Around 75 per cent of the administrators for Malta-domiciled funds are local – even though it is not mandatory for them to be Malta-based, according to Kenneth Farrugia, the chairman of the Malta Funds Industry Association.
He was explaining how rapidly clusters had started to form in the jurisdiction, which has in a relatively small time carved out a niche for itself, in spite of competing with jurisdictions like Luxembourg and Ireland which had established themselves over three or four decades.
Malta already has 149 licence holders, many of which started off as with a token presence of two or three resources, but which have since grown to dozens of staff.
“Malta was very attractive for start-up operations but the companies which came here strengthened their substance in Malta… They did this consciously because they know that Malta works – but we are well aware that everything must be done to ensure that this positive experience endures,” he said.
The target is to encourage more of the licence holders to have not only local administrators but also managers and custodians – increasing the economic value-added –something Mr Farrugia has already seen happening. There are also more and more local directors being appointed.
For a small island, this is not without its challenges, and there are efforts under way to tackle the complex and cumbersome procedures to get a visa for third-country nationals needed to fill the skills gap
For a small island, this is not without its challenges, and there are efforts under way to tackle the complex and cumbersome procedures to get a visa for third-country nationals needed to fill the skills gap.
There is also a wealth of new initiatives like the introduction of the Notified Alternative Investment Manager, aimed at keeping Malta on the cutting edge – in fact, you cannot talk to anyone in the financial services industry for more than five minutes before they say ‘innovation’.
Mr Farrugia likes to point out how the entire infrastructure is geared towards a ‘can do’ attitude, and he cites as an example the presence this week of delegates attending the AGM of the European Funds and Asset Management Association (EFAMA).
EFAMA represents 28 member associations and 61 corporate members holding €21 trillion in assets under management of which €12.6 trillion was managed by 56,000 investment funds at end 2015.
EFAMA is the voice for all matters relating to the asset management industry, and the most vocal entity when it comes to EU directives. Until three years ago, Malta was one of only two member states which were not members. It got observer status for one year and then successfully applied for full membership, with Mr Farrugia now a member on the board, along with some 40 others representing national associations.
“It was a considerable task to organise the AGM here at short notice, especially in view of the complex logistics and high standards for everything from menus to security, not to mention finding rooms in high season. “But the whole industry came together, with members coming forward as sponsors, complemented by Finance Malta and the Malta Financial Services Authority, and even the Office of the Prime Minister offering to host the gala dinner at the Auberge de Castille,” MFIA executive secretary Anatoli Grech said.
Mr Farrugia has no doubt that the effort will be worth it: “Some of the most influential fund management companies will be here, represented by their top executives: Allianz, Amundi, Aviva Investors, Axa, Blackrock, BNP Paribas, Credit Suisse AG, Goldman Sachs, JP Morgan, Pictet & Cie, and Vanguard. It is a unique chance to showcase the Maltese jurisdiction and also a great opportunity for the local companies to network.
“But our whole experience with EFAMA has been tremendous. It has given us first-hand access to information on what is happening on the regulatory front – with monthly conference calls lasting four or five hours which take members through all the key regulatory amendments that are taking place. This has also put us in a position to advise the government on their possible national implications – positive or negative. And we have been able to argue strongly when we feel that there are developments which are not in the interest of Malta…” Mr Farrugia said.