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A Guide to the MSE Flipbook PDF
A Guide to the MSE
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A Guide to the MSE Much more than just a listing venue
Malta and its economy “With a highly-educated and English-speaking workforce, a European time zone, a Mediterranean lifestyle as well as excellent air and sea connections to continental Europe and beyond, Malta is recognised internationally as a low-risk jurisdiction benefitting from economic and political stability which makes the island a safe and secure place to do business.”
Malta’s political, economic, cultural and historical links to Europe can be traced back for many centuries, due to its geographically strategic location at the cross-roads between East and West. Since 2004 Malta has been a Member of the European Union and adopted the Euro as its national currency in 2008. Today, Malta is a fast-developing financial and business centre right at the heart of the Mediterranean, an island which boasts an advanced communications set up and a business environment which gives every incentive to companies operating within its shores, to invest, grow, innovate and compete in the global marketplace. With a highly-educated and English-speaking workforce, a European time zone, a Mediterranean lifestyle as well as excellent air and sea connections to continental Europe and beyond, Malta is recognised internationally as a low-risk jurisdiction benefitting from economic and political stability which makes the island a safe and secure place to do business. The financial services and business environments are bolstered by a legal system which is based on a continental European civil law system and a UK administrative and fiscal based legislation, supported by world-class practitioners in the legal, accountancy, audit and other related areas, but still at relatively lower costs. Malta enjoys a balanced and vibrant economy in which manufacturing makes up 17% of GDP and financial services account for 13% of GDP. The financial services sector continues to play an important part in the economic development of the country and indeed, in line with national policy, this sector is well on the way to becoming Malta’s third pillar of the economy, together with tourism and construction. Malta’s financial services are regulated by a strong yet accessible single regulator, the Malta Financial Services Authority, which is structured in line with EU and global best practice standards. Malta’s strong bias towards maintaining a robust regulation and a high level of expertise amongst its practitioners, combined with a very cost-effective professional support service network, has resulted in Malta becoming a highly-developed financial centre which is expected to grow significantly over the next decade.
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FOREWORD
The Malta Stock Exchange has been at the heart of Malta’s capital market for over two decades and has developed into the diversified market infrastructure that it is today. Over the years we have expanded the scope and breadth of our products and we are now proud to offer a complete service across the full value chain of the capital formation and asset servicing industry, providing for the local financial sector as well as being geared to offer these services internationally. As an EU regulated market the MSE operates an efficient network of member firms, including internationally connected brokering firms, investors and issuers that participate on our trading venue. Technology is at the centre of what drives our market and both our price finding platform as well as the OTC reporting facility are provided by Deutsche Bourse AG that is one of the world’s leading technology providers for trading venues. Securities that are admitted to Prospects, the Multilateral Trading Facility operated and regulated by the MSE, will also share this same trading infrastructure thus giving investors the full market transparency as provided for securities listed on the Regulated Market. In the post-trading landscape the Exchange has built a comprehensive service that is based on regulatory compliance, standards as well as a robust technological infrastructure. Our dematerialised and completely electronic Central Securities Depository harnesses the latest technology in integration and electronic registration developed by world established providers. From the issuing of ISINs to custody, registration, clearing & settlement and dematerialisation services, our CSD offers a broad range of asset servicing products. Our CSD is linked with Clearstream, the international CSD owned by Deutsche Bourse, and is integrated using SWIFT connectivity into the ECB’s settlement platforms T2S for securities and T2 for cash. Our highly experienced and skilled people are at the core of our success and the strength that ensures the continuous innovations and improvements in our services. Together we are dedicated to maintain our momentum of growth to meet the challenges posed by the diverse and ever changing environment in which we operate where regulatory and technological changes are continuous. With the creation of the Malta Stock Exchange Institute we have now responded to the educational and training demand that has long been felt within the industry. We believe we have a most exciting future and I welcome you to look into our extensive capital market services that are outlined in the following pages.
Simon Zammit Chief Executive
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MISSION STATEMENT
To facilitate capital formation in the public and private sector by developing and operating a liquid, efficient and fair securities market for the ultimate benefit of issuers and investors while adding value to its stakeholders.
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MILESTONES
1990
Enactment of Malta Stock Exchange Act establishing the Exchange
1992
Commencement of manual, call-over, once weekly trading
1992
First equity listing
1993
First corporate bond listing
1995
First Collective Investment Scheme listing
1996
Electronic Trading interface with clearing, settlement and registration systems
1998
Daily trading introduced
2000
Alternative Companies Listing structure launched
2001
Remote trading introduced
2002
Enactment of Financial Markets Act
2007
Treasury Bills admitted to the Market
2007
Set up of Malta Stock Exchange Group Corporate Structure
2008
Adoption of the Euro
2008
Member of Target 2
2011
CSD Link with Clearstream Banking AG
2012
Migration to Xetra Trading Platform
2013
Launch of Market Making Rules
2014
Launch of European Market Infrastructure Regulation (EMIR) reporting services
2015
Participation in Target 2 Securities Settlement System
2016
Launch of Prospects, the SME oriented MTF
2016
Launch of the MSE Sharia Equity Index
2016
Launch of e-Portfolio, an electronic Investor Access system
2016 Launch of MSE Institute 2016 Launch of National Capital Markets Strategic Plan
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CONTENTS
Services 8 Admission to listing
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Prospects 14 Why list on the Malta Stock Exchange
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Islamic Finance
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Membership 20 Central Securities Depository (CSD)
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Additional Services
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MSE Institute
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SERVICES
The Malta Stock Exchange The Malta Stock Exchange became a reality upon the enactment of the Malta Stock Exchange Act in 1990. The main objective was to develop the capital market in Malta by facilitating the mobilisation of savings into productive investment through the primary market, as well as to facilitate trading of listed securities through the provision of a secondary market. Trading commenced on 8 January 1992 on a manual, once weekly basis, initially solely in Government Stocks. From this modest beginning, the Exchange has undergone many positive corporate and operational developments which have enabled it to serve as an effective catalyst to mobilise capital. In 2002, the Exchange shed its regulatory and Listing Authority roles and in 2007 changed its corporate structure to a group of companies incorporated under the Companies Act. This structure better reflects the core services and operations provided by the Exchange and moreover provides the best legislative, regulatory and governance platform for the Exchange to continue to expand current operations into new avenues of business. Legislative, regulatory and the many operational developments that have been undertaken throughout the years have ensured that today, the Exchange is an internationally-recognised regulated market which successfully fulfils its role as an effective venue to raise capital finance. The Exchange provides a structure for admission of financial instruments to its recognised lists which may subsequently be traded on a fully electronic order book in a regulated, transparent and orderly market place through authorised Members. The Exchange also offers a very comprehensive range of back-office services through its post-trading infrastructure, the Central Securities Depository, including clearing and settlement, maintenance of share and bond registers and custody services. A key strategic initiative undertaken was to unbundle the various services which may be availed of separately or otherwise, depending on the applicant’s circumstances and market requirements. As the Exchange continues to develop in order to continue to achieve sustainable growth, it is committed to widening its horizons to attract more international business. One focus of the Exchange’s international strategy has been to achieve connectivity with other markets. In this context, the first interoperable link was set up between Clearstream Banking AG and the Exchange’s own depository, which has also led to the launch of the Exchange’s custody business. The Exchange’s participation in Target 2 Securities, the pan-European Securities Settlement System operated by the European Central Bank, with effect from June 2015, has continued to enhance the Exchange’s capabilities to provide further interoperable links, which not only increase the efficiency of cross-border business but also allow the Exchange to provide a wider spectrum of post-trading services. These developments, coupled with the Exchange’s migration to the Xetra trading platform, operated by Deutsche Bourse AG in July 2012, which has the largest global participation footprint, serve to bolster and support its international strategy.
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Our Services The Malta Stock Exchange offers a varied spectrum of services :
Admission to Listing on the Main market of equities, corporate and sovereign debt securities, Treasury Bills and Collective Investment Schemes Admission to listing on the Alternative Companies List Admission to Prospects, an SME oriented MTF Membership Secondary market trading Securities register administration including notarial services Registration Clearing and settlement Custodial services National Numbering Agency Services EMIR Reporting MSE Institute
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ADMISSION TO LISTING
Admission to Listing on the Exchange’s Regulated Market
Admission Process In order for financial instruments to be admitted to the Official List or the ACL, the first step of the process is for the Listing Authority (the MFSA) to approve the issue of the Prospectus and issue confirmation of “Admissibility to Listing”. The Listing Rules are issued by the Listing Authority and are publicly available on www.mfsa.com.mt.
The Exchange operates two regulated markets - the main board (Official List) and the Alternative Companies List (ACL). Furthermore, the Exchange also operates a Multilateral Trading Facility (MTF), Prospects, which is designed to cater for the financing needs of SMEs and start-up companies.
Following this, the prospective issuer may apply for “Admission” to either the Official List or the ACL in accordance with the Admission Requirements and Disclosure Standards as outlined in Chapter 6 of the Bye-laws of the Exchange. Although “admissibility” and “admission” procedures are two distinct processes, effectively these are undertaken concurrently in order that the procedure is not lengthened unnecessarily. Furthermore, under normal circumstances, the Exchange will not seek any further information than that already requested by the Listing Authority and will not review again any documentation already vetted during the “admissibility” process. The Role of the Sponsor The first step to apply for Admissibility to Listing from the Listing Authority is to appoint a Sponsor who, at a minimum, must be in possession of a Category II licence in terms of the Investment Services Act or equivalent authorisation from the appropriate Authority of a recognised jurisdiction. The role of the Sponsor is to guide the prospective Issuer through the listing and admission process, to co-ordinate processes of all the advisors as well as to act as liaison with the Listing Authority and the Exchange, and to generally advise the prospective Issuer on all relevant matters including those issues related to the secondary market. The Sponsor also assumes responsibility for signing and lodging the applications and supporting documents with the Listing Authority and the Exchange.
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Basic Conditions for Admissibility The basic conditions to be fulfilled by a prospective Issuer for admission of its financial instruments to the Official List or the ACL are: - Financial instruments must be freely transferable; - The application must relate to, and apply for, the financial instruments for which admission is being sought; and - Issuers must comply with the Disclosure Standards and ongoing Continuing Obligations as laid down in the Listing Rules. Furthermore, in order to be admitted to the Official List, prospective issuers issuing equity must offer at least 25% of the issued share capital of the company for sale to the public and the Issuer must also have a 3 year operating track record. In the case of the issuance of debt, the issue must be of at least €1 million or equivalent in a convertible currency. Entry requirements in respect of the ACL are less onerous; however, on-going Continuing Obligations are the same for both markets. The current maximum timeframe for approval of a Prospectus by the Listing Authority is 20 working days from submission of final documents. Issuers which have been granted Admissibility to Listing under the Maltese jurisdiction can opt to have their instruments traded on the Malta Stock Exchange trading platform, or may seek to have them traded anywhere within the EU. This is possible since both the Main and the Alternative Companies lists are Regulated Markets, and, therefore, enjoy full passporting rights within the EU.
Company Announcements Disclosure requires the dissemination of company information through the issue of Company Announcements. The contents and frequency of Company Announcements are in accordance with the Listing Rules. Such Company Announcements: • May be issued in English; and • Are disseminated through the Exchange’s Dissemination System and may be issued at any time during the Exchange’s Business Hours. Where financial instruments admitted to the Exchange’s Official List or ACL are going to be traded on the Exchange’s secondary market and registered within the CSD operated by the Exchange, the relevant rules as set out in the respective Chapters of the Bye-laws shall apply.
Companies admitted to listing on the MSE’s main market and ACL are listed in accordance with the Prospectus Directive and benefit from full passporting rights within the EU.
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ADMISSION TO LISTING
Admission to Listing of Collective Investment Schemes The Listing of a fund on the Malta Stock Exchange increases the fund’s prestige and marketability since a listing on such a wellregulated, reputable market within an EU jurisdiction provides a valuable marketing tool for the promoters of investment funds.
Listing of non-retail funds - Potentially increases an investment fund’s investor base since legal and/or regulatory requirements may restrict or prohibit certain institutional investors from investing in unlisted securities or securities which are not listed on a regulated market. - Allows investors to mark their investment in close-ended funds according to market price since institutional investors investing in investment funds usually require a publicly quoted market price in respect of such investments. Listing of retail funds - Makes information available publicly to investors since the NAVs and other announcements made by investment funds listed on the Malta Stock Exchange are notified to the public through the Exchange’s company information dissemination system. Listing and Admission Process The Listing Rules issued by the MFSA cover the requirements for the admissibility to primary or secondary listing of Units in both open-ended and close-ended Collective Investment Schemes whether incorporated in Malta or outside of Malta together with continuing obligations applicable to the different types of Schemes and the type of listing sought. Conditions to be fulfilled by open ended schemes seeking authorisation for admissibility to primary listing include that: - Units must be freely transferable - There must be at least one director and corporate directors are not eligible unless the corporate director is the manager of the scheme - The Scheme must adopt rules governing dealing by directors - At the time of the AGM, copies of the Directors’ service contracts must be made available for inspection by the public - Directors and proposed Directors and in the case of a Unit Trust, the Directors of the Manager, shall be personally responsible for the information contained in the Prospectus. In the case of an open-ended scheme seeking a secondary listing in Malta, the scheme must fulfil the above criteria, have the appropriate licence granted by the MFSA and, in the case of UCITS, the scheme must be licenced by a regulatory authority of a Member State or EEA State.
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In the case of close-ended schemes seeking authorisation for admissibility to primary listing, conditions include that: - The application must be duly signed by an authorised representative and the Sponsor - The scheme must be licensed by the MFSA under the Investment Services Act - The scheme must comply at all times with MFSA regulations particularly those concerning investment restrictions - The prospectus must be drawn up in compliance with the provision of the Investment Services Act Detailed Application Procedures for Admissibility by Collective Investment Schemes may be found in the Listing Rules. Continuing Obligations & Disclosure Standards Every Scheme applying for authorisation for admissibility to listing is required to comply with the continuing obligations and disclosure requirements, whether in respect of investors, the Competent Authority or the regulated market on which they are admitted, as set out in the Listing Rules. Disclosure requirements for all Schemes include information regarding: - Capital and management including NAV’s, any suspension of calculation of NAVs, any change in the status of the Scheme for tax purposes etc. - Rights of holders and rights between holders - Dividend distributions as applicable - Financial information - Information regarding Directors - Related party transactions - Any price-sensitive information The detail of information required and whether this needs to be made public or not or merely notified to the Competent Authority and/or the Exchange depends on the structure of the Scheme, whether this is primary or secondary listed and on the nature of the information as outlined in the Listing Rules.
In the case of an openended scheme seeking a secondary listing in Malta, the Scheme must also have the appropriate licence granted by the MFSA and, in the case of UCITS, must be licensed by a regulatory authority of a Member State or EEA State.
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PROSPECTS
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Facilitating access to the capital markets for SMEs The development of Prospects, an SME and start-up oriented market which operates under an MTF structure, supports the MSE’s commitment to open up new capital market opportunities, create economies of scale and to afford businesses more competitiveness and sustainability. This new market has been designed specifically for SMEs and start-ups and reflects their particular needs and circumstances. Prospects creates an opportunity for SMEs and start-ups to access capital markets relatively easily and efficiently and to benefit from the advantages which, so far, have only been available to much larger entities. Small and medium-sized businesses are now able to raise capital by issuing bonds or new shares, or selling existing shares to the market instead of relying on financial support from banks, their own family or friends. In a tangible and practical way, Prospects offers many businesses growth opportunities which have hitherto been simply out of reach. In order to maximise opportunities for SMEs and start-ups, the relevant Rules provide that there is no minimum value for the Initial Public Offering (IPO), Issuers may issue both equity or corporate bonds, and participation is open to all types of investors, including retail investors. Admission to Prospects raises a company’s brand awareness and prepares it for the issue, or sale, of equity as part of a succession planning process. While Prospects is an MTF, it is fully compliant with the Markets in Financial Instruments Directive (MiFID) which harmonises the regulation of investment services and Multilateral Trading Facilities (MTFs) across the EU.
Prospects is a cost-effective proposal due not only to the very competitive fees, but also as procedures ensure that the admission process, regulated by the MSE, is as efficient and as fast as possible. Applicant companies have the choice of a number of Exchangeapproved corporate advisors who can guide them through the admission process and will continue to support them postadmission in order to ensure continued investor protection through disclosure and compliance with the Rules. Applicant corporate advisors must demonstrate to the Prospects Committee that they possess the competence and expertise to counsel applicant companies on matters relating to law, audit, accounting, corporate governance and compliance. It is the Advisors’ responsibility to ensure these small companies adopt sound corporate governance practices and comply with regulatory requirements. Secondary market trading and post-trading processes are governed by the relevant Bye-laws of the Exchange. Further details may be found on the Prospects website: www.smeprospects.com
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Why list on the Malta Stock Exchange? More than just a cost-effective solution
AN EU JURISDICTION COUPLED WITH PASSPORTABILITY The Malta Stock Exchange (MSE) is located in a well-regulated, cost-effective domicile which is a fast-developing financial centre with an excellent reputation, skilled Englishspeaking professionals and a pleasant working environment. The MSE is itself an authorised organisation that has been operating to the highest international standards for almost 25 years. Companies admitted to listing on the MSE’s main market and the secondary listing board, the Alternative Companies List, which are both regulated markets, are listed in accordance with the Prospectus Directive. These, therefore, benefit from full passporting rights within the EU as well as having the option to have their instruments traded on any EU market of their choice, including the MSE’s own trading platform.
A PROFESSIONAL ENVIRONMENT BACKED BY COST-EFFECTIVE SUPPORT SERVICES The MSE has extensive experience with listing various categories of financial instruments such as equities, bonds, money market funds, property funds and venture capital or development funds. Moreover, the Maltese financial services sector is supported by numerous experienced professionals who are able to provide costeffective expertise in legal, audit, accounting and brokerage services. All the global accounting and audit firms are represented in Malta and operate together with many other accounting firms, all of which provide premium services at significantly competitive rates when compared to many other EU jurisdictions. There are also a large number of law firms with highly trained multi-lingual lawyers with expertise in domestic and international law, servicing international companies, private individuals and family businesses. It is fair to say that such support services are priced at up to 40% less than EU counterparts, while offering the same high level of professionalism that the market expects.
COST-EFFECTIVE ACCESS TO CAPITAL MARKETS There are many reasons why companies may seek a listing on the MSE, such as seeking access to capital markets as a source of finance or to raise new equity capital. A listing may also help raise an entity’s brand profile or address succession planning issues. The fees applicable to companies seeking admission to listing on the Main Market are very competitive and cost-effective. Indeed the Exchange’s fee structure is one of Europe’s most affordable. They are also very straightforward and easy to establish since they are structured on an ‘annual fee’ basis, without any up-front charges or other addons. Unlike many other exchanges, the MSE does not charge an admission fee in respect of its Main Market. The Central Securities Depository (CSD) also charges minimal fees when compared to other European CSDs. Trading fees are also quite low.
A SINGLE REGULATOR FOR ALL FINANCIAL SERVICES The Malta Financial Services Authority (MFSA) is the single regulator for all regulated financial services in Malta. The MFSA ensures best practice standards and compliance with relevant rules and regulations as well as ensures streamlined procedures and reduced bureaucracy. The MFSA also acts as the Listing Authority which approves admissibility to listing on regulated markets. Besides co-operating with other EU regulators, the MFSA has also entered into a number of Memoranda of Understanding with other non-EU jurisdictions which facilitate cross-border business and supervision. Furthermore, the MFSA is a Member of the International Organisation of Securities Commissions (IOSCO) and the International Association of Insurance Supervisors (IAIS).
VARIOUS ADMISSION TO LISTING OPTIONS AVAILABLE There are three markets that an issuer may opt to use when accessing the Capital Market. The Main Market and the Alternative Companies List (ACL) are regulated by the MFSA and require a sponsor and a prospectus and must adhere to the criteria laid down in the Prospectus Directive. Prospects, on the other hand, is an SMEoriented market which has the structure of an MTF operated and regulated by the MSE. Admission to this market is disclosure-based rather than criteria-based as is the case for listing on the other two boards. Prospects addresses the specific needs of SMEs, not only by providing a vehicle for small IPOs but
also by creating a framework for succession planning for these companies. Prospects Rules have been designed to be a lighter regulatory regime when compared to the Main Market or ACL requirements. It is very cost-effective while providing robust investor protection and transparency through the appointment of a Corporate Advisor.
A FULL VALUE-CHAIN EXCHANGE The MSE, which also operates a CSD, uses state-of-the-art trading and depository technology. Situated in the heart of Malta’s capital city, Valletta, it is able to provide a full value chain of services from IPO right through to registration of securities in bookentry form within its depository. At the same time, participants in the capital market may choose which services are appropriate to their needs through the MSE’s user-friendly and flexible rules and processes. CSD services are currently being offered to both listed and non-listed companies in a dematerialized environment, with full access to corporate action, notarial, custody and administrative services as well as benefitting from the possibility of settling transactions and corporate actions through the MSECSD’s link with Clearstream Banking AG, one of the largest global ICSDs. As the appointed National Numbering Agency for the Maltese jurisdiction, the Exchange is responsible for issuing International Securities Identification Numbers (ISINs) for Malta registered financial instruments. In this capacity, Malta Stock Exchange plc is a member of the Association of National Numbering Agencies (ANNA).
TARGET2 SECURITIES (T2S) ENABLED POST-TRADING INFRASTRUCTURE The MSE-CSD was one of the first participants of T2S, a pan-European settlement platform developed and operated by the ECB. Once all the migration waves are rolled out, it will encompass all Euro settlement volumes in a seamless and cost-effective manner, and will be fundamental in creating a truly single capital market in Europe.
HIGHLY NETWORKED INFRASTRUCTURE – XETRA, CLEARSTREAM BILATERAL LINK, SWIFT AND TARGET2 Trading on the MSE takes place through Xetra, the trading system operated by Deutsche Bõrse AG which offers trading functionality in line with international standards, MiFID compliant reporting and also facilitates international participation. Xetra is the largest exchange network in the world, currently connecting over 4,000 traders from 16 European countries as well as Hong Kong and the United Arab Emirates, amongst others. The MSE offers custody services through its link with Clearstream Banking AG. The link to Clearstream facilitates access to the MSE depository for international investors seeking to invest in instruments listed in Malta. Through its connectivity to the SWIFT telecommunication platform, the MSE provides Members and participants with a full service for the exchange of standardized financial messages for payments and securities settlement. The Exchange is also a direct member of TARGET2, the interbank payment system for the real-time processing of cross-border transfers throughout the EU. TARGET2 offers a premium payment service across national borders in the European Union, thus enabling the MSE to clear and settle Euro transactions in a safe and secure manner.
MULTI-CURRENCY OPTION While Malta’s official currency is the Euro, the MSE’s admission to listing, trading and settlement processes can accommodate multi-currency issues on all the markets it operates and can, therefore, support companies seeking to raise finance in nonEuro denominated currencies, such as Pound Sterling or US Dollar – other currencies can be supported by prior agreement.
A PERSONALISED SERVICE, EVERY STEP OF THE WAY The Malta Stock Exchange offers a comprehensive spectrum of services. It has built an excellent reputation that it strives to safeguard. There is also significant potential for growth. Like Malta itself, the MSE is agile, pro-active and flexible in its approach. It is also businessfriendly and keen to build domestic and cross-border relationships in a transparent and professional manner. Supported by a pro-business Competent Authority and other stakeholders, the MSE’s executive management team is easily accessible and open to exploring opportunities that offer good quality prospects for new business. This efficient process thrives on a ‘can do’ attitude that cascades from the very top. A company seeking admission to listing on the Main Market, ACL or Prospects will discover that the MSE is a willing and likeminded business partner, not only before the IPO and admission to listing, or after the offer is concluded, but throughout its life as a listed entity.
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ISLAMIC FINANCE
Islamic Finance
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Islamic Finance The Malta Stock Exchange launched a new equity index called the MSE Sharia Equity Index on 1st January 2016 with an initial base of 1,000. The equities included in this index have been certified to be Sharia-compliant by Dar Al Sharia, Dubai – a world-renowned Islamic finance consultancy firm. Equities listed on the MSE will continue to be reviewed on a quarterly basis in order to ensure continued compliance with Sharia principles and also to review new companies that may come to the market that may be eligible for inclusion in this Index. Sharia law principles prohibit activities related to alcohol, pork, ammunition, tobacco and interest-based banking and other Sharia-repugnant activities. These
parameters, which can be found in more detail on the MSE website, are monitored on a periodical basis to ensure continued Sharia compliance. The MSE Sharia Equity Index is the first step to launching Malta as a centre for Islamic finance products, with a view to attracting Sharia-compliant equities and sukuk instruments that could be listed and traded in Malta, while enjoying the benefits of a well-regulated and stable EU jurisdiction. This new market could result in increased business for the Exchange through the raising of capital from Muslim communities, financing the needs of Islamic companies who would access the European and non-European capital markets through the Malta Stock Exchange.
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MEMBERSHIP
Membership and Trading
Membership Eligibility Membership of the Exchange shall consist of persons: · licensed in terms of the Investment Services Act (Cap. 370 of the Laws of Malta); or · European Investment Firms, either directly or indirectly; or · deemed by the Exchange to be fit and proper, to have sufficient level of trading ability and competence, to have sufficient financial resources and, where applicable, adequate organizational arrangements. Candidates wishing to be admitted to membership must submit an application in writing, and authorise at least one trader to carry out trading on the exchange on their behalf. Each Member must appoint a Compliance Officer to deal with the Member’s regulatory issues and its continuing obligations. All Members of the Exchange must contribute towards the Settlement Guarantee Fund (SGF) set up to cover specific settlement default scenarios in accordance with specific provisions as laid down in the Bye-laws. Members must promote high standards of integrity and fair dealing and should act with due skill, care and diligence in providing a service. Members must keep records in sufficient detail to show particulars of its trading activities, and shall retain books of accounts and records for at least 10 years. These shall be available to the Exchange for inspection or audit. Members shall also maintain one or more clients’ accounts at one or more licensed banks, into which only such amounts which have been received from or on behalf of clients for the settlement of purchases of financial instruments may be deposited. A full list of approved Members and contact details may be found on the Members section of the MSE website: www.borzamalta.com.mt
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Trading Financial instruments admitted to the Exchange’s recognised lists may be traded on the regulated market by approved Members acting on behalf of, and in accordance with, the instructions of their clients. The Malta Stock Exchange strives to ensure that the highest standards of market integrity are applied to all the activities conducted on its markets to ensure that the appropriate levels of transparency and investor protection are in place. The Exchange ensures that: There are clear and transparent rules for the admission of financial instruments to trading on its markets, in line with EU law
Trading System The Exchange is a participant exchange on the Xetra trading platform, hosted by Deutsche Boerse in Frankfurt. This platform is used extensively by exchanges in over 18 countries throughout the world and allows connectivity with over 4,500 members internationally. Over-The-Counter trades are also reported through the Exchange’s trading infrastructure for dissemination to the market. Regular market trading is intermediated and is all electronic order book with best execution price formation using price / time parameters in a continuous market. Market makers may also operate on the market in accordance with relevant rules which provide criteria for continuous quotes and spreads.
There is pre-and post-trading transparency There are clear and transparent rules for the admission of Members Trading Hours There is continuous monitoring of trading activity and Members’ compliance with trading rules and other applicable regulations There is regular regulatory reporting to the Competent Authority Trading rules ensure best-execution and transparent price, based on supply and demand There are opportunities to broaden the investor base while gaining access to a market that has a high level of regulation and transparency There is dissemination of market data and company information providing clear and transparent information to potential investors
REGULAR MARKET Pre Trading Continuous Post Trading
09:00 - 09:30 09:30 - 12:30 12:30 - 15:00
Note: Regular Market Trading commences with an Opening Auction and ends with a Closing Auction
TREASURY BILLS MARKET Pre Trading Continuous
09:00 - 09:30 09:30 - 10:30
OFF-MARKET TRADES REPORTING Over-The-Counter Trade Reporting 09:00 - 15:00 Trading Calendar The Trading and Settlement Calendar and the Trading Time-Table are issued annually and are available on the Exchange’s website.
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CENTRAL SECURITIES DEPOSITORY (CSD)
Central Securities Depository (CSD) The Exchange operates a fully-dematerialised, direct holding CSD which provides a varied spectrum of services to Issuers, Members and Investors related to maintenance of company registers, transfers, registration, clearing and settlement and custody. All holders of financial instruments registered within the CSD are assigned unique Malta Stock Exchange Account Numbers, within the CSD .
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CSD Services The CSD provides a number of services to its users which include: New Issues Registration Services This service includes the collection, data input and all other processes related to the applications made by prospective investors in respect of an initial public offering of instruments and assets. Since the CSD will also be acting on the instructions of the Issuer in respect of the allocation of the investments in the name of investors, the provision of registrar services is a naturally integrated extension of securities issuance services. The CSD provides a securities holders’ register administration service. The service includes the notarial function as well as maintenance of the records. Securities Administration of dematerialised securities The Exchange offers dematerialisation and custody services in respect of issues of dematerialised securities by corporate (e.g. private and public companies or corporations) and non-corporate (e.g. other entities, unit trusts and mutual schemes) issuers through its Central Securities Depository (CSD). This service is available to listed as well as unlisted organisations. The term ‘Dematerialised’ means that registers of financial instruments maintained within the CSD are held in book-entry form and are not held in certificate or any other physical form. This comprehensive service includes the updating of the registers with all the details relative to the transfers, transmissions, pledges and rights of mandates or of usufruct on the financial instruments. It also caters for the processing of all corporate actions planned by an Issuer, such as the dividend/interest payments processing, power-of-attorney mandates and fixed term securities maturities and redemptions, new issues and rights and bonus issues, regulatory or other ad hoc reporting, and updating of registered holdings’ details to listed and unlisted companies both locally and internationally. Companies interested in having the register administration outsourced to the CSD will find that fees are very competitive and a professional service is offered.
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Clearing and Settlement Clearing and settlement of financial instruments, i.e. the verification of the transfer of financial instruments or other assets in accordance with due instructions; typically consisting of delivery versus payment (‘DvP’) in respect of the transfer of assets against payment, or free of payment (‘FoP’) in respect of the delivery of assets free of payment. Conventionally, securities settlement on the Maltese regulated market takes place on T+2 for all registered financial instruments. Clearing and settlement is performed by MaltaClear, the authorised securities settlement system operated by the Exchange and forming part of the operations of the Central Securities Depository. Since June 2015, the CSD has been a participant in Target 2 Securities (T2S) the pan-European Securities Settlement System operated by the European Central Bank and intended to lower both costs and risks of settlement process on both a domestic and cross-border level. As more CSDs and ICSDs join the platform, connectivity between these infrastructures will be enhanced and facilitated, opening up more opportunities for cross-border business. Custody Services The CSD offers professional, customised and cost-efficient custody and depository services to retail, institutional or sophisticated investors wishing to avail of the MSE’s custodial holding services, clearing and settlement of assets and the effective exercise of rights arising therefrom on their behalf. Custodial services may extend to securities issued in Malta and overseas.
CSD link with Clearstream Banking AG The Malta Stock Exchange’s relationship with Clearstream Banking AG links the Maltese depository and custodial services provider with this global depository. The link facilitates the participation of MSE customers on the international markets while affording an easy access to international investors to include securities issued in Malta within their portfolios. MSE customers without a Clearstream or other CSD account abroad may still hold internationally-issued securities and assets over a secure and efficient link by appointing the MSE as their custodian. This custodial relationship will allow investors to benefit from secure and efficient clearing and settlement processing and a host of other security custody services. The relationship between MSE and Clearstream allows Maltese financial instruments issued through the CSD to be deposited, cleared and settled in an international environment, making these financial instruments much more liquid since they may be actively transferred in a secure manner anywhere in the world through Clearstream’s global reach. The converse of the above also holds and investors wishing to invest in foreign securities and assets may do so by transacting or otherwise acquiring title over such securities and assets through authorised intermediaries or over-the-counter. Instead of maintaining an account directly with a foreign depository, or indirectly through participants in such a depository, to record the holding in these investments, the MSE Central Security Depository will hold these investments in custody on behalf of such investors through its partnership custodial relationship with Clearstream Banking.
One area of growth in Malta has been the Fund industry, and the Exchange has enlarged its custodial service offering by providing cost-effective custody services to professional investor funds.
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ADDITIONAL SERVICES
Additional Services
Facilitating compliance with the European Market Infrastructure Regulation (EMIR) reporting requirements The objective of EMIR, which came into effect on 16 August 2012, with an implementation date of February 2015, is to improve the transparency of OverThe-Counter (OTC) derivatives markets and to reduce the risks associated with these markets. As provided for by EMIR, which allows reporting to be routed through a Reporting Counterparty, the Malta Stock Exchange (MSE) offers the service of facilitating reporting of EMIR-related transactions for Maltese and non-Maltese companies in order to assist and ensure compliance with EMIR requirements. The MSE has an agreement with REGIS-TR, an authorised trade repository in Spain, in order to fulfil its role even though it does not participate in any derivative trading; in fact the MSE reports the related contractual data to the Trade Repository on behalf of the Appointing Counterparty. The Appointing Counterparty could either be the company who would be a party to the derivative trade or could be delegated the responsibility of reporting by a third party. National Numbering Agency As Malta’s national numbering agency accredited with the international Association of National Numbering Agencies, the Central Securities Depository issues, upon request, a unique international securities identification number (‘ISIN’) (and maintains updated details) in respect of securities issued in Malta as part of the preparatory work and other corporate administrative services involved in any type of securities issuance. ISINs are allocated to Issuers within 24 hrs of application being made.
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MSE INSTITUTE
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The Malta Stock Exchange recognises the importance of financial education and has adopted the objective of improving the level of financial literacy as part of its strategy. The MSE Institute leverages on the expertise and experience gained throughout the Exchange’s 25 year history and is focused on enhancing financial education in Malta for individual investors as well as industry practitioners. The Institute will be running over 35 short courses and seminars on a number of subjects, ranging from introductory courses to more specialised subjects such as risk management, securitisation, trusts, compliance and regulation, hedge fund strategies and corporate governance, to name a few. The courses are offered at the beginner, intermediate and advanced levels, since they are aimed at candidates with different levels of knowledge and financial literacy. The majority of the courses will be held in English but where appropriate, they will also be held in Maltese. Candidates may choose to enroll for single courses or may choose to continue to enroll for other courses through the different levels and eventually attain a diploma.
Course Modules:
An Introduction to the Financial Markets An Introduction to ETFs and Funds Accounting for Business Owners An Introduction to Corporate Law An Introduction to Strategic Management Financial Statements Analysis Corporate Finance Portfolio Management and Capital Markets Financial Markets Compliance and Regulation Anti-Money Laundering Hedge Fund Strategies and Structures Fund Accounting and Administration Understanding Trusts Principles of Sound Corporate Governance
More information about the range and content of the courses being offered by the MSE Institute including their cost can be found on www.borzamalta.com.mt
Understanding M&A and Corporate Restructuring Understanding the Process of an Initial Public Offering An Introduction to Securitisation An Introduction to Derivatives and Asset Backed Securities An Introduction to Structured Products An Introduction to Islamic Finance The Role of the Board Trading Foreign Exchange, Futures and Options Fundamentals of Financial Markets Risk Management One Day Free Seminars Workshop Series Visiting Scholar Series Diploma in Securities Analysis and Portfolio Management
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Malta Stock Exchange plc. Corporate Information Registered Address:
Garrison Chapel Castille Place Valletta VLT 1063 Malta
Tel No.: Fax No.:
+356 21 24 40 51 +356 25 69 63 16
Web: www.borzamalta.com.mt E-mail: [email protected] Incorporation: Registered in Malta as a public limited liability company under the Companies Act Company Registration No.: C42525 Licences: RM / 42525 Licensed by the MFSA as a regulated market in terms of Article 4 of the Financial Markets Act CSD / 42525 Licensed by the MFSA to operate a Central Securities Depository in terms of Article 24 of the Financial Markets Act Authorised to operate a Securities Settlement System (MaltaClear) by the Central Bank of Malta in terms of Article 36 of the Central Bank of Malta Act The MSE is a participant in Target2 and Target2-Securities Competent Authorities: Regulated Market / Central Securities Depository: Malta Financial Services Authority Securities Settlement System - MaltaClear: Central Bank of Malta Primary Legislation:
Financial Markets Act (Cap. 345 of the Laws of Malta)
Rules:
Issued in terms of the Financial Markets Act: Financial Market Rules stipulating Financial Resources and Financial Reporting Requirements
Internal Rules: Bye-laws Prospects Rules Exchange Notice 1 – Fees & other charges Exchange Notice 719 – Access link with Clearstream Banking AG International Affiliations:
Malta Stock Exchange is a Member of: - World Federation of Exchanges - Federation of European Securities Exchanges - European Central Securities Depositories Association - Association of National Numbering Agencies
Language: English
The contents of this promotional document are designed to give a fair overview of the services provided by the Malta Stock Exchange as at November 2016.
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Malta Stock Exchange plc, Garrison Chapel, Castille Place, Valletta VLT 1063. Tel: + 35621244051 E-mail: [email protected] Website: www.borzamalta.com.mt