In the fifth episode of the ‘Ganado Meets Finance’ podcast, Mark Caruana Scicluna, a senior associate within the Investment Services and Funds Team at Ganado Advocates, speaks with Kenneth Farrugia, in his capacity as Chairperson of the Malta Asset Servicing Association.

Listen to the podcast here:

The Malta Asset Servicing Association – its Journey and Objectives

In 1995, Malta enacted a suite of legislative and regulatory initiatives within the financial services industry, with prominence afforded to the asset management space.

Several banks in Malta began setting up their asset management operations targeting the domestic market, predominately in the retail space. As the industry evolved, we slowly began seeing international operators also setting up funds in Malta – in the wake of which the Malta Funds Industry Association (“MFIA”) was formed.

Following our accession to the EU, Malta experienced rapid growth with asset management operators relocating to Malta and setting up business here. During this period, the jurisdiction also saw an influx of fund administrators opting for Malta. With time, the sector advanced from its focus on asset management and began expanding to the assert servicing, custody and brokerage sectors as well. At this point, the MFIA became the Malta Asset Servicing Association (“MASA”).

The MASA also forms part of the European Fund and Asset Management Association.

Is Malta a Credible Alternative to other European Jurisdictions?

Farrugia describes Malta as “complementing” existing financial services jurisdictions. Whilst Luxembourg is renowned for its UCITS environment and Ireland predominantly focuses on hedge funds, Malta has principally been driven by innovation. For instance, the Professional Investor Fund (“PIF”) regime, a home grown product, allows one to structure a fund – with relative flexibility – that may invest in a broad range of assets.

Malta’s competitive costs also make it possible for smaller players to find a suitable jurisdiction that fits the size of their operations and enables them to launch products easily. Caruana Scicluna affirmed that Malta remains attractive and a commercially viable alternative to investors.

Looking Forward

Farrugia stressed that Malta must focus on its ‘niche strategic position’. Malta is an ideal place for fund managers who are seeking to set up a fund structure. As a jurisdiction, Malta offers a comprehensive suite of products, particularly in the PIF space and is now seeing traction with Notified Alternative Investment Funds (“Notified AIFs”).

Looking forward, Malta should focus on bespoke products. For instance, the Covid-19 Pandemic has had an impact on the operations of the unregulated sector. Loan funds may have the opportunity to manage and purchase non-performing loans from banks.

Farrugia also highlighted that Malta should continue to focus on venture capital and private equity funds. We need to use our size to our advantage.

Concerted Action between the Local Industry and the Maltese Authorities  

Farrugia emphasised the importance of the local industry and Maltese authorities, describing them as “integral components in the articulation of Malta’s strategic position”.

He stressed that the role of the local industry is an active one. Service providers in Malta have direct contact with clients and new business, and their insight is crucial to shaping our future path.  The Maltese Government (as policy makers) and the Malta Financial Services Authority (“MFSA”) (as regulator) are also crucial.

Caruana Scicluna reiterated the significance of frequent dialogue between the local industry and Maltese authorities.

Promoting Malta as a Jurisdiction

Our marketing strategy should revolve around two key areas.

Firstly, the asset management sector. Malta has a comprehensive legal and regulatory framework that fits the expectations of asset managers. Given that asset managers are pivotal in the establishment of fund structures, if we can continue to attract asset managers to Malta – it is more likely that they will set up fund structures here in Malta too.

Secondly, Malta should also have a product-related focus. For instance, we have advanced well in the fintech industry. This provides Malta with an opportunity to promote blockchain regulation within the asset management field and attract operators that want to position themselves in this area.

As Malta may not have the breadth of resources to target all typologies of customers and market operators, adopting a more focused, specialised approach is key to the sustainable growth of the asset management industry.

The Workforce being key to the Prosperity of the Asset Management Industry

Another theme discussed is the importance for the local industry to ensure it retains, and further builds on, the supporting eco-system in the asset management sector. The financial services industry in Malta has benefitted from a reliable workforce and a steady stream of competent individuals, who are well-versed and readily available to assist asset managers in meeting the expectations of the MFSA.

Caruana Scicluna mentioned that the educational system in Malta should better understand the resource gap. Farrugia agreed that we should ensure that the right training programmes are available to equip existing and future industry personnel with the right tools.

In parallel, Malta should seek to attract subject-matter experts from overseas (such as in portfolio management, risk management, governance, risk and compliance) where the pool of personnel available locally may sometimes be limited to meet the demands of market operators. Naturally, this entails making Malta more appealing as a jurisdiction from various standpoints – such as widening the scope of the Highly Qualified Persons regime.


Malta should remain innovative in the way it serves as an attractive platform for asset managers to provide their services. Where possible, the jurisdiction should eliminate unnecessarily bureaucratic processes which tend to be significantly taxing on asset managers setting up shop in Malta. We may (i) use blockchain technology as a repository to streamline tedious due diligence processes, (ii) shift to a paperless environment, and (iii) continue to develop niche products such as the Notified AIF regime.

As a concluding remark, Farrugia suggested that Malta should consider extending the notification process to other fund types (such as the PIF) whereby the asset manager may provide the MFSA with the necessary comfort and sign-off in a manner similar to Notified AIFs.

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