Transcript Slide 1

Malta Financial Services Authority
Malta as a finance centre:
A Model Of Stability
in a Changing Landscape
MALTA
Framework for the Development
of Financial Services
FinancialServices
Services Legislation
Financial
Legislation
Primary Legislation
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Banking Act
Financial Institutions Act
Insurance Business Act
Insurance Intermediaries Act
Investment Services Act
Special Funds Act [Retirement
Pensions Act]
Trustees and Trusts Act
Malta Financial Services Authority Act
Central Bank of Malta Act
Financial Services Legislation
Supporting Legislation:• Companies (includes Limited
Partnerships) Act
• Netting upon Insolvency Act
• Securitisation Act
• Prevention of Financial Market Abuse Act
• Professional Secrecy Act
• Prevention of Money Laundering Act
Regulation
Malta Financial Services Authority (MFSA)
• Single regulator for financial services
• Regulates banking, financial institutions, insurance
companies, investment services companies, securities,
stock exchanges and listing, trust management
companies, pension schemes
• Autonomous public institution, selffunded
Avoidance of Prescriptive Regulation to
allow promoters the flexibility to operate
Main Objectives of the MFSA
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to regulate, monitor and supervise financial
services in Malta;
to promote the general interests and legitimate
expectations of consumers of financial services,
and to promote fair competition practices and
consumer choice;
to advise the Government generally on the
formulation of policies in the field of financial
services, and to make recommendations to
Government as to any action which in the opinion
of the Authority, it would be expedient to take in
relation to matters in respect of which the
Authority has such duties;
MFSA - Structure
MFSA
Legal & Int Affairs Unit
Board Secretary
Board of Governors
Chairman
Co-ordination Committee
Supervisory Council
Company Registry
Board of Management
and Resources
Director General
Registrar of Companies
Chief Operations Officer
Functions – Board of Governors
• Board of Governors is composed of seven
members including the Chairman. Chairman and
Governors appointed for a period of up to five
years and their appointment may be renewed for
further periods of five years;
• Board of Governors sets policy;
• The Legal and International Affairs Unit acts as
Secretary to the Board of Governors and the CoOrdination Committee.
Composition of the Supervisory
Council
Director General
Supervisory Council
Director
Banking
Supervision
Director
Director
Insurance &
Pensions
Supervision
Securities &
Markets
Supervision
Director
Regulatory
Development
Director
Authorisation
Remit of the Supervisory
Council
• Art 10. (1) of the MFSA Act states:-
– The Supervisory Council shall be responsible
for the approval of and for the issuing of
licences and other authorisations, for the
processing of applications for such licences
and authorisations, and for the monitoring
and supervision of persons and other entities
licensed or authorised by the Authority in the
financial services sector.
Board of Management &
Resources
MFSA Act Art 11 states
“.....responsible for carrying out the day-to-day management and finances of the
Authority, including business development and ancillary services and for the
general co-ordination of the Authority’s administrative affairs and shall be
composed of the persons responsible for such activities as may be designated by
the Board of Governors”
BOARD OF MANAGEMENT &
RESOURCES
Chief Operations Officer
Finance &
Administration
Unit
Human
Resource &
Training Unit
Information
Systems Unit
Communications
Unit
Remit - Board of Management & Resources
Finance &
Admin
HRD &
Training
• Finance – Accounting records, internal control, budgets
• Administration - premises, transport, security, cleaning
• Procurement, Operational risk management
• Internal personnel training
• Industry training programmes
• HR functions – recruitment, personnel records, staff appraisals
• Systems development, outsource system applications, data security & integrity
• Implement new systems & infrastructure, security, support, maintenance
Information
• System back-up and business continuity
Systems
• Information & Public Relations – media, enquiries, website, intranet
Communic - • Events – conferences, seminars, training logistics, conference facilities
ations
Co-Ordination Committee
Co-ordinates the application of policies approved by the
Board of Governors. Serves as a channel of
communication between the Board of Governors and the
other organs of the Authority
Chairman Board of Governors
Director General –
Supervisory
Council
Registrar of
Companies
Secretary - Board
of Governors /
Director Legal &
Int. Unit
Chief Operations
Officer –
Chief Operations
Board
of
Officer - Board of
Management
&
Development and
Resources
Resources
Membership of International
Organisations
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New EU Supervisory Architecture:• European Securities & Markets Authority (ESMA)
• European Banking Authority (EBA)
• European Insurance and Occupational Pensions Authority
(EIOPA)
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International
(IAIS)
Association
of
Insurance
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International
(IOSCO)
Organization
of
Securities
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International
(IOPS)
Organisation
of
Pensions
Supervisors
Commissions
Supervisors
Memoranda of Understanding
currently in force
Bilateral MoU’s and
Agreements with
Foreign Regulators
• 24 MoU’s in 22 countries & 2 Letter Agreements
• Covering Banking, Insurance, Securities, Trusts,
Pension funds, exchange of information, etc
Bilateral MoU’s –
Local Authorities
• Office of Fair Competition – exchange of
information & assistance
• CBM – exchange of information and payment
and securities settlement systems
Multilateral
MoU’s &
Protocols
• MOF/CBM – co-operation in financial crisis
• FSA/EU Central Banks & Fin.Min. – fin. stability
• CEIOPS – Insurance and Occupational Pensions
• CESR & IOSCO – Securities
• IAIS - Insurance
MFSA
Human Resources
Number of Employees
Full Time
Part Time
180
7
160
5
140
3
3
120
100
161
80
60
126
135
146
40
20
0
2007
2008
2009
2010
Males and Females
180
160
140
94
120
100
81
70
72
59
63
65
74
2007
2008
2009
2010
80
60
40
20
0
Male
Female
Employee Age Bracket
Age Bracket,
50 -, 14%
Age Bracket,
41-50, 13%
Age Bracket,
31-40, 33%
Average Age:
35 ½ years
Age Bracket,
18-30, 40%
Qualified Personnel
Diploma, 39
Diploma, 39
Diploma, 36
Diploma, 25
1st Degree, 100
1st Degree, 67
1st Degree, 74
1st Degree, 83
2nd Degree, 27
2nd Degree, 29
2nd Degree, 31
2nd Degree, 35
2007
2008
2009
2010
International Evaluation
• FATF – Financial Action Task Force
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(1999)
OECD – Organisation for Economic
Co-operation and Development (2000)
Council of Europe Money Laundering
Committee (2001)
EU Peer Review (2002)
International Monetary Fund – full FSAP
(2003)
International Evaluation
• “Malta embraces international tax standards for
transparency and exchange of information and has
joined OECD member countries in committing to
eliminate harmful tax practices.”
(OECD Official News Release, June 2000)
• “ a comprehensive and robust legal framework and a
particularly well-regulated financial sector”
(Report of the Council of Europe Money-laundering Committee, April
2003)
International Evaluation
• The World Economic Forum Report on
Competitiveness (2010-2011) Report places:
1. Malta in the 11th position in financial market
development. Key performance indicators for the
financial services sector also confirm the sector’s
standing as a leading innovator in the Maltese
economy.
2. Soundness of Maltese banks has been ranked in 10th
position.
3. Malta is in the 12th position in the assessment
carried out on the regulation of securities
exchanges.
4. 8th position on the strength of auditing and
reporting standards.
International Evaluation
• “Malta’s financial system appears to be healthy and
well supervised …. Malta has a comprehensive legal
framework and strongly adheres to most of the
international standards and codes…. The authorities
have undertaken major efforts in strengthening the
supervisory framework”
(International Monetary Fund, Financial System Stability Assessment
(FSSA), September 2003)
Independent Assessment based on:
Basel Core Principles (BCP)
International Organisation of Securities
Commission (IOSCO)
International Association of Insurance
Supervisors (IAIS)
Assessors:Piero Ugolini (former Assistant Director – IMF and mission
Chief of the IMF/World Bank team that conducted the
2002/3 FSAP exercise)
Richard Nun (former Deputy Director – Texas
Banking/Finance Commission, Austin-Texas; and currently
peripatetic expert in banking Supervision – IMF and
Centennial Group – Washington D.C., USA
Michael Kehr, Senior Advisor International Policy/Affairs,
Bafin, Bundesanstalt fur, Finanzdienstleistungsaufsicht,
Federal Financial Supervisory Authority, Germany
2002/3 FSAP Overall
Outcome
• Malta’s financial sector is sound and well
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supervised but very concentrated
Very concentrated sector and strong
reliance on real estate properties collateral
Insurance and Securities : not systemically
important
Insurance companies are healthy
The 2010 Assessment:
BCP-IAIS-IOSCO
What’s new?
• World wide dissemination of
international standards and best
practices
• Entry into EU – 2004
• Concentration of Supervision in MFSA
• Expansion of financial sector and
reputational risk/benefit
2010 Overall Outcome
• Positive : progress noted in all
assessments
• Banking sector : the most clear
progress
• Insurances : recent extensive
changes in the Principles do not
allow a proper comparison with 2003
• Securities : progress from an already
relatively 2002/3 positive
assessment
BCP Comparison
• 2002/3
• 2010
Assessment
Assessment
• Compliant : 11
• Largely
• Compliant :21
• Largely
Compliant: 12
Compliant: 5
• Materially NC: 1 • Materially NC : 0
Insurance - IAIS
• October 2000 methodology : 17
Principles
• October 2003 methodology : 28
Principles
IAIS Principles Broad Comparison 2002/3-2010
• 2002/3---17 ICP
• 2010 ---28 ICP
• Observed: 12
• Observed : 22
• Broadly observed: 3 • Largely observed: 4
• Materially non
• Partly observed : 2
observed: 2
• Non observed : 0
32
IOSCO 2002/3- 2010
30 Principles
• 2010
• 2002/3
• Implemented : 22 • Implemented: 24
• Broadly
• Broadly
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implemented:0
Partly
implemented: 6
Nonimplemented: 0
Not applicable: 2
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implemented: 4
Partly
implemented: 0
Non
implemented: 0
Not applicable: 2
Conclusions
Overall progress and strong framework
-- Entry in EU
-- Implement international standards
and best practices
-- Reorganization at the MFSA
-- Good communication and
transparency
MALTA
Critical Success Factors
Legislation
• Flexible & versatile legal framework
• Civil Law jurisdiction
• Business legislation based on English law
principles
• Old, established juridical system
• Laws and Regulations published in
English and Maltese
Financial Reporting
• IFRS – International Financial
Reporting Standards since 1997
• Accounting records and bank
accounts in foreign currencies
• PWC, Deloitte, Ernst & Young,
KPMG, Grant Thornton, PKF,
BDO, Mazars etc
Human Resources
• Multilingual community
• English is the working language. Wellspoken
Italian,
French,
Spanish,
German;
• Free market for labour;
• Availability of multilingual graduates in
disciplines related to financial services as
also administrative and clerical staff;
• High levels of productivity.
Cost Structure - Average Salaries
General Manager
Senior IT Manager
Euro74,000
Euro45,000
Finance and admin
manager
Network
Admin/Programmer
Euro26,000
Euro24,000
Senior/executive staff Euro19,000
Office
clerk/secretary
Receptionist
Source: Malta Financial Services Authority
Euro14,000
Euro12,000
Cost structures - Office Rent
(Euros per sq.m. per annum)
Dublin
524
London
Paris
984
Frankfurt
555
Malta
924
135
Source: CB Richard Ellis – Global Market Rents (Nov 2010) and
MFSA Data
Taxation
• Modern and competitive tax regime
• Tax-efficient base for outsourcing activities
• Tax system based on the full imputation
system:
• 35% tax on company profits ……
• shareholders receive full credit for any tax
paid by the company from which a
dividend is received
• Double tax treaties with 56 countries
The Opportunities
• Funds Services
• Managed insurance and ReInsurance Companies
• Management of Trusts
• Management of Pension
Schemes
• Financial Institutions
• Banking Services
COMPETITIVE HIGH QUALITY SKILLS
STEADFAST REGULATION
AGILITY IN THE MARKET
MALTA - the culture of getting things done
Thank. you!
www.mfsa.com.mt