How to obtain the Malta Investment Services Licence

RTS Advisory Ltd offers professional consultancy aimed at obtaining the licence to offer investment services in Malta. (Investment Services Act, 1994) 

Maltese law allows natural or legal persons who have obtained an investment services licence from the MFSA or passported the same type of licence from an EU Member State to operate in the financial sector.

The Maltese licence for investment services can be passported in all EU member states through the automatic notification procedures available from the MFSA regulator, which communicates, to the member state, the name of the company that has the intention to operate outside Malta. Upon receipt of the request, the Member State shall register the Maltese investment company in its registers. The Maltese investment company may operate in any EU member state either by establishing a branch office or remotely under the freedom to provide services. 

The investment services which are the object of the licence are the following:

1. Reception and transmission of orders in relation to one or more instruments;
2. Execution of instructions on behalf of third parties;
3. Trading on own account;
4. Management of third-party assets;
5. Trustee, custodian or nominee services;
6. Investment consultancy in the form of personal recommendations;
7. Acquisition and custody of financial instruments, or placement of financial instruments with irrevocable commitment;
8. Placement of financial instruments without irrevocable commitment;
9. Management through the multilateral trading system;

 

The financial instruments covered by the investment services legislation are:

1. Transferable securities including shares, bonds and other similar securities;
2. Money market instruments, such as Treasury bills, certificates of deposit and commercial cards, excluding payment instruments;
3. Units of collective investment schemes for savings;
4. Derivative instruments related to transferable securities, currencies, interest rates or yields, or other derivatives, financial indices or financial instruments that can be settled by physical delivery or in cash;
5. Derivatives relating to commodities that can be settled in cash;
6. commodity-related derivatives that can be physically settled and traded on a regulated market or multilateral business system;
7. Commodity-related products which can be physically settled, which are not for commercial purposes, but which are cleared and executed through recognised clearing houses or subject to regular margin calls;
8. Derivatives for the transfer of credit risk;
9. Rights under a Contract for Difference (CFD);
10. Derivatives related to climate variables, transport tariffs, emission allowances, inflation rates or other official economic statistics, settled in cash;
11. Certificates or other instruments conferring ownership rights in respect of any other instrument;
12. Exchange purchased or held for investment purposes.

The Investment Services Licence is divided into four categories:

CATEGORY 1

1. Authorised to transmit and receive orders in relation to one or more financial instruments and, or provide financial advice and, or place financial instruments without irrevocable commitment, but not hold or control the third party funds or assets. (This category does not include the management service for investment funds)
2. Authorised to transmit and receive orders, and/or to provide financial advice in relation to one or more instruments, and/or, place financial instruments without irrevocable commitment exclusively for professional clients or eligible counterparties, but not to hold or control third party funds or assets. (This category does not include the management service for investment funds)

CATEGORY 2
Authorised to provide any investment service and hold or control the clients’ funds and/or assets, but not to manage “multilateral trading facility” or manage on its own account or subscribes to or place instruments without irrevocable commitment. 

CATEGORY 3
Authorised to provide any type of investment service and to hold or control clients’ funds or assets. 

CATEGORY 4
Authorised to act as Trustee and custodian for collective investment funds for savings. 

Evaluation criteria for granting the licence:
The MFSA regulator, in order to issue a licence to offer of investment services, shall take into account:

1. The degree of clients’ protection
2. The protection of Malta’s international reputation
3. Promotion of competition

In general, there are three criteria that have to be met by the applicants for a licence:

• Integrity
• Competence
• Solvency

Integrity concerns the applicants and their employees, who in the past must have had an irreproachable conduct towards their clients and third parties in general. 

Competence means that applicants for a licence must demonstrate that they have gained knowledge, professional competences and experience in the field related to their licence application. 

Solvency means ensuring that applicants have sufficient economic resources to carry the business forward. 

Process for obtaining the license:

STEP 1 – PREPARATORY

1. Preliminary meeting with the MFSA regulator, where the promoters are required to explain in detail the operational dynamics of the investment company.
2. Presentation of a specific form with all the required documentation together with the payment receipt of the non-refundable registration fee. The regulator may send specific requests to applicants within 3 weeks of submitting the documentation.
3. The regulator is required to verify the applicants’ good reputation requirements also through direct contact with foreign regulatory authorities;
4. The regulator, at its discretion, may determine the licensing level to carry out investment services provided in the legislation. (Ex.  Portfolio management, order transactions  etc.)

STEP TWO – PRE LICENSING

1. The regulator shall express an opinion on the possibility of approving the issue of the licence;
2. Submission of signed copies forms for additional enquiries that includes in attachment the additional or corrected documentation requested by the regulator;
3. Resolution and completion of all the issues that have emerged during the application process;
4. Issue of the licence.

THIRD PHASE – POST LICENCE / BEFORE INITIATING WITH THE ACTIVITY
Before the formal start of activities, the regulator may at its discretion review the documentation and if necessary request further clarification. 

Fees
All the fees are in Euro

	Application Fee	License Issue fee
Category 1 A	2,500	2,000
Category 1 B	3,000	2,750
Category 2	5,000	4,500
Category 3	7,000	6,000
Category 4a	17,000	15,000
Category 4b	7,500	500

Minimum capital requirement:
The paid-up share capital must amount to 0.02% of the assets managed, with a minimum as shown in the table below and a maximum of €10,000,000.

	Minimum Initial Capital
Category 1 A	50,000
Category 1 B	20,000
Category 2	125,000
Category 3	730,000
Category 4	730,000