There will be no need for legislative changes and amendments after technical guidelines on an Islamic securities market are published in the first half of the year, the Finance Ministry told The Times Business.
Asked about the next step following the guidelines' release and whether changes to legal frameworks were needed, a ministry official said this week: "It does not appear that this would be necessary."
Finance Minister Tonio Fenech told Parliament on January 26 that the Malta Financial Services Authority was concluding specialist studies which will lead to the guidelines' publication.
According to the official, the guidelines will only explain how the 'Investment Services Rules for Collective Investment Schemes and Professional Investor Funds' would apply to particular aspects of Shariah funds and concepts.
Institutions involved in Shariah-compliant securities may begin to operate in Malta after the guidelines are issued by applying for a licence under the Investment Services Act, similarly to any other fund.
"In other words, Islamic funds can already apply for a licence under the current framework," the official pointed out.
Meanwhile, studies on the potential introduction of Islamic banking in Malta have encountered legal and technical difficulties which are being examined further.
The official did not divulge what the difficulties involved and would only say that the matter was still under consideration.
Mr Fenech had pointed out in Parliament last month that the original consultation document and the feedback statement later issued by the MFSA on the introduction of Islamic finance, referred specifically to the banking sector, including retail banking and other banking transactions like project financing.
Documentation also referred to the securities sector which encompassed fund management.
The consultation document did not refer to the insurance sector, which, it was planned, would be handled at a later stage, Mr Fenech said.
"The European insurance sector is currently going through a process of fundamental legislative and regulatory change. In these circumstances, it is not possible to give a definite date," the ministry said.
Asked whether authorities had a tentative timeframe for the launch of a complete, or at least partial, Islamic finance framework, particularly in view of advances made by competing jurisdictions, the ministry said: "Islamic finance in other European jurisdictions is evolving gradually over the years and has presented challenges in every jurisdiction which, like Malta, is trying to make it possible for Islamic financial services to operate within established regulatory frameworks."
On February 2, Labour MP Leo Brincat called on the government to set up an Islamic banking sector which would give Malta a niche in a financial market that was developing rapidly.
Speaking during the second reading of the Budgetary Measures Implementation Bill in Parliament, Mr Brincat said the opposition would welcome such an initiative and contribute to its success.
The government could use the excellent relations Malta had with the Maghreb countries to foster this financial activity, he pointed out, adding that there were Arab financial entities in Europe which would be ready to join this venture in Malta.