The cornerstone of investment services regulation is the Investment Services Act (Cap. 370 of the Laws of Malta), as amended, which provides for two types of licences, namely Investment Services Licences and Collective Investment Schemes Licences. The Investment Services Act is intended to comprehensively regulate the provision of investment services whilst securing adequate investor protection.
Investment Services Providers
The Investment Services Rules for Investment Services Providers recognises and regulates four principal categories of Investment Services licences:
|Licence Holders are authorised to receive and transmit orders in relation to one or more instruments and, or provide investment advice and, or place instruments without a firm commitment basis but not to hold or control Clients’ Money or Customers’ Assets. (This Category does not include managers of Collective Investment Schemes).|
|Licence Holders are authorised to receive and transmit orders, and, or provide investment advice in relation to one or more instruments and, or place instruments without a firm commitment basis solely for professional clients and, or eligible counterparties but not to hold or control Clients’ Money or Customers’ Assets. (This Category does not include managers of Collective Investment Schemes).|
|Licence Holders authorised to provide any Investment Service and to hold or control Clients’ Money or Customers’ assets, but not to operate a multilateral trading facility or deal for their own account or underwrite or place instruments on a firm commitment basis. Fund Managers (i.e. UCITS Management Companies, Alternative Fund Managers and De Minimis Fund Managers) are encompassed in this category.|
|Category 3||Licence Holders authorised to provide any investment service and to hold and control Clients’ Money or Customers’ Assets.|
|Category 4a||Licence Holders authorised to act as trustees or custodians of all types of Collective Investment Schemes.|
|Licence Holders authorised to act as custodians to (a) AIFs which have no redemption rights exercisable during the five year period from the date of initial investment and which generally do not invest in assets that must be held in custody in terms of the Investment Services Rules and/or (b) AIFs marketed in Malta in terms of regulation 7 of the Investment Services Act (Alternative Investment Fund Manager) (Third Country) Regulations.|
The Final Resources Requirements/Capital Resources Requirements, reporting obligations and applicable fees vary according to the type of licence that has been granted. Furthermore, some of the categories of Investment Services Licences are cumulative, but this is not the case with Category 4 Licences. Therefore, in those cases for example where an applicant wants to provide investment services encompassed under Category 2 and 4, it will be necessary to apply for both a Category 2 and a Category 4 licence.
Investment Services Licence Holders (apart from Category 2 De Minimis AIFMs) may also benefit from the respective European passport (under the MiFID, AIFMD or UCITS Directive).
Category 2 and 3 Investment Services Licence Holders are further required to participate in and submit annually a variable and a fixed contribution to the Investor Compensation Scheme. Category 1 and Category 4 Investment Services Licence Holders are exempt from such requirement.
For information on collective investment schemes, please follow the link.