September 2012Malta HedgeFund Services2012Expertise attracts   Opportunities grow Tax implicationsmanagers as          for...
ContentsIn this issue…                                          04 Global fund industry drawn to Malta’s                  ...
structured                                                                                 for                success     ...
IntroductionGlobal fund industry drawnto Malta’s proven qualities                                             By Kenneth F...
Introduction   Malta’s legislation also scores highly in      the small and medium-sized accountancyother areas, especiall...
C a m ill e r i P r e z i o s i    Collective Investment  Schemes: Tax implications                          By Laragh Cas...
Overview             Malta’s expertise           attracts managers as               AIFMD looms                           ...
Overview8   advantage over rival EU fund centres             “Higher-profile clients    Luxembourg and Dublin in its signi...
Fund Services   Mediterranean Bank fund services delivers a market leading platform to its clients:            • Internati...
Mediterranean bank Value-added services from    Mediterranean Bank                                        Interview with X...
lecocqassociatebanking & corporate finance law firml e co c q a s so c i at e i s a b o u t i q u e l aw f i rmw i t h of ...
L e c o c q a s s o c i at e                Seeking an asset               management license                             ...
Overview10   reputation, because they have been around         “American managers are     for a lot longer, but we are fas...
Overview15   between the two cases. And the rights and          “I’m not aware of new players     obligations conferred by...
Fund Administration To                                                      Suit Your Needs                               ...
C a s t l e g at e F u n d S e r v i c e s              Malta and corporate                  governance                   ...
On d u v i e w                                                                                               I verstry    ...
INVESTMENT FUNDS                                                                                                         S...
G a n a d o & A s s o c i at e s      Private equity funds and         the AIFM Directive             By Dr Stephanie Mica...
Zodiac Advisory services Malta is not a small island  of light touch regulation                                           ...
Industry20   up the sub-advisor relationship with the          “We have enjoyed booming     manager outside the EU. We hav...
Ex a n t e     The online one-stop shop     that’s open for business                                           Interview w...
Committed to excellenceMamoTCV Advocates is a tier-one law firm in Malta with a strong international practice andactively ...
HedgeWeek Special Report, Malta Hedge Fund Services 2012
HedgeWeek Special Report, Malta Hedge Fund Services 2012
HedgeWeek Special Report, Malta Hedge Fund Services 2012
HedgeWeek Special Report, Malta Hedge Fund Services 2012
HedgeWeek Special Report, Malta Hedge Fund Services 2012
HedgeWeek Special Report, Malta Hedge Fund Services 2012
HedgeWeek Special Report, Malta Hedge Fund Services 2012
HedgeWeek Special Report, Malta Hedge Fund Services 2012
HedgeWeek Special Report, Malta Hedge Fund Services 2012
HedgeWeek Special Report, Malta Hedge Fund Services 2012
HedgeWeek Special Report, Malta Hedge Fund Services 2012
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HedgeWeek Special Report, Malta Hedge Fund Services 2012

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HedgeWeek Special Report, Malta Hedge Fund Services 2012

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HedgeWeek Special Report, Malta Hedge Fund Services 2012

  1. 1. September 2012Malta HedgeFund Services2012Expertise attracts Opportunities grow Tax implicationsmanagers as for fund services for collectiveAIFMD looms providers investment schemes
  2. 2. ContentsIn this issue… 04 Global fund industry drawn to Malta’s proven qualities By Kenneth Farrugia, FinanceMalta 07 Collective Investment Schemes: Tax implications By Laragh Cassar, Camilleri Preziosi 08 Malta’s expertise attracts managers as AIFMD looms By Simon Gray 12 Value-added services from Mediterranean Bank Interview with Ximo Vicent, Mediterranean Bank 14 Seeking an asset management license By Dominique Lecocq and Dr Caroline Pace, Lecocqassociate 19 Malta and corporate governance By Roger Buckley, Castlegate Fund Services 20 Service providers see opportunities as Malta gains traction By Simon Gray 22 Private equity funds and the AIFM Directive By Dr Stephanie Micallef, Ganado & Associates 24 Malta is not a small island of light touch regulation By Adam de Domenico, Zodiac Advisory Services 27 The online one-stop shop that’s open for business Interview with Gatis Eglitis, EXANTE 29 Local fund regime could run in parallel with AIFMD Interview with Joseph Saliba, Mamo TCV Advocates 33 Working under the AIFM Directive By Chris Casapinta, Alter Domus Publisher Special Reports Editor: Simon Gray, simon.gray@globalfundmedia.com Editor: James Williams, james.williams@globalfundmedia.com Sales Managers: Simon Broch, simon.broch@globalfundmedia.com; Malcolm Dunn, malcolm.dunn@globalfundmedia.com Marketing Director: Oliver Bradley, oliver.bradley@globalfundmedia.com Publisher & Editorial Director: Sunil Gopalan, sunil.gopalan@globalfundmedia.com Graphic Design: Siobhan Brownlow, siobhan.brownlow@globalfundmedia.com Photographs: © European Union Published by: GFM Ltd, 1st Floor, Liberation Station, St Helier, Jersey JE2 3AS, Channel Islands Tel: +44 (0)1534 719780 Website: www.globalfundmedia.com ©Copyright 2012 GFM Ltd. All rights reserved. No part of this publication may be reproduced, stored in a retrieval system, or transmitted, in any form or by any means, electronic, mechanical, photocopying, recording or otherwise, without the prior permission of the publisher.Malta Hedgeweek Special Report Sep 2012 www.hedgeweek.com | 2
  3. 3. structured for success Exceptional Growth for Malta’s Fund Industry The number of collective investment schemes increased from 200 in 2006 to 525 in December 2011. This success was made possible by Malta’s highly favourable business environment. This includes the role played by the island’s Single Regulator, renowned throughout the industry for its flexibility coupled with meticulous attention to detail. The island’s highly competitive, cost-effective business environment and the presence of all the Big Four accounting firms adds even further advantage. An onshore EU jurisdiction allowing passporting and redomiciliation of funds, with an efficient fiscal regime, a balmy Mediterranean climate and a multilingual, ethical and professional workforce, Malta offers a winning combination of advantages specifically designed to foster further growth and maximise success. more information on: www.financemalta.org Scan QR Code with your smartphone Effective | Secure | Skilled Find us on: FinanceMalta @FinanceMalta FinanceMaltaYT FinanceMaltaFinanceMalta - Garrison Chapel, Castille Place, Valletta VLT1063 - Malta | info@financemalta.org | tel. +356 2122 4525 | fax. +356 2144 9212 FinanceMalta is the public-private initiative set up to promote Malta’s International Financial Centre
  4. 4. IntroductionGlobal fund industry drawnto Malta’s proven qualities By Kenneth FarrugiaMalta’s fund industry is increasingly making refused to license funds focused on exoticthe headlines in the financial media, which investments, such as racehorses. Malta’shave highlighted the island’s attractiveness Investment Services Act provides for threeas a domicile. Journalists and finance categories of PIFs with different eligibilityanalysts progressively see Malta as a criteria for investors, based on theircomplementary EU jurisdiction to traditional experience and knowledge.fund domiciles, where regulatory environment Under the assumption that investors aresupports innovative strategies and solutions. familiar with strategies and markets and According to the country’s financial aware of risks, PIFs are not regulated asregulator, the Malta Financial Services tightly as UCITS and other non-UCITS retailAuthority (MFSA), the number of Maltese- Kenneth Farrugia is chairman funds. UCITS currently play a relativelybased funds has grown from around 130 of FinanceMalta minor role in Malta’s fund sector with somein 2004 to more than 550 at the beginning 60 schemes currently registered, but theirof this year, with EUR8.3bn in assets under number is gradually increasing.management. Much of this growth has takenplace since the island joined the European Full range of structuresUnion. In 2011 alone, the country added PIFs or UCITS can be formed in a numbermore than 100 new registrations from fund of possible vehicles, including open-endedmanagers primarily using the island to tap and closed-ended corporate entities, trusts,into EU markets. limited partnerships and contractual funds. But it is not only EU membership that The investment company with variablegives Malta the edge over other fund share capital (SICAV) is currently the mostdomiciles. It also offers easy market access widely-used vehicle in Malta, especially byto non-EU countries through various tax PIFs, and it can be structured to includetreaties and other bilateral agreements, while master-feeder funds and umbrella funds withthe island’s geographic location makes it segregated sub-funds.a convenient gateway for European and In 2011 the MFSA enacted new regulationsinternational financial services firms targeting making it possible for a fund to be constitutedNorth Africa and the Middle East. as an incorporated cell in an Incorporated Malta offers a number of fund options, Cell Company (ICC). While under the SICAVincluding alternative funds under the Regulations a fund and its segregated sub-Professional Investor Fund (PIF) regime, funds form a single legal entity and theand UCITS (Undertakings for Collective sub-fund has no separate identity, eachInvestment in Transferable Securities). incorporated cell is a limited liability companyHedge, private equity and property funds are endowed with its own legal personality.usually set up as PIFs, which make up three- As a relatively new concept, the ICCquarters of all Malta-based funds. regime is still under development, and in Free from investment restrictions and November 2011 the MFSA announced that ittargeted at financially-literate high net was considering extending it into a platformworth investors, PIFs can invest in a variety concept that would involve a Recognisedof assets, from financial securities and Incorporated Cell Company (RICC) providinginstruments to real estate. However, to administrative services to any number ofprotect the country’s reputation as a quality incorporated cells licensed as collectivefund domicile, the MFSA has repeatedly investment schemes.Malta Hedgeweek Special Report Sep 2012 www.hedgeweek.com | 4
  5. 5. Introduction Malta’s legislation also scores highly in the small and medium-sized accountancyother areas, especially the appointment of firms and large number of law firmsservice providers. Service providers to PIFs servicing the fund sector. Having developedmay be based in any jurisdiction in the world a versatile industry cluster, Malta is keen tothat is recognised by the MFSA, a non- attract further service providers – particularlyprotectionist approach that gives promoters custodians – to increase its share of UCITSthe flexibility to work with institutions with business.which they have already established a Interest in Malta is also set to grow asbusiness relationship. the implementation of the EU’s Alternative However, a large number of funds Investment Fund Managers Directive inchoose to work with local service providers, July 2013 draws closer. Many offshore fundespecially in the field of fund administration. managers are currently assessing whether itMore than 70 per cent of Malta-domiciled might be more cost-effective to establish afunds have a Maltese administrator, a clear permanent base in the EU.testament to the high quality of service offers With its generally lower cost structureby local providers. and a track record in the management of Another competitive advantage for the alternative funds, Malta offers an attractiveisland is that PIFs and UCITS can be base for alternative managers in this newset up with a self-managed structure as environment. The first firms to have relocatedan alternative to external management, include managers from traditional offshoresubject to the appointment of an investment centres such as the Cayman Islands and thecommittee. Around 10 per cent of Maltese British Virgin Islands.funds follow this model, with 40 per centmanaged from Malta and almost 50 per cent Increasing competitive edgemanaged from outside the country. Effective oversight and a highly personalised approach have helped Malta to establishCluster of global leaders itself as a fund domicile of internationalPromoters looking for a local service provider repute. In the coming years, the industryare spoiled for choice. In tandem with the expects a further boost when the full impactgrowing number of funds, more and more of regulatory developments such as theservice providers have set up operations in AIFM Directive will become apparent.Malta in recent years. Similar to the licensing The island has already seen a significantprocess for collective investment schemes, inward migration of funds and servicemanagers, investment advisors, custodians providers. Funds from other jurisdictions canand prime brokers establishing operations easily be transferred to Malta, where thein Malta need to apply for a licence under fund undertakes the licensing process withthe Investment Services Act, while firms the MFSA concurrently with the corporateintending to provide purely administrative redomiciliation procedure. Maltese legislationservices must apply to the MFSA for a allows redomiciliation from all EU, EEArecognition certificate. and OECD countries as well as from most Around 70 fund managers are currently offshore centres.operating in Malta, including Liongate Malta has already proved it is well suitedCapital Management, Clive Capital, Comac as a base for fund operations, serving notCapital, and BlueGold Investments, while 24 only domestic clients but also Europeanfund administrators such as Valletta Fund and international markets. With low costs,Services, HSBC, Apex, Custom House, efficient regulation, beneficial tax treatmentPraxis, TMF and Valetta Fund Services have and a flexible and accessible regulator,been recognised by the MFSA. Six global the island is an attractive domicile for bothcustody providers have a presence in Malta, funds and managers. Competition may beincluding HSBC. increasing in the fund industry, including Malta has the capacity and expertise to between jurisdictions, but as long as Maltahelp the fund industry continue to expand, maintains its competitive advantages, it iswith the ‘Big Four’ accounting firms all well placed to capture an even bigger shareestablished on the island, adding weight to of the world’s fund business. nMalta Hedgeweek Special Report Sep 2012 www.hedgeweek.com | 5
  6. 6. C a m ill e r i P r e z i o s i Collective Investment Schemes: Tax implications By Laragh Cassar, Partner, Camilleri PreziosiCollective Investment Schemes distributions made to a resident personCollective Investment Schemes (CIS) offer (whether directly or indirectly as beneficialvarious benefits and enable participants to owner of such income) would generally bepool in their investments under the principle subject to withholding tax at the rate of 15%.of risk spreading. Furthermore, CIS enablethe individual investor to benefit from Capital Gains for non-residentsinvestment opportunities which are generally Capital Gains derived by a non-residentnot viable or available to them, due to cost, person from the transfer of units in anyregulatory and licensing restrictions. The fund are exempt from tax in Malta whilstnumber of CIS licensed in Malta has grown a transfer of units in a CIS by a residentsignificantly over the past decade and, due Laragh Cassar, Partner, person is generally subject to tax, subject to Camilleri Preziosito various factors (including a favourable certain exemptions.fiscal regime), is continuing to increase at asteady rate. CIS generally take the form of Switching of fundsinvestment companies with variable share Should an investor switch any units fromcapital or limited liability partnerships. Other one sub-fund to another sub-fund withinvehicles that are also used include common the same CIS, no gain or loss is deemed tocontractual funds and units trusts. arise for income tax purposes and therefore no tax will be charged. However, uponThe beneficial fiscal regime disposal of the final securities, tax will beThe taxation of a CIS depends on whether charged on any capital gains. Conversely, ifthe CIS and its sub-funds are each classified such disposal relates to a disposal of unitsas a prescribed fund or a non-prescribed held in a non-prescribed fund, the capitalfund. A prescribed fund is defined as a fund gains may be calculated by deducting theof a Malta-based scheme where its assets original cost of acquisition from the proceedssituated in Malta are equal to at least 85% of derived on disposal, provided that no unitsits total assets. A non-prescribed fund is a were switched from a prescribed fund. Onfund which is not a prescribed fund. any other disposal of final securities, any Generally, the income of prescribed and chargeable gains or losses arising throughoutnon-prescribed CIS is exempt from tax in the switches of units are aggregated whenMalta, unless the income is derived from calculating the capital gain or loss.immovable property situated in Malta. Securities may also be switched from aInvestment income received by a prescribed sub-fund of a CIS to a sub-fund of anotherfund is subject to a withholding tax of either CIS. However for such a transaction to qualify15% (if such income is domestic bank as a switch and benefit from the aboveinterest) or 10% (with respect to any other treatment, various conditions are satisfied.investment income, including certain interest, For instance, the latter sub-fund must havepremium or discounts received, certain investment objectives, which are identical toprofits distributed by a foreign CIS). those of the first-mentioned sub-fund.Investors participating in a CIS Value Added Tax (VAT)Any distribution to any person, whether Activities involving the management of a CISresident in Malta or otherwise, is not subject are exempt from VAT. Furthermore, a CIS is notto further tax in Malta. However, certain required to be registered for VAT purposes. nMalta Hedgeweek Special Report Sep 2012 www.hedgeweek.com | 7
  7. 7. Overview Malta’s expertise attracts managers as AIFMD looms By Simon GrayAs though a mediocre investment climate in practice – are not only running later thanand a difficult environment for fundraising expected but may differ in significant waysweren’t enough to deal with, the alternative from the advice the Commission was givenfund industry in Europe is now facing up to last year by the European Securities andthe home straight of implementation of the Markets Authority.European Union’s Alternative Investment Nowhere is the uncertainty more alarmingFund Managers Directive, which is due to than among investment managers ortake effect as of July 22 next year. But while funds based outside the EU, who have inmany professionals may see the legislation theory have been offered a route to obtainas a threat, or at best a distraction for urgent authorisation and the same cross-borderinvestment and operational issues, Malta and marketing passport as their European-basedits fund service providers tend to see it more counterparts, but not before July 2015, andas an opportunity. only subject to subsequent decisions by No-one can yet be absolutely sure how the EU institutions that are by no meansthe directive is going to impact their business guaranteed.because it is still shrouded in uncertainty. It’s an ill wind that blows nobody anyThe final wording of the directive itself may good, and industry professionals in Maltahave been signed off by the EU institutions say the Mediterranean island could be alast year, but the so-called Level 2 measures major beneficiary of the desire by managers– the directly applicable regulation from the abroad to ensure they retain access to theEuropean Commission setting out the detail European market once the AIFM Directive isof how the legislation is to be implemented in force. The jurisdiction may have a valuable 10Malta Hedgeweek Special Report Sep 2012 www.hedgeweek.com | 8
  8. 8. Overview8 advantage over rival EU fund centres “Higher-profile clients Luxembourg and Dublin in its significantly lower cost structure, a more important are starting to come in. consideration when fundraising is slow Whereas previously business and managers may be starting out with a was largely dominated by relatively small pool of assets. At first sight Malta’s fund industry middle-tier funds that needed does not seem to represent much of a a favourable environment, threat to its bigger European rivals. At the end of June the Malta Financial Services the bigger players are now Authority reported a total of 439 funds and considering Malta as it sub-funds in locally-domiciled collective becomes better known and investment schemes with EUR10.33bn in assets under management, including 348 more popular.” Professional Investor Funds (including sub- Laragh Cassar, Camilleri Preziosi funds), the regulatory structure used by the alternative investment industry, with assets wave of spin-off fund management firms of EUR7.15bn. By contrast, at the same established in recent years under the impact time Luxembourg was home to 3,867 funds of regulatory shifts such as the Volcker (13,407 separate portfolios including sub- Rule, the increased preference of investors funds) with EUR2.22trn in assets, including for fund vehicles established in regulated 1,445 Specialised Investment Funds with onshore European jurisdictions, and the assets of EUR259.17bn). growing appeal of once-exotic investment But these numbers do not necessarily specialities such as Shariah funds. tell the whole story. For one thing, the By and large it has escaped blow-ups, MFSA’s figures do not include funds and bar the 2008 collapse of the La Valette assets domiciled in the Cayman Islands or Multi-Manager Property Fund, which other traditional offshore fund domiciles but resulted in a long-running row between managed and/or administered by Maltese disgruntled investors, the regulator and the firms. For another, the island’s fund industry fund’s manager, Bank of Valetta, which still has grown extremely rapidly over the past continues. On September 5 the international few years despite a highly inhospitable accounting firm Mazars was appointed global economic climate. At the end of 2006, by the MFSA to examine investor files for just before the dawn of the financial crisis, evidence of mis-selling. However, the case Malta had just 153 funds with EUR2.09bn in has not affected international perceptions assets, including 78 PIFs with EUR1.28bn. of Malta because the investors were The island has not been immune to the overwhelmingly domestic. impact of the financial firestorms racing So far the growth in domiciled funds has around the world in recent years, but by any been driven mostly by smaller vehicles. “The standards it has performed impressively, typical size of fund launches we are seeing capitalising on developments including the ranges from smaller launches with assets of between EUR10m and EUR20m, which “So far Malta, with these constitute perhaps around 40 per cent of the Maltese fund market, to a handful of few exceptions, has failed to launches above the EUR500m mark, but attract big fund platforms. these are only between 2 and 3 per cent of That is our next challenge the total,” says Dr André Zerafa, a partner with law firm Ganado & Associates. now that Malta is on the “So far Malta, with these few exceptions, map as a fund domicile of has failed to attract big fund platforms. That is our next challenge now that Malta is on choice in the same way as the map as a fund domicile of choice in Luxembourg or Ireland.” the same way as Luxembourg or Ireland. Dr André Zerafa, Ganado & Associates The island does not does yet have their 15 Malta Hedgeweek Special Report Sep 2012 www.hedgeweek.com | 10
  9. 9. Fund Services Mediterranean Bank fund services delivers a market leading platform to its clients: • International Standard Custody • Trade Execution • Finance Mediterranean Bank is the perfect solution for funds and family-offices operating in Malta.10 St Barbara Bastion, Valletta VLT 1961, Malta • +356 2557 4400 • fundservices@medbank.com.mt www.medbank.com.mt Global custodian
  10. 10. Mediterranean bank Value-added services from Mediterranean Bank Interview with Ximo VicentMediterranean Bank is a relatively new fact weren’t. All a client has to do is log onbanking institution. Now, having focused to Clearstream’s system and hey presto, theyon building out its infrastructure to meet its have peace of mind that their assets areown business needs, the bank is looking being clearly segregated.to leverage this to support smaller funds “We put ourselves in the shoes ofdomiciled in Malta. potential clients and said ‘What would As a local custodian, the bank is well we like to see? If I can see my assets inplaced to service funds that will be required Clearstream I don’t need to take anyone’sto register with the AIFM Directive, and word for it’,” states Vicent.despite catering mainly to savers, Med Bank The partnership with Clearstream onlyis already carving out a niche in capital Ximo Vicent, Head of Credit & commenced this summer. Nevertheless,markets. As Ximo Vicent, Head of Credit & Investments, Mediterranean the bank is already working with a number BankInvestments, confirms: “Our infrastructure is of clients to get them signed up, focusingable to support both retail and institutional on those to whom Med Bank knows it canclients looking to access these markets.” provide the right value. One of the biggest developments that Such a solution fits well with the newthe bank has been involved in is the regulatory paradigm evolving in Europe butestablishment of ‘segregated segregated having a robust custodian is only part of theaccounts’, in partnership with Clearstream, equation for hedge fund managers; they willthe clearing and settlement division of also require expertise and support in areasDeutsche Borse. such as leverage, access to derivatives As Vicent explains: “These are segregated products, which are typical of the primeaccounts, as is typical of all custodians, brokerage domain, but which remain thin onbut most importantly they’re not omnibus the ground in Malta.accounts where the client is commingled Aware of this, Vicent says that over thewith everybody else. Even a client with next few years “we think there is going to bea small account – say EUR2million – can a need for more prime brokerage serviceshave their own segregated account where on the island, which we are well positionedthey can see their own assets in their own to provide. Capital markets are part of whataccount in Clearstream.” we do on a daily basis, so we can provide Crucially, by working directly with the that access to the markets and things likeultimate custodian – Clearstream – and cutting leverage to our clients.”out the global custodian middleman, Med There are, no doubt, added pressures andBank is able to save on intermediary fees. costs on custodians and banks in terms ofThis allows it to provide a lean service to how they operate under the Directive. Rathersmall funds and as Vicent says: “Being a fairly than get carried away, Vicent says that thenew entrant we can provide direct segregated bank will take its time developing its primeaccounts to these clients in Clearstream, brokerage services, remaining vigilant on costs:which may not necessarily be offered by “We hope to start offering executionother custodians, most of whom typically only capabilities in the coming months, and someconsider accounts of over EUR100million.” additional capabilities shortly thereafter. This is an important development in light We’re only interested in ever offering theof the recent Lehman Brothers and MF right product in the right format. We want toGlobal incidents where clients thought their develop these additional services in the rightassets were being fully segregated, but in manner.” nMalta Hedgeweek Special Report Sep 2012 www.hedgeweek.com | 12
  11. 11. lecocqassociatebanking & corporate finance law firml e co c q a s so c i at e i s a b o u t i q u e l aw f i rmw i t h of f i c e s i n Sw i t ze r l a n d , i n M a l taa n d in t h e E m i rat es s p e c i a l ize d inf i n a n c e r e g u l at i o nareas of practiceco l l ec t i ve i nvest m e nt s c hem esexc ha nge t raded fundsexc ha nge t raded comm o di t i espri vate e qui t y s c he mesl i st i ng of se c uri t i esre g ul ato ry ba nk i ng a nd fi na nc ere g ul ato ry i ns u ra nc el i c e ns i ng of ba nks, ins ura nc es a ndbro ke ra ge f i rm stax re l ated i ss uesco rpo rate wo rkcontact detailswww.lecocqassociate.comSwiss office42, route de Frontenex1207 GenevaSwitzerlandT. +41 22 7079333F. +41 22 7861468E. drl@lecocqassociate.comMalta officeSwiss Urban Factory5, St-Frederick StreetValletta - VLT 1470MaltaT +356 21317171F +356 21317172E. drl@lecocqassociate.com
  12. 12. L e c o c q a s s o c i at e Seeking an asset management license By Dominique Lecocq & Dr Caroline PaceIn order to get a regulatory license, an asset and a Risk Management Policy mustmanagement company must guarantee a fit be established and maintained. Properand proper organisation. Most recognised documentation must be available and bejurisdictions have set similar standards, aligned to the manager’s activity. The MFSAincluding (i) a level of independence between reviews in detail the risk managementshareholders and board members; (ii) a level policy. Exemption: A request may be madeof ‘chinese wall’ between operations, risk to the MFSA to be exempt from having anmanagement and compliance; (iii) dual control independent risk management function onand four eyes principles; (iv) good monitoring the basis that it is not proportionate in viewof conflict of interests. The Malta Financial of the nature, volume and complexity ofService Authority (‘MFSA’) controls the issuing Dominique Lecocq, partner, the business, and the range of investmentof licenses and supervising asset managers and Dr Caroline Pace, senior services and activities undertaken by the associate, Lecocqassociateand advisors operating in or from Malta. management company.While the 1994 Investment Service Act sets Internal audit function: An internalcore legal conditions required to get a license, audit function independent from the otherthe MFSA has also implemented specific responsibilities of the asset manager is torequirements which are not necessarily be established. Exemption: Derogation mayavailable in writing, summarised below: be requested where the nature, scale and Shareholders: An asset management transaction volumes of the entity justify it.company cannot be established as a single Minimum number of employeemember company and thus must have at required: If all exemptions are granted,least two founding shareholders at all times. a start-up manager may start with one Directors: The MFSA stresses the employee only.principle of ‘Dual Control’ and the ‘Four Eyes Due diligence process: This is a crucialPrinciple’, thus requiring a minimum of two stage in the licensing process whereby thedirectors. In order to establish and maintain MFSA, following an assessment of all thejurisdiction in Malta, at least one of the documentation provided, determines whetherdirectors must be a Maltese resident. a person is fit and proper. This requisite is Investment committee members: A to be fulfilled by every qualifying shareholderminimum of three investment committee (i.e. direct or indirect holder of ten percentmembers are to be appointed yet not or more of the capital or voting rights of thenecessarily as employees of the entity. At least entity); director, IC members and any otherone member must be a local resident. The person proposed to hold a key positioninvestment committee must meet physically in within the applicant entity.Malta at least once every quarter. Where the Business plan: The MFSA necessitatesentity prefers not to employ a local IC member a detailed Business Plan of the assetbefore the license is issued, the MFSA allows management company’s business,that the Business Plan be submitted containing contemplated scope of activities, futurea detailed description of the position to be held goals and the manner in which these goalsby a local person. Once the license is granted, will be achieved, three years of forward-the founders may start looking for a proper looking financial statements, and any otheremployee and present their credentials to the relevant details.MFSA for review and approval. With a well-prepared application, an Business conduct and risk management in-principle approval should be expectedrequirement: A Code of Business Conduct within three months of submission. nMalta Hedgeweek Special Report Sep 2012 www.hedgeweek.com | 14
  13. 13. Overview10 reputation, because they have been around “American managers are for a lot longer, but we are fast catching up.” Laragh Cassar, a partner with law firm watching developments very Camilleri Preziosi, believes that a change in closely, but they feel they still the jurisdiction’s stature and the background don’t have all the information of its fund clientele is already underway. “Higher-profile clients are starting to come they need about the AIFM in,” she says. “Whereas previously business directive to take decisions.” was largely dominated by middle-tier funds Joseph Ghio, Fenech & Fenech that needed a favourable environment, the bigger players are now considering Malta as it becomes better known and more popular.” “Costs are still important, but they have Cassar says some of the newcomers are gone down the list of priorities for the typical funds groups that are establishing Maltese fund promoter,” he says. “Today they are investment vehicles alongside existing offshore looking at the capability of service providers funds in order to ensure continued access in Malta, the capacity of the industry here, to the European market under the AIFM and an approachable regulator. Time to Directive, or that have previously focused market may not be as fast as in the Cayman on markets such as North America or Asia Islands, where funds are not regulated in but are now are seeking to attract European the same way that they are in EU member capital as well. “They know that they need states, but it is still reasonable at around an EU domicile to gain access to the market 10 weeks to launch. All these factors have here, but with the passport mechanism, they militated in favour of Malta.” see the directive not so much as a threat as At this point, most industry members an opportunity,” she says. are reluctant to hazard a guess about the The cost of doing business in Malta is extent to which these advantages may a significant benefit for smaller and start- be compromised by the AIFM Directive. up managers; some industry members put However, the authorities are determined total set-up costs, including regulatory fees, that the island will be ready for the July at between one-third and half the level in 2013 implementation deadline – even if, as Luxembourg. Fears that costs might rise as is increasingly conjectured, a significant the industry grows, a problem for Dublin in proportion of the EU membership will not. the early 2000s, have so far proved needless. At the beginning of September the MFSA However, Zerafa argues that in any case this published a consultation paper outlining is no longer as substantial a driver for the its plans for transposing the directive into choice of a Maltese domicile as it may have national law. Says Zerafa: “There will be been in the past. a revamp of Malta’s main funds law, the Investment Services Act, but the bulk of the obligations stemming from the directive will be implemented through rules and regulations. This would give the MFSA the flexibility to adapt the rules according to what comes out of the Level II measures, rather than having to go back each time to change the main law through an act of parliament.” Says Cassar: “We currently have a very concise rulebook regarding non-retail funds, which will have to be substantially changed in the light of the directive. For example, right now there is no differentiation between a passportable non-retail fund that would fall within the scope of the directive and one that would not. They will need to distinguish 17 Malta Hedgeweek Special Report Sep 2012 www.hedgeweek.com | 15
  14. 14. Overview15 between the two cases. And the rights and “I’m not aware of new players obligations conferred by the directive will need to be incorporated into the local rules.” coming into the market as The deadline for responses to the MFSA’s yet, but Malta is certainly consultation paper falls at the end of actively trying to attract September, and Cassar says that if Malta’s MiFID implementation is anything to go by, larger custodians.” adoption of the directive and its associated Paul Mifsud, Sparkasse Bank Malta rules should take place rapidly. According to Zerafa, the plan is to have all the legislation, rules and regulations adopted by the first industry professionals acknowledge that quarter of 2013, comfortably ahead of the some fund managers are uneasy at having a transposition deadline. Already the regulator is relatively limited choice, and that this issue is preparing more or less formal education and one factor in Malta’s more sedate growth in training sessions both for licence-holders and the UCITS market. members of the local support services sector The authorities have made attracting on the way in which the directive will affect more custodians a priority; two well-known Maltese firms and their clients. – but still anonymous – industry names Joseph Ghio, a partner with Fenech & are reported to be in the pipeline. In the Fenech Advocates, says some potential meantime, Malta plans to use its option to clients are “sitting on the fence” about exercise a derogation to the local custody whether to domicile funds, or indeed their requirement until 2017, by which time it is investment management company, within the possible that progress on the vexed issue of EU or outside until it becomes clear exactly an EU passport for depositaries could render how implementation of the directive will work the question moot. out in practice. “I’m not aware of new players coming “This is particularly affecting business into the market as yet, but Malta is certainly from the other side of the Atlantic,” Ghio actively trying to attract larger custodians,” says. “American managers are watching says Paul Mifsud, managing director of developments very closely, but they feel they Sparkasse Bank Malta, the subsidiary of an still don’t have all the information they need Austrian savings bank that has carved out a about the AIFM directive to take decisions. significant custody market share. Until the Level 2 measures are published, the However, he believes it may be difficult AIFMD remains a moving target.” to attract global players while new business However, he believes the uncertainty also in Malta remains dominated by small and has positive aspects in that market players start-up fund businesses. “Larger custodians are taking the opportunity to re-examine normally require larger business, and they their existing, often long-standing business normally charge fairly elevated minimum models. The focus on how the international fees,” Mifsud says. “I don’t see the market regulated fund space will change is creating being ready for that, because some of new opportunities for Malta to become managers coming here are relatively small. more visible,” Ghio says. “The directive is A big custodian would start off by asking prompting people to look for alternatives and for EUR25,000 or EUR30,000 as a minimum options for how to remodel their business, annual fee.” and Malta can offer a very acceptable His view is shared by Ximo Vicent, head alternative.” of credit and investments at another niche One AIFM Directive issue that is set custody provider, Mediterranean Bank (not to to affect Malta in the medium term is the be confused with Mid-Med Bank, forerunner directive’s requirement that assets be of HSBC Bank Malta), which was established deposited with a custodian in the jurisdiction in 2005 and is now owned by UK private in which the fund is domiciled. For now equity firm Anacap Financial Partners. “Many Malta has just a handful of licensed players here in Malta are focused on bigger custodians, and only two international funds, but we offer a cost-efficient custody names, HSBC and Deutsche Bank. Local solution designed for small funds,” he says. n Malta Hedgeweek Special Report Sep 2012 www.hedgeweek.com | 17
  15. 15. Fund Administration To Suit Your Needs Expertise Responsiveness Tailored Solutions Competitive Fee StructuresCastlegate Fund Services Ltd. is a full service fund administrator and provider ofindependent directorship services.Through a team of highly qualified and experienced individuals utilising leading fundadministration systems, our aim is to provide a high quality, customer driven service,with an emphasis on responsiveness, attention to detail and competitive pricing.FOR MORE INFORMATION PLEASE CONTACT:Castlegate Fund Services Ltd. Tel: (+356) 2122 6608Daniela House Contact: Niall Brooks – Director1st Floor, 197 Marina Street nbrooks@castlegatefundservices.comPieta, PTA9041,Malta Roger Buckley – General Manager rbuckley@castlegatefundservices.com www.castlegatefundservices.com
  16. 16. C a s t l e g at e F u n d S e r v i c e s Malta and corporate governance By Roger BuckleyAs an emerging funds jurisdiction Malta is Accordingly, change may be on thein a strong and perhaps enviable position horizon and having now establishedto mould its future as a domicile and fund Malta as a jurisdiction of merit, the MFSAadministration centre with enhanced corporate has signalled that it’s exploring ways togovernance standards. Together with further enhance corporate governance,compliance and risk management, decent which ultimately should lead to increasedcorporate governance is a crucial pillar of transparency and market confidence.fundamental importance in the investment Many other fund jurisdictions havefunds industry. Moreover, shortcomings in already established regulations and bestcorporate governance have been a main practice guidelines in corporate governance,contributor to the majority of the recent Roger Buckley, Castlegate especially in relation to the appointmenthigh profile international fund scandals. The Fund Services of independent service providers and non-appointment of independent non-executive executive directors. For example, all Irishdirectors and an independent administrator investment funds are required by law tostrengthens and improves governance, which appoint an independent Irish based fundis of paramount importance to the integrity administrator and more recently the Irishof an investment fund and maintenance of Funds Industry Association (“IFIA”) underinvestor confidence. the supervision of the Irish Central bank, To date, the Malta Financial Services introduced a voluntary “corporate governanceAuthority (“MFSA”) has adopted a cautious code” for funds. Similarly Luxembourg hashands-on approach to the establishment established a “conduct for investment funds”and authorisation process for both funds and Jersey a “fund governance regime”.and regulated service providers. Face-to- Castlegate Fund Services Ltd.face meetings with potential new entrants (“Castlegate”) specialises in fundis encouraged, this fulfils a dual role for the administration and the provision ofMFSA of safely gatekeeping the industry and independent directors for funds domiciledwelcoming new business. So far, the MFSA in Malta and elsewhere. Industry leadinghas avoided any stringent specific rules or fund administration software married with aguidelines on corporate governance, such management team with over four decadesas directorship limitations or service provider of multi-jurisdictional fund experience givesrequirements, thereby allowing a great deal Castlegate unique competencies. Castlegateof flexibility in the structuring of new funds. has a strong focus on compliance and For funds that choose to domicile risk management which ensures that allin Malta, with the exception of certain aspects of a funds operation are individuallycircumstances there are no local examined in detail and attended to with aresident director or local service provider high level of thought and care.requirements. When this is the case, the With the advent of these changes, nowminimum requirement of a fund is the is an ideal time for investment managersappointment of a “local representative”. and promoters to examine the corporateThis light-touch approach has fared well governance of their funds, specifically within attracting funds to Malta, particularly in regard to the level of transparency andthe small to medium size range. However, independence. Ultimately the cost of anthe continued long term success of Malta independent administrator and director willas a jurisdiction will rest with a quality over be offset by risk reduction and enhancedquantity approach. reputational benefits. nMalta Hedgeweek Special Report Sep 2012 www.hedgeweek.com | 19
  17. 17. On d u v i e w I verstry Service providers see opportunities as Malta gains traction By Simon GrayThe success of Malta in becoming including a global financial services player inestablished as an alternative to the HSBC and the headquarters of the Customestablished European Union domiciles House group, a number of specialist servicefor both traditional and alternative cross- providers active in various European andborder funds, Luxembourg and Ireland, is offshore fund centres including Abacus, Alterunderpinned by the growing breadth of Domus, Apex, Folio, Heritage, and Trident,capacity and depth of expertise of service and various local firms such as the fundproviders to the industry, from law firms services arm of Bank of Valetta.and accounting and audit practices to fund Some of the firms in the sector have comeadministrators and custodians. to Malta with an existing client base, such The administration sector has grown as IDS Fund Services, which specialisessubstantially in recent years and still has in serving South African managers that areplenty of room for further development, offering funds to a global market. “We havegiven that the net assets of funds domiciled enjoyed booming business this year, mostlyin Malta, EUR8.3bn at the end of 2011, from South African fund managers lookingwas larger than the volume of assets to mirror their domestic fund offerings or toadministered on the island, at EUR6.2bn, launch completely new products in Europe,”even though the latter included 164 non- says director Andrew Frankish.Maltese funds with assets of EUR1.4bn, “Because of the AIFM Directive, managersmostly from the Cayman Islands and from outside are scrambling to establishother offshore jurisdictions in the Western a presence in the EU, which opens uphemisphere. opportunities for local providers to provide There are currently 26 recognised fund services to managers, helping them obtain aadministrators active in the Maltese market, investment management license and setting 25Malta Hedgeweek Special Report Sep 2012 www.hedgeweek.com | 20
  18. 18. INVESTMENT FUNDS SECURITIES LAW TRUSTS CAPTIVE RE-INSURERS PENSIONS & QROPS INTERNATIONAL BANKING CORPORATE FINANCE MERGERS & ACQUISITIONS JOINT VENTURES PRIVATISATION TAXATION EU PASSPORTING SHIPPING AVIATION CORPORATE SERVICES LITIGATION & ARBITRATION EMPLOYMENT INDUSTRIAL & LABOUR TELECOMS, MEDIA & TECHNOLOGY INTELLECTUAL PROPERTY COMPETITION PUBLIC PROCUREMENT ENVIRONMENTAL LAW RESIDENCY PROPERTY CONVEYANCING MEDICAL & HEALTH ENERGY & RENEWABLES Eyes see opportunity where minds comprehend Ganado & Associates Advocates, a leading law firm with a predominantly international practice, provides integrated legal services across all practice areas. Our multi-disciplinary team takes a constructive hands-on approach to deliver a bespoke service to our international business clients. For more information on how we can help please call +356 2123 5406/7/8, Ganado email lawfirm@jmganado.com or visit www.jmganado.com & Associates ADVOCATES11433_GA_GENERAL_FP.indd 1 12/08/2009 15:36:06
  19. 19. G a n a d o & A s s o c i at e s Private equity funds and the AIFM Directive By Dr Stephanie Micallef, Ganado & Associates, AdvocatesMalta has become an attractive jurisdiction The AIFM Directive includes disclosurefor funds, due in part, to the flexible regime rules which require a private equity fundfor professional investor funds (“PIFs”). manager to notify involved parties when theUnder this regime, private equity funds fund it is managing acquires a major holdingare structured as PIFs. Currently the Malta or control of a non-listed company or anFinancial Authority (the “MFSA”), through issuer. The Directive also obliges the fund tosupplementary rules, regulates only one produce an enhanced annual report of theaspect of private equity funds; drawdowns portfolio company or of the fund itself. Theon investors’ committed funds. Requests annual report must include a fair review ofon committed funds must be effected on a the development of the portfolio company’spro-rata basis amongst all relevant investors Dr Stephanie Micallef, Ganado business, its future plans for developmentin the fund and further calls can only be & Associates, Advocates and must highlight any significant eventsmade by the fund once all outstanding which have occurred since the end of thecommitments from existing investors have last financial year. Although these measuresbeen requested. The fund is also obliged will increase transparency, the disclosureto retain copies of written agreements of sensitive information might disadvantageconcluded with investors committing to private equity bidders. To control thisinvest in the fund, at its registered office. effect, the Directive includes confidentiality Local regulation also provides for the provisions, however it leaves it up to eachissuing of units at a discount to investors Member State to implement its own rules towho have committed to subscribe for address confidentiality issues.units, by written agreement. The discount In order to protect companies frommust apply exclusively to any outstanding short-term investments and prevent assetcommitment arising under the agreement stripping, the AIFM Directive has also soughtand must be provided for in the constitutive to regulate buy-outs of companies. Thedocument of the fund. The nature of such Directive prohibits a fund which has acquireddiscount must be disclosed in the fund’s control in a company, from facilitating,offering documentation. The regulations supporting, instructing or voting in favouralso impose a cap on the value of the of any distribution, capital reduction, shareunits to be issued at a discount and if such redemption and/or acquisitions of owndiscount is in excess of that permitted by the shares for a period of twenty-four monthsregulations, the investor is bound to pay the following the acquisition of control.fund the difference plus interest. These requirements, together with the Although the PIF regime is flexible enough requirement for each fund to appoint ato cater for private equity funds, the rules depository, have been criticised as increasingspecific to such funds are currently limited. costs for private equity funds as well asThe MFSA has therefore recognised the impacting the drawdown process andneed to consider additional regulation to closing procedures. A change in operatingfacilitate the establishment of local private practice will inevitably be necessary.equity funds and in this regard will shortly The introduction of new rules on privateintroduce bespoke rules for these types of equity structures to the Maltese regulatoryfunds. The introduction of the rules will also framework may address these issues andserve as a means to align the current rules provide further clarity and solutions to privatewith the AIFM Directive. equity fund managers. nMalta Hedgeweek Special Report Sep 2012 www.hedgeweek.com | 22
  20. 20. Zodiac Advisory services Malta is not a small island of light touch regulation By Adam de DomenicoThere are many reasons why managers rules require the Company to establishmight decide to come to Malta; its favourable relevant functions including: a compliancetax regime, climate, inexpensive costs and function; risk management function;more. In the last few years there’s been a operational & Supervisory (Board, Investmentgood push from both managers and funds Committee); internal audit functions &looking to set up in Malta. independent Risk function (if relevant); And whilst Malta may be considered less establish, implement and maintain policyexpensive when compared to other key fund and procedures; have measures in placejurisdictions, this shouldn’t be confused with to effectively monitor outsourced functions;the idea that its services are sub-standard. The monitor, control and maintain adequatequality of service providers here is at par with Adam de Domenico, Founder capital resources requirement (eg. 2 BPs onmainland Europe with a focus of professional and Managing Director of AUM > EUR250Mmin of EUR125K). Zodiac Advisory Services (ZAS)services within the financial services industry. The Rules also require the Investment When it comes to applying for a fund Manager to establish, implement andlicense in Malta, it is also critical to maintain appropriate policies andunderstand what’s needed post-approval. This procedures, covering various conduct ofis not a tiny island with minimum regulation. business obligations such as best execution,Indeed, in many ways the MFSA takes a conflicts of interest, and staff dealing tosimilar stand to the FSA, so managers need name a few.to think clearly about how they plan to From a practical perspective, the Companyoperate once the license has been obtained. may delegate certain functions to third Promoters considering application for a parties approved by the Board, howevermanagement company may wish to consult outsourced services remain the responsibilitythe MFSA website which clearly lists out of the Board. Critical operational functionsthe regulatory rules on application and post may not be outsourced in such a way aslicence. In general, the regulatory compliance to impair materially the quality of its internalrequirements of Collective Investment Schemes control and MFSA’s monitoring abilities and(“Funds”) are similar to other key European the Company shall have measures in placejurisdictions including that the Fund is to effectively monitor outsourced functions.subject to the investment objectives, policies Once the license has been approved, it’sand restrictions as outlined in its offering not a case of sitting on one’s laurels. There’smemorandum. Furthermore, as one would a lot to think about. Whilst the MFSA areexpect, UCITS Funds are subject to additional available to meet promoters, they have rulesspecific limitations and investment restrictions and they stick by them. The essence of thefrom a risk management perspective. message here is that post-license things are Funds are also required to submit annual easier said than done.audited accounts and half-yearly reports to Zodiac Advisory Services Limited is aninvestors and to the MFSA within four and investment management advisory firm. Thetwo months respectively. firm has been operating in Malta since 2009. The Rules applicable to Investment With over 40 years of experience amongstManagers include general requirements; its team, ZAS is able to support its clients inconduct of business obligations; outsourcing areas of regulatory compliance, accounting,rules; disclosure requirements to clients; directorships, as well as support servicesfinancial Resources Requirements, such as helping clients relocating to MaltaAccounting and Record Keeping. The general with recruitment and housing. nMalta Hedgeweek Special Report Sep 2012 www.hedgeweek.com | 24
  21. 21. Industry20 up the sub-advisor relationship with the “We have enjoyed booming manager outside the EU. We have also seen plenty of new funds established over the business this year, mostly past year, especially smaller launches from from South African fund managers starting out with their personal managers looking to mirror seed capital.” Malta’s focus on boutique-scale providers their domestic fund offerings suits demand in the marketplace, Frankish or to launch completely new argues. “The country offers lower set-up and ongoing running costs, and smaller products in Europe.” managers don’t necessarily want to go to Andrew Frankish, IDS the brand-name providers that dominate in larger jurisdictions,” he says. “That is A couple of the island’s administration when Malta really competes at the moment, firms have been established by providers enabling it to nip at the heels of those from the British Virgin Islands, another longer-established centres.” jurisdiction in which niche firms have carved Anthony O’Driscoll, managing director out a market serving small and start-up of Apex Fund Services in Malta, says the managers. According to general manager number of local structures launched over Roger Buckley, Castlegate Fund Services the past 12 months has slowed somewhat, was established in Malta after an existing but the slack has been taken up by demand client decided to restructure its offshore for the servicing of offshore vehicles. “We fund as a UCITS, but the firm’s main focus continue to get enquiries about Maltese is on providing back office services in Malta funds, but the conversion rate is lower than it for BVI funds, although it also administers has been over the previous three years,” he locally-domiciled UCITS and PIFs. says. “This year we have been doing more He notes that an important source of offshore business, traditional Cayman Islands growth in Malta has been the revamp of and Bermuda structures, than Maltese PIFs fund legislation in Switzerland, which is set and UCITS.” to place an onerous compliance burden on One factor, he believes, is the continuing managers of non-Swiss funds that up to uncertainty surrounding the detailed AIFM now have not been regulated at all, even Directive rules, but another is attitudes if they wanted to be. The AIFM Directive – among Swiss managers, who have played a the catalyst for the regulatory changes in significant role in the growth of the Maltese Switzerland – has also prompted managers fund industry. “Unless they have a large of offshore funds to examine the merits of European investor base, a lot of managers different European centres. will continue to look at offshore vehicles,” “Malta has a number of advantages, O’Driscoll says. “And then there’s the starting with its location,” Buckley says. “It’s fundraising issue. Seed capital is still scarce close to the Middle East and North Africa, on the ground for the launch of new funds.” and has marketed itself as a centre for The test will come, he believes, once the Shariah-compliant funds, which is something directive and its implementing measures we’re positioning to do further down the line. are fully in place. “Once it is operational, a We decided on Malta for our European hub lot of managers, even of the traditional US because it is an up-and-coming jurisdiction master-feeder structures, will have to decide and well suited to smaller managers, whether they are going to cater for European our target market. We do a lot of hand- investors, who may want their alternative holding and walk managers through all the investments to use an onshore domicile,” processes necessary to set up a fund.” O’Driscoll argues. “They will have to look The newcomers from Switzerland include at how they access European money and Geneva-based law firm Lecocqassociate, whether they want to put in place European which decided to establish a Malta office structures. Then the question will arise two or three years ago when investors in whether they want to be in Luxembourg, funds run by Swiss managers became less Dublin or a newer jurisdiction like Malta.” comfortable with funds based in the Cayman 30 Malta Hedgeweek Special Report Sep 2012 www.hedgeweek.com | 25
  22. 22. Ex a n t e The online one-stop shop that’s open for business Interview with Gatis EglitisFor integrated brokerage and fund platform financial services sector in Europe.firm, EXANTE, setting up in Malta last year Says Eglitis: “We can help companies thatwas certainly a case of ‘New Kid on the choose to domicile their funds here fulfil theirBlock’. Historically, the island has always potential by offering a global infrastructure. Ifbeen a nation of savers. The investment they have to choose a broker or platform toindustry has necessarily developed to reflect trade global markets there’s literally no onethis fact, where the general sentiment is one in Malta except us that is able to provide allof long-term investing with low risk appetite. the tools. When you consider that EXANTE prides “For a hedge fund considering a domicileitself on having cutting edge technology, a like Malta, knowing that such a brokerageco-location infrastructure, and what is, to all Gatis Eglitis, Managing company existed would certainly add to itsintents and purposes, a highly sophisticated Partner, EXANTE overall attraction.”trading infrastructure well suited to high However, trade execution is only half thefrequency traders, their establishment on the story. EXANTE also hosts a multi-asset fundisland was clear for all to see. platform, which operates solely online via Speaking with Hedgeweek, Gatis Eglitis, the internet. Not only can funds trade globalone of EXANTE’s managing partners, says: markets, they can also market themselves“The main value EXANTE brings to Malta is and their strategies to all of EXANTE’s globalreally the fact that we offer something different: customers. “In that sense what we offer ishigh frequency, trading-oriented. So really we truly a one-stop shop,” states Eglitis.are filling in the missing piece of the puzzle of To emphasise, EXANTE is not onlyMalta’s conservative investment environment.” interested in high volume clients running Attending a recent Finance Malta sophisticated strategies: it is happy toconference, Eglitis says he was surprised deal with all kinds of clients, be they localthat very few of the investment managers he or international, long-only equity or highspoke to were investing in credit derivatives, frequency quant trader.statistical equity arbitrage strategies, futures Says Eglitis: “Regardless of who theetc; more plain vanilla investment strategies passenger is, they still get to enjoy ridingwere the focus of their attention. This may in a Bentley. Whether clients are HFTs orstart to change. long-term conservative money managers, As the smart money continues to flow the infrastructure is sound and gives themfrom other parts of Europe, the potential for quality execution and affordable pricing.”Malta’s investment fund industry to get more Right now, the firm has around 70sophisticated is high. Malta has never really clients and 50 funds totalling in excess ofhad a cutting-edge global broker able to meet EUR1.5billion in AUM. It has, confirms Eglitis,the needs of aggressive investment managers already established relationships with somesuch as hedge funds, who rely on leverage, of Malta’s market leaders including thecompetitive prices and access to a range of island’s largest retail broker.derivative instruments; EXANTE plugs that gap. “Whether clients are making thousands And when you look at some of Finance of transactions a day or simply buying andMalta’s statistics, their timing seems good: holding instruments long-term makes no109 investment services licenses, 539 funds difference to our business model. All are(179 new licenses) representing a 24 per welcome and the pricing is the same forcent year-on-year growth, and EUR8.3billion everyone, regardless of whether they arein NAV. Malta is now the fastest growing high or low volume traders.” nMalta Hedgeweek Special Report Sep 2012 www.hedgeweek.com | 27
  23. 23. Committed to excellenceMamoTCV Advocates is a tier-one law firm in Malta with a strong international practice andactively involved in all areas of commercial law, with a particular focus on financial services.The Financial Services Department within the firm is committed to providing bespokelegal solutions to credit and financial institutions, investment firms, family offices and otherstakeholders in the financial services industry. Our mission is to deliver high-quality services instructuring and implementing investment proposals, operations and products in a pro-active,efficient and timely fashion. To this end, we continue to foster and develop our local andinternational network with a view to offering comprehensive and integrated services to clients.FINANCIAL SERVICES CORPORATE AND COMMERCIALInvestment Funds Corporate Law Shipping & AviationCustody Services Insolvency ConstructionPortfolio Management Mergers & Aquisitions PrivatisationsOther Investment Services Project Finance CompetitionInsurance and Re-Insurance Trusts Public ProcurementCaptive Insurance Intellectual Property EmploymentPensions Schemes Media, Communications & IT Consumer AffairsSecurities Law Gaming & Lotteries TaxationFinancial Intermediaries EU Law Litigation & ADR MamoTCV Advocates Palazzo Pietro Stiges, 103 Strait Street Valletta VLT 1436, Malta T: (356) 2123 2271 / 2123 1345 F: (356) 2124 4291 / 2123 1298www.mamotcv.com E: info@mamotcv.com

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