MFSA Newsletter - Next generation business
Some months prior to EU accession the MFSA had published a road map for Maltese financial services in the single market. The legal framework for attracting new types of financial activity was in place - bells, whistles and all - and the country was...
Some months prior to EU accession the MFSA had published a road map for Maltese financial services in the single market. The legal framework for attracting new types of financial activity was in place - bells, whistles and all - and the country was well on the way to gaining widespread respect as a well-regulated jurisdiction. The domestic market had grown in sophistication and competition was driving new products onto the shop floor.
Of the 10 countries joining the EU, Malta's economy was the most open. The industry already had a degree of international business, mostly servicing this through international trading companies and a residence scheme for expatriates. Also, the brand names in financial services were operating in the local market. Our concern then was that the single market could level out our capacity to develop products and services of international calibre and to be able to hold on at least to a share of the local market. In the immediate future the ambition was "to jump ahead of the pack of newly-acceding countries looking for cross-border business in the financial services sector."
In order to do this we had to be able to attract and cultivate a new set of activities that would not only lead to wider growth in business and employment but to a rapid integration into the single market in financial services.
The stage was all set for attracting the first handful of captive insurance companies and registering the first hedge funds. Although skills had to be learnt, professional expertise had to be acquired in specific areas and practical know-how had to be available, the industry believed that all this was achievable.
We were therefore confident that we could start developing a capability to service the international market through fund services and insurance management. We could also see developments in trust management and the potential to expand and diversify our international banking activity.
With the exception of pension-related services, where progress has been slower than anticipated due to a number of local and international factors, there is little in what we set out to do that has not been achieved. The number of hedge funds has gone beyond the 250 mark and the fund services are here and expanding. Not only have we emerged as a leading captive insurance domicile, underpinned by the best names in the insurance management business, but we are well on the way to becoming an insurance and reinsurance hub. For every captive that has been licensed we have attracted some four or five other insurance companies doing third party business. Likewise trust services are thriving following a tremendous effort that was made to embed the trust concept into a legal environment that is founded on civil law. Meanwhile, direct investment and strategic alliances forged with overseas operators through painstaking and clever networking should ensure an ongoing build up of know-how that could be exploited competitively in new markets.
As all this continues to consolidate through these challenging times, it is also time to be looking at the next step in the transformation of the sector. In the funds area, where one can already notice a move into custody services, the next ground breaking development is likely to be in asset management. Asset managers no longer seem to be dead set on keeping their home in the traditional centres and appear disposed to consider alternative abodes through which they can still operate effectively.
The advent of the single management passport in the EU and increased specialisation on the local scene, are but two factors that should be nudging some of this activity Malta's way.
The insurance industry is undergoing a transformation with overseas business fuelling growth for the fourth year running. While the protected cell company framework is set to accelerate the pace of this growth it is perhaps time to be looking at sustaining this business in the longer term. The banking industry, a pillar of the sector in its own right, will certainly be looking at more customised services for these insurance companies such as international payments, custody and treasury management. Synergies will also be struck between the insurance and the investment sector that will add depth to the terrain and anchor the industry going forward.
Maltese trusts, on the other hand, are being discovered as excellent vehicles for personal pension provision. While the regulatory framework for trustees gives the settlor the much needed peace of mind to have the trust set up here, Maltese trust law is flexible enough to allow choice of law when it comes to administering the trust.
Here again clients seeking trust services in Malta are also increasingly looking for investment advice locally through their local trustees. Assets are also being moved to Malta. The law on foundations, which works on lines that are very similar to trust, has also started to be considered as a basis for settling family wealth for future generations. As in trusts, tax law allows the settlor the choice between using a foundation as a tax transparent vehicle or as a corporate structure.
In short, for the Maltese financial services sector the possibilities are truly endless. Now that a solid business has been built inside the EU, the MFSA is looking at building bridges across the globe, strengthening its regulatory ties and, as in the case of Islamic finance, providing yet more scope for the next generation of business.
MFSA website: http://www.mfsa.com.mt
Registry website: http://registry.mfsa.com.mt
Consumer website: http://www.mfsa.com.mt/consumer
Of the 10 countries joining the EU, Malta's economy was the most open. The industry already had a degree of international business, mostly servicing this through international trading companies and a residence scheme for expatriates. Also, the brand names in financial services were operating in the local market. Our concern then was that the single market could level out our capacity to develop products and services of international calibre and to be able to hold on at least to a share of the local market. In the immediate future the ambition was "to jump ahead of the pack of newly-acceding countries looking for cross-border business in the financial services sector."
In order to do this we had to be able to attract and cultivate a new set of activities that would not only lead to wider growth in business and employment but to a rapid integration into the single market in financial services.
The stage was all set for attracting the first handful of captive insurance companies and registering the first hedge funds. Although skills had to be learnt, professional expertise had to be acquired in specific areas and practical know-how had to be available, the industry believed that all this was achievable.
We were therefore confident that we could start developing a capability to service the international market through fund services and insurance management. We could also see developments in trust management and the potential to expand and diversify our international banking activity.
With the exception of pension-related services, where progress has been slower than anticipated due to a number of local and international factors, there is little in what we set out to do that has not been achieved. The number of hedge funds has gone beyond the 250 mark and the fund services are here and expanding. Not only have we emerged as a leading captive insurance domicile, underpinned by the best names in the insurance management business, but we are well on the way to becoming an insurance and reinsurance hub. For every captive that has been licensed we have attracted some four or five other insurance companies doing third party business. Likewise trust services are thriving following a tremendous effort that was made to embed the trust concept into a legal environment that is founded on civil law. Meanwhile, direct investment and strategic alliances forged with overseas operators through painstaking and clever networking should ensure an ongoing build up of know-how that could be exploited competitively in new markets.
As all this continues to consolidate through these challenging times, it is also time to be looking at the next step in the transformation of the sector. In the funds area, where one can already notice a move into custody services, the next ground breaking development is likely to be in asset management. Asset managers no longer seem to be dead set on keeping their home in the traditional centres and appear disposed to consider alternative abodes through which they can still operate effectively.
The advent of the single management passport in the EU and increased specialisation on the local scene, are but two factors that should be nudging some of this activity Malta's way.
The insurance industry is undergoing a transformation with overseas business fuelling growth for the fourth year running. While the protected cell company framework is set to accelerate the pace of this growth it is perhaps time to be looking at sustaining this business in the longer term. The banking industry, a pillar of the sector in its own right, will certainly be looking at more customised services for these insurance companies such as international payments, custody and treasury management. Synergies will also be struck between the insurance and the investment sector that will add depth to the terrain and anchor the industry going forward.
Maltese trusts, on the other hand, are being discovered as excellent vehicles for personal pension provision. While the regulatory framework for trustees gives the settlor the much needed peace of mind to have the trust set up here, Maltese trust law is flexible enough to allow choice of law when it comes to administering the trust.
Here again clients seeking trust services in Malta are also increasingly looking for investment advice locally through their local trustees. Assets are also being moved to Malta. The law on foundations, which works on lines that are very similar to trust, has also started to be considered as a basis for settling family wealth for future generations. As in trusts, tax law allows the settlor the choice between using a foundation as a tax transparent vehicle or as a corporate structure.
In short, for the Maltese financial services sector the possibilities are truly endless. Now that a solid business has been built inside the EU, the MFSA is looking at building bridges across the globe, strengthening its regulatory ties and, as in the case of Islamic finance, providing yet more scope for the next generation of business.
MFSA website: http://www.mfsa.com.mt
Registry website: http://registry.mfsa.com.mt
Consumer website: http://www.mfsa.com.mt/consumer