development and ancillary services and for the
general co-ordination of the Authoritys
administrative affairs and shall be composed of
the persons responsible for such activities as
may be designated by the Board of Governors
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Remit - Board of Management Resources
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Co-Ordination Committee
Chief Operations Officer - Board of Development
and Resources
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Membership of International Organisations
 

• New EU Supervisory Architecture-
• European Securities Markets Authority (ESMA)
• European Banking Authority (EBA)
• European Insurance and Occupational Pensions
  Authority (EIOPA)
• International Association of Insurance
  Supervisors (IAIS)
• International Organization of Securities
  Commissions (IOSCO)
• International Organisation of Pensions
  Supervisors (IOPS)

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Memoranda of Understanding currently in force
 
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MFSA
Human Resources
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Number of Employees
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Males and Females
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Employee Age Bracket
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Qualified Personnel
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International Evaluation

• FATF Financial Action Task Force (1999)
• OECD Organisation for Economic
• Co-operation and Development (2000)
• Council of Europe Money Laundering Committee
  (2001)
• EU Peer Review (2002)
• International Monetary Fund full FSAP (2003)

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International Evaluation

• Malta embraces international tax standards for
  transparency and exchange of information and has
  joined OECD member countries in committing to
  eliminate harmful tax practices.
• (OECD Official News Release, June 2000)
• a comprehensive and robust legal framework and
  a particularly well-regulated financial sector
• (Report of the Council of Europe
  Money-laundering Committee, April 2003)

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International Evaluation

• The World Economic Forum Report on
  Competitiveness (2010-2011) Report places
• Malta in the 11th position in financial market
  development. Key performance indicators for the
  financial services sector also confirm the
  sectors standing as a leading innovator in the
  Maltese economy.
• Soundness of Maltese banks has been ranked in
  10th position.
• Malta is in the 12th position in the assessment
  carried out on the regulation of securities
  exchanges.
• 8th position on the strength of auditing and
  reporting standards.

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International Evaluation

• Maltas financial system appears to be healthy
  and well supervised . Malta has a comprehensive
  legal framework and strongly adheres to most of
  the international standards and codes. The
  authorities have undertaken major efforts in
  strengthening the supervisory framework
• (International Monetary Fund, Financial
  System Stability Assessment (FSSA), September
  2003)

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Independent Assessment based on Basel Core
Principles (BCP)International Organisation of
Securities Commission (IOSCO) International
Association of Insurance Supervisors (IAIS)
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Assessors-Piero Ugolini (former Assistant
Director IMF and mission Chief of the IMF/World
Bank team that conducted the 2002/3 FSAP
exercise)Richard Nun (former Deputy Director
Texas Banking/Finance Commission, Austin-Texas
and currently peripatetic expert in banking
Supervision IMF and Centennial Group
Washington D.C., USAMichael Kehr, Senior
Advisor International Policy/Affairs, Bafin,
Bundesanstalt fur, Finanzdienstleistungsaufsicht,
Federal Financial Supervisory Authority, Germany

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2002/3 FSAP Overall Outcome

• Maltas financial sector is sound and well
  supervised but very concentrated
• Very concentrated sector and strong reliance on
  real estate properties collateral
• Insurance and Securities not systemically
  important
• Insurance companies are healthy

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The 2010 Assessment BCP-IAIS-IOSCO

• Whats new?
• World wide dissemination of international
  standards and best practices
• Entry into EU 2004
• Concentration of Supervision in MFSA
• Expansion of financial sector and reputational
  risk/benefit

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2010 Overall Outcome

• Positive progress noted in all assessments
• Banking sector the most clear progress
• Insurances recent extensive changes in the
  Principles do not allow a proper comparison with
  2003
• Securities progress from an already relatively
  2002/3 positive assessment

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BCP Comparison

• 2010
• Assessment
• Compliant 21
• Largely Compliant 5
• Materially NC 0

• 2002/3 Assessment
• Compliant 11
• Largely Compliant 12
• Materially NC 1

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Insurance - IAIS

• October 2000 methodology 17 Principles
• October 2003 methodology 28 Principles

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IAIS Principles - Broad Comparison 2002/3-2010

• 2002/3---17 ICP
• Observed 12
• Broadly observed 3
• Materially non observed 2

• 2010 ---28 ICP
• Observed 22
• Largely observed 4
• Partly observed 2
• Non observed 0

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IOSCO 2002/3- 201030 Principles

• 2010
• Implemented 24
• Broadly implemented 4
• Partly implemented 0
• Non implemented 0
• Not applicable 2

• 2002/3
• Implemented 22
• Broadly implemented0
• Partly implemented 6
• Non-implemented 0
• Not applicable 2

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Conclusions

• Overall progress and strong framework
• -- Entry in EU
• -- Implement international standards and best
  practices
• -- Reorganization at the MFSA
• -- Good communication and transparency

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MALTA
Critical Success Factors
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Legislation

• Flexible versatile legal framework
• Civil Law jurisdiction
• Business legislation based on English law
  principles
• Old, established juridical system
• Laws and Regulations published in English and
  Maltese

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Financial Reporting

• IFRS International Financial Reporting
  Standards since 1997
• Accounting records and bank accounts in foreign
  currencies
• PWC, Deloitte, Ernst Young, KPMG, Grant
  Thornton, PKF, BDO, Mazars etc

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Human Resources

• Multilingual community
• English is the working language. Well-spoken
  Italian, French, Spanish, German
• Free market for labour
• Availability of multilingual graduates in
  disciplines related to financial services as also
  administrative and clerical staff
• High levels of productivity.

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Cost Structure - Average Salaries
General Manager Euro74,000
Senior IT Manager Euro45,000
Finance and admin manager Euro26,000
Network Admin/Programmer Euro24,000
Senior/executive staff Euro19,000
Office clerk/secretary Euro14,000
Receptionist Euro12,000
Source Malta Financial Services Authority Source Malta Financial Services Authority
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Cost structures - Office Rent
(Euros per sq.m. per annum)

• Dublin 524
• London 984
• Paris 924
• Frankfurt 555
• Malta 135
• Source CB Richard Ellis Global Market Rents
  (Nov 2010) and MFSA Data

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Taxation

• Modern and competitive tax regime
• Tax-efficient base for outsourcing activities
• Tax system based on the full imputation system
• 35 tax on company profits
• shareholders receive full credit for any tax paid
  by the company from which a dividend is received
• Double tax treaties with 56 countries

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The Opportunities

• Funds Services
• Managed insurance and Re-Insurance Companies
• Management of Trusts
• Management of Pension Schemes
• Financial Institutions
• Banking Services

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COMPETITIVE HIGH QUALITY SKILLS

STEADFAST REGULATION
AGILITY
IN THE MARKET
MALTA - the culture of getting things done
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Thank you!
www.mfsa.com.mt