Market infrastructure - Malta
Institutions and organisation
The Malta Stock Exchange became a reality upon enactment of the Malta Stock Exchange Act in 1990, and commenced its trading operations on 8 January 1992.
The Exchange was set up with the main objective to develop the capital market in Malta by facilitating the mobilisation of savings into productive investment through the primary market as well as to facilitate trading of listed securities through the provision of a secondary market.
The Malta Stock Exchange Act provided that the Exchange would be both the operator and regulator of the capital market i.e. besides supporting secondary market trading, the Exchange was also responsible for listing, licensing of members and oversight of the market. The legislation also provided for the Exchange to the exclusive place for trading of listed securities in Malta.
All the listed financial instruments, with the exception of Collective Investment Schemes which are traded through the respective fund managers, are traded on the market by Members of the MSE acting on behalf of and in accordance with the instructions of their clients.
Malta Stock Exchange plc has been appointed as the National Numbering Agency for Malta by the MFSA as Competent Authority. Malta Stock Exchange plc is, therefore, responsible for issuing International Securities Identification Numbers (ISINs) to Malta registered financial instruments.
In its capacity as National Numbering agency, Malta Stock Exchange plc is a member of the Association of National Numbering Agencies (ANNA).
Malta Stock Exchange plc has been appointed as the Officially Appointed Mechanism (OAM) for Malta by the MFSA as Competent Authority, in terms of the Transparency Directive.
CSD - Malta Stock Exchange
In terms of Article 24 of the Financial Markets Act (Cap. 345 of the Laws of Malta) and Article 36 of the Central Bank of Malta Act (Cap. 208 of the Laws of Malta), Malta Stock Exchange plc is licensed by the Malta Financial Services Authority (MFSA) as Component Authority to carry out the functions and provide the services of a central securities depository.
Central Bank – Central Bank of Malta
The Central Bank of Malta was established by the Central Bank of Malta Act on 17 April 1968. On 1 May 2004 the Bank joined the European System of Central Banks (ESCB) and on 1 January 2008 it became part of the Eurosystem.
The Bank contributes to the stability of the financial system through ongoing macro surveillance of the infrastructure, financial institutions and markets and by monitoring and assessing the implications for financial stability of economic and financial developments, both domestically and in the euro area. As part of its early warning system, the Bank analyses data to identify sources of risk and tests the resilience of the financial sector to withstand eventual shocks. This approach is supported by the development of a sound framework for the management of crisis situations and of contingency procedures. Ultimately, in order to safeguard financial stability, the Bank acts as lender of last resort.
Regulatory structure
The Financial Market Act was enacted on 1st October 2002, effectively repealing the Malta Stock Exchange Act.
The enactment of the Financial Markets Act resulted in the transfer of the Exchange’s regulatory responsibility to the Malta Financial Services Authority (MFSA), the Exchange attained the status of a recognised investment exchange and the exclusively of trading was removed.
With the transfer of regulatory responsibility to the MFSA, listing, licensing, and oversight of listed companies came under the jurisdiction of the MFSA, while oversight of the market was retained by the Exchange.
Listing was transferred to the MFSA as Listing Authority. A “two tier” process was created whereby “admissibility” or the approval of the issue of a prospectus fell within the remit of the Listing Authority while granting of admission to any of its recognised lists fell within the responsibility of the Exchange.
Licensing of Members also become the responsibility of the MFSA in terms of the Investment Services Act while “access” to the market is granted by the Exchange in terms of the Financial Markets Act.
The Exchange retained oversight of the market, however, investigatory powers were transferred to the MFSA.
A number of regulations were also issued under the Financial Markets Act in line with prevalent EU Law and also in preparation of new EU legislation that would be enacted in the near future such as the Markets in Financial Instruments Directive (MiFID) and the Transparency Directive. The Regulations issued under the Financial Markets Act referred to membership and access, transfer of listed securities, reporting requirements and off-market trading.
The Financial Markets Act was significantly amended again in 2007 principally to provide for the transposition of MiFID and the Transparency Directive into Maltese Law.
Other amendments within the Financial Markets Act directly effecting the Exchange referred to new provisions regarding the licensing and supervision of central securities depositories. The Exchange was in fact issued with two licenses – one to provide the services of a regulated market (replacing the previous status of a recognised investment exchange) and the other to operate a central securities depository.
Other provisions included in amendments to the Financial Markets Act provided for the new corporate structure for the Exchange, whereby from a corporate entity set up under a specific law it would be possible to set up the Exchange as a public limited company set up under the Companies Act.