Malta: Stockbroking Brokerage Liberalisation Postponed "To Later Date"

Lisa Ugur, Tax-news.com, London

26 July 2000

Changes are afoot in the Maltese stockbroking industry but according to a report in the Malta Business Weekly, the date for the liberalisation of stockbroking commissions and brokerage has been postponed.

Commenting on the decision to postpone changes, the chairman of the Malta Stock Exchange, Alfred Mallia, said 'The date for the liberalisation of stockbroking commissions/brokerage has been postponed by the council at the request of the stockbrokers to a later date which has not yet been communicated to the stockbroking community.' For some time now stockbrokers and the Malta Stock Exchange have been in talks over liberalising their business, and a target date of 1 July 2000 had been set, although this was criticised by some brokers as being too early. It now seems that it could happen in January 2001.

However, legal amendments have been put into place allowing a "person" to obtain a stockbroking licence, and these amendments were issued in a legal notice. In addition, the amendments prevent a person from keeping his licence if his nomination as a stockbroker is withdrawn by the Financial Services Organisation (FSO). These amendments are seen as paving the way for banks to offer stockbroking services.

The Malta Business Weekly asked Mr Mallia whether a stockbroking licence issued to a bank would be issued in the bank's or the individual's name, and whether any legal changes were necessary for a licence to be issued in the bank's name. He replied 'In terms of Section 9 (1) of the MSE Act 1990 (Cap. 345) no person shall act as a stockbroker in Malta unless he is in possession of a valid stockbroker's licence issued by the council in accordance with the statute. The licence is therefore issued in the name of the applicant. The recent amendment to the statute referred to in LN 124 published on 14 July, 2000 has not altered current procedures. The amendment protects the Financial Services Organisation (FSO) in the sense that a person nominated by an FSO to act as a stockbroker shall be deemed to have resigned from membership of the exchange if the council receives notice in writing from the FSO that it intends to withdraw its nomination of such person. In other words a person who obtains a licence to act as a stockbroker as a result of his nomination by an FSO does not carry the licence with him if his nomination is withdrawn by the FSO."

Liberalisation would also have a bearing on fees, and Mr Mallia said 'The changes being envisaged, though not yet operational or indeed definite, are to make the commission/brokerage subject to negotiation between a stockbroking firm and its customers. Currently stockbrokers are prohibited from sharing or rebating commission/brokerage.' Regarding the possibility of foreign stockbrokers being allowed to work in Malta, Mr Mallia said 'Currently, in terms of the Bye-Laws every applicant for registration as a member shall, among other qualifications required, be a citizen of Malta.'

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