Investment Services

Regulation of Investment Services

The provision of investment services is regulated by the Investment Services Act (Chapter 370 of the Laws of Malta) (“ISA”) that apart from establishing the regulatory framework for the provision of investment services, also provides for adequate investor protection. This legislation also deals with the appointment of the Malta Financial Services Authority (“MFSA”) as the competent authority responsible to administer the provisions of the ISA, particularly as regards licensing, supervision and overall regulation. Apart from the main legislation, the ISA is also supported by a number of subsidiary legislations (known as regulations, dealing with specific areas) and also backed up by investment services rules issued by the MFSA, which rules have force of law.

A valid investment services license must be issued to:-

  • any person who intends to provide an investment service in or from within Malta
  • any body or association formed in accordance with or existing under the laws of Malta that intends to provide an investment service in or from within a country, territory or other place outside Malta.

Categories of Licences

There are four categories of investment services licences as follows.

Category 1a Licence:
Applies to persons who intend to carry out any receiving and transmitting orders in relation to one or more instruments, providing investment advice, placing instruments without a firm commitment basis. This licence does not authorise licence holders to hold or control clients’ money or customers’ assets. This licence does not include managers of collective investment schemes.

Category 1b Licence:
Applies to persons who intend to carry out any receiving and transmitting orders, provide investment advice in relation to one or more instruments, placing instruments without a firm commitment basis solely for professional clients and / or eligible counterparties. This licence does not authorise licence holders to hold or control clients’ money or customers’ assets.

Category 2 Licence:
Applies to persons who intend to provide any investment service and hold or control clients’ money or customers’ assets. This licence does not authorise licence holders to operate a multilateral trading facility or deal for their own account or underwrite or place instruments on a firm commitment basis.

Category 3 Licence:
Applies to persons who intend to provide any investment service and to hold and control clients’ money or customers’ assets.

Category 4a Licence:
Applies to persons who intend to act as trustees or custodians of all types of collective investment schemes.

Category 4b Licence:
Applies to persons who intend to:

  • act as custodians of alternative investment funds (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
  • act as custodians to AIFs marketed in Malta in terms of regulation 7 of the Investment Services Act (Alternative Investment Fund Manager) (Third Country) Regulations

Licence Fees

Applicable licence fees:-

  • Application fee payable upon submission of application and not refundable
  • Fee payable for issue of fee, which is equal to the minimum annual supervisory fee applicable to the category in question
  • Annual supervisory fee, In case of categories 1-3 this is calculated on the level of the revenue of the year immediately preceding the year when the fee is payable, whereas in the case of category 4, this is a fixed fee.

The applicable fees are currently as follows:

Licence Application Fee Annual Supervisory Fee
Category 1A €2,500 Minimum €2,500
Category 1B €3,000 Minimum €2,750
Category 2 €5,000 Minimum €4,500
Category 3 €7,000 Minimum €6,000
Category 4A €17,000 €15,000
Category 4B €7,500 €5,000
Licence Minimum Initial Capital
Category 1A €50,000
Category 1B – with PII €20,000
Category 1B – without PII €50,000
Category 2 €125,000
Category 3 €730,000
Category 4A €730,000
Category 4B €125,000