A four member delegation from the Budgetary Affairs Committee of the Chamber of Deputies of the Parliament of the Czech Republic held meetings with a number of public institutions during a recent visit to Malta. The delegation was headed by Mr Milos Patera, who also acts as the Chairman of the Sub-committee on Financial Markets and Lotteries.

The delegation was given an overview of the financial services industry in Malta by MFSA Chairman Prof Joe Bannister who was accompanied by members of the Authority's senior management team.

The ensuing discussions centred on current issues affecting financial services in Europe as well as other topics of international relevance. The strength of the banks in the respective countries and the ability of current capital requirements in Europe to withstand pressures in the financial system of the magnitude seen in recent months were among the topics discussed.

Other views were shared about the financial services infrastructure in both countries particularly aspects related to the autonomy, financial independence and accountability of regulatory institutions. The supervision of rating agencies and other harmonised regulation being implemented in the EU were also discussed.

Participation at the 12th European Captive Rendezvous

The MFSA has participated in the 12th European Captive Rendezvous held in Luxembourg between the 16th and 19th of June. The Rendezvous was organised by Risk and Insurance Research Group (RIRG) with a participation of over 130 delegates from the European insurance industry. The conference is held to discuss developments in captive insurance, risk management and alternative risk and is addressed by top calibre speakers from Europe's most prominent businesses and the captive and ART industry.

Presentations focussed on emerging trends in ART and captives, the evolution of the industry, the effects of the credit crunch on the insurance industry, alternative captive structures, direct writing, Solvency II and tax and transfer pricing considerations for captive insurance. FinanceMalta and the Malta Insurance Management Association (MIMA) set up a joint exhibition stand during the event.

Consultations underway

(i) Proposed EU Directive on Alternative Investment Fund Managers

On the 29th April, 2009 the European Commission proposed a Directive on Alternative Investment Fund Managers (AIFM). The proposed Directive is considered as a fundamental part of the European Commission's response to the financial crisis.

The main aim of the proposal is that of creating a comprehensive and effective regulatory and supervisory framework for AIFM in the European Union. The proposed Directive will introduce harmonised regulatory and supervisory framework for AIFMs in the EU. For the purposes of the Directive, AIF are defined as all funds that are at present not harmonised under the UCITS Directive. The objectives of the proposed Directive are to:

[a] Ensure that all AIFM are subject to appropriate authorisation and registration requirements;

[b] Provide a framework for the enhanced monitoring of macro-prudential risks, e.g. through sharing of relevant data among supervisor;

[c] Improve risk management and organisational safeguards to mitigate micro-prudential risks;

[d] Enhance investor protection;

[e] Improve public accountability for AIF holding controlling stakes in companies; and

[f] Develop the single market for AIFM.

The proposed directive requires the approval of the European Parliament and Council. The Authority is currently considering the implications of the proposed directive on the local framework for the regulation of Non-UCITS collective investment schemes and their service providers. Local operators are encouraged to familiarise themselves with the proposed directive and to forward any comments to the Authority by mail addressed to: The Director - Securities Unit, Malta Financial Services Authority Notabile Road, Attard BKR 3000 or e-mail: su@mfsa.com.mt

A copy of the European Commission's proposal and other relevant documentation is available on the EU's web-site through the following web-link: http://ec.europa.eu/internal_market/investment/alternative_investments_en.htm

(ii) Proposed amendments to the Investment Services Rules applicable to PIFs targeting Experienced Investors

The MFSA is currently consulting with the industry the proposed amendments to the Investment Services Rules applicable to PIFs targeting Experienced Investors. Following a review of the current requirements for PIFs targeting Experienced Investors, the MFSA considers it appropriate to introduce certain investment restrictions in the Standard Licence Conditions applicable to these funds which - subject to the investor qualifying as ‘experienced' - may be sold to persons who may not necessarily be high net worth investors and who are not required to satisfy a high minimum investment threshold.

The objective of the proposed changes to the regulatory requirements for Experienced Investor PIFs, is that of ensuring a minimum level of risk diversification given that with the exception of the five hedge fund rule for funds of hedge funds, there are currently no prescriptive requirements relating to risk-spreading, with the consequent risk that such funds may be excessively exposed to a single issuer or counterparty.

Interested parties are requested to send their submissions in writing to the Director - Securities Unit, MFSA, or by e-mail at su@mfsa.com.mt, by not later than the 30th June 2009.

Further details about the proposed amendments can be downloaded from the MFSA website www.mfsa.com.mt under Announcements - Consultation Papers.

(iii) EU Consultations

The European Commission is currently consulting on responsible lending and borrowing and on the final report of the Expert Group on Credit Histories. The following are the links to the two consultations:

(i) Consultation on responsible lending and borrowing (information available at: http://ec.europa.eu/internal_market/finservices-retail/credit/responsible_lending_en.htm). The EU has launched this consultation in an attempt to tackle credit market risks that were at the the root of the current financial crisis. The consultation covers, amongst other things, the advertising and marketing of credit products, the pre-contractual information provided, ways to assess product suitability and borrower creditworthiness, advice standards, responsible borrowing and issues relating to the framework for credit intermediaries (e.g. disclosure, registration, licensing and supervision).

(ii) Consultation on the final report of the Expert Group on Credit Histories (information available at: http://ec.europa.eu/internal_market/finservices-retail/credit/history_en.htm)

Interested parties are invited to send their comments to the Commission by 31 August 2009 (instructions on the Consultations website at http://ec.europa.eu/internal_market/consultations/index_en.htm).

A public hearing on responsible lending and borrowing will be held in Brussels on 3 September 2009 to discuss with stakeholders the most appropriate policy responses to the challenges faced by borrowers and the financial services industry, and to draw together the main conclusions from the consultation. A draft agenda is available at: http://ec.europa.eu/internal_market/finservices-retail/credit/responsible_lending_en.htm.

Warnings to Investors

Over the past month the MFSA has received and circulated a number of warnings to investors issued by overseas regulators. Full releases can be accessed from the Warnings for Investors section in the MFSA website: (www.mfsa.com.mt).

Licences issued in May/June

i Collective Investment Scheme (CIS) Licences

  • Additional CIS licence issued to NBCG Fund SICAV plc in respect of one sub fund. This fund is a Professional Investor Fund targeting Qualifying Investors.
  • Additional CIS licence issued to VIP Select Funds SICAV plc in respect of four sub funds. This fund is a Professional Investor Fund targeting Qualifying Investors.
  • CIS licence issued to DGV Investment Fund SICAV plc in respect of one sub fund. This fund is a Professional Investor Fund targeting Extraordinary Investors.
  • CIS licence issued to Trevose Global Opportunity Fund SICAV plc in respect of one sub fund. This fund is a Professional Investor Fund targeting Qualifying Investors.
  • CIS licence issued to The ARP Diversified Futures Fund SICAV plc in respect of one sub fund. This fund is a Professional Investor Fund targeting Qualifying Investors.
  • CIS licence issued to Foinavon SICAV plc in respect of one sub fund. This fund is a Professional Investor Fund targeting Extraordinary Investors.
  • CIS licence issued to Wood & Company Fund SICAV plc in respect of one sub fund. This fund is a Professional Investor Fund targeting Extraordinary Investors.

ii Investment Services

  • Category 2 Investment Services licence issued to MPM Capital Limited.
  • Category 2 Investment Services licence issued to Theorema Advisors Limited.

iii Insurance Business

  • Authorisation issued to Platinum Insurance Limited to carry on in and from Malta business of insurance restricted to risks situated outside Malta in two classes of general business.

Surrender of Collective Investment Scheme licences

  • MFSA has accepted the surrender of CIS licence granted to FMG Funds SICAV plc in respect of the FMG (EU) New Balkans Fund.
  • MFSA has accepted the surrender of CIS licence granted to VIP Select Funds SICAV plc in respect to BFI Asset Allocation Fund.

Surrender of Fund Administration Recognition certificate

  • MFSA has accepted the surrender of Fund Administration Recognition certificate granted to Union Capital Management Limited.


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