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LICENSING REQUIREMENT

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The Act provides that the provision of investment services in or from within Malta is subject to an investment services licence. Entities formed in accordance with or existing under the laws of Malta that provide or hold themselves out as providing an investment service in or from within a country, territory or other place outside Malta also require a valid investment services licence.

Maltese law however provides a number of exemptions from the licensing requirement, including for investment firms authorised in terms of MiFID in another EU/EEA Member State (if such firms wish to establish a branch in Malta or provide cross-border services into Malta, they do not need further authorisation from the MFSA, provided they follow the relevant passporting notification procedure). Most of the other exemptions essentially reproduce the exemptions set out under MiFID itself.

Maltese law also provides for a recognition status and procedure (a lighter form of authorisation, not amounting to licensing) for persons who, in or from Malta, provide administrative services to licence holders in Malta, or to equivalent authorised persons and schemes overseas.

LICENCE CATEGORIES

An investment services licence may be one of four categories:

  • Category 1a: Licence Holders 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).
  • Category 1b: Licence Holders authorised to receive and transmit orders, and, or provide investment advice in relation to one or more instrument 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).
  • Category 2: Licence Holders authorised to provide any Investment Service (as specified and/or restricted in the Licence) 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. The various fund management licences which are issued in Malta are issued under this category, but special rules apply to various fund management licences, depending on whether the licence relates to UCITS managers, AIFMs, ‘de minimis’ managers or other fund managers;
  • 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.
  • Category 4b: ‘Depo Lite’: Licence Holders authorised to act:(a) as custodians of 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 (b) as custodians to non-EU AIFs managed by a Maltese or EU AIFM and marketed in the EU/EEA.

The various categories determine not only the nature and activities which may be carried out by the holder, but also the financial resources and own funds requirements applicable to the holder. Each category also carries different application and supervisory fees payable by the licence holder to the MFSA.