{"id":50038,"date":"2025-07-10T09:25:38","date_gmt":"2025-07-10T09:25:38","guid":{"rendered":"https:\/\/my.legal500.com\/developments\/?post_type=legal_developments&p=50038"},"modified":"2025-07-10T09:25:38","modified_gmt":"2025-07-10T09:25:38","slug":"mfsa-publishes-observations-from-inspections-with-investment-services-providers","status":"publish","type":"legal_developments","link":"https:\/\/my.legal500.com\/developments\/thought-leadership\/mfsa-publishes-observations-from-inspections-with-investment-services-providers\/","title":{"rendered":"MFSA publishes observations from inspections with investment services providers"},"content":{"rendered":"

The Malta Financial Services Authority (\u201cMFSA\u201d) has published a\u00a0Dear CEO letter<\/a>\u00a0addressed to all chief executive officers and compliance officers of \u2018persons professionally arranging or executing transactions\u2019, particularly to investment services providers. The letters sets out the MFSA\u2019s main findings following numerous market abuse-related supervisory inspections which it carried out with numerous Maltese investment services providers \u2013 primarily member firms of the Malta Stock Exchange \u2013 between 2020 and 2024.The letter makes for some interesting reading as it gives the MFSA\u2019s perspective on the industry\u2019s compliance with MAR generally.<\/strong><\/p>\n

<\/p>\n

The letter also includes some recommended best practice to help investment services providers adhere to their obligations under the Market Abuse Regulation (\u201cMAR<\/strong>\u201d), as well as a number of poor practices which the MFSA observed in the market, all of which are summarised below.<\/p>\n

General observations<\/em><\/p>\n

The tone of the letter is overall quite positive since it opens by saying that the \u201cvery large majority\u201d of investment services providers had at least undertaken efforts to implement appropriate systems and procedures to allow them to fulfil their obligations under MAR. That said, the MFSA also admits that there is \u201csignificant room for improvement\u201d when it comes to general MAR compliance, even though the \u201cgeneral level of compliance had markedly improved\u201d since the first set of inspections which the MFSA carried out between 2018 and 2020.<\/p>\n

In our view, a number of shortcomings identified by the MFSA are, and can be, easily remedied by a minor investment of time and effort by investment services providers. For instance, the MFSA places significant emphasis on a lack of training, both in respect of market soundings as well as market monitoring, which can be easily rectified with a well thought out and planned training programme.<\/p>\n

Best and poor practices<\/em><\/p>\n

As mentioned, the letter sets out recommended best practices, as well as examples of poor practices observed by the MFSA. We\u2019ve set out a summary of these in the table annexed to the article and have split them according to the key areas which the MFSA focused on in the letter, namely: (1) market soundings, (2) market monitoring, and (3) investment recommendations. Kindly note that the good practices do not necessarily correspond to the poor practices set out in the same row and each column should therefore be read separately.<\/p>\n

Next steps<\/em><\/p>\n

Given that MAR has been in force since 2016 and taking into consideration the various MFSA circulars and supervisory interactions held with market participants, the MFSA has made it clear that it expects all investment services providers to comply with MAR in full.<\/p>\n

From experience, we\u2019ve seen the MFSA ramp up its oversight of MAR \u2014 with more supervisory inspections and a notable rise in enforcement actions, including significant fines. Given the MFSA\u2019s own assessment that there\u2019s \u201csignificant room for improvement\u201d in overall MAR compliance, we expect this intensified scrutiny to continue \u2014 or even escalate. Investment services providers should be ready for sustained regulatory attention in this area.<\/p>\n

To this end, entities which fall in scope of MAR would be well advised to review their existing policy frameworks and operational arrangements to ensure that they are in full compliance with MAR and regulatory expectations.<\/p>\n

(Click the table below to view the complete version) (Link to Photo: <\/em>https:\/\/bit.ly\/3GhjoXs<\/em><\/a> )<\/em><\/p>\n

Ganado\u2019s Capital Markets team is well-versed in all market abuse-related matters and will be pleased to assist any issuer or potential issuer should the need arise.<\/em><\/p>\n","protected":false},"featured_media":0,"template":"","class_list":["post-50038","legal_developments","type-legal_developments","status-publish","hentry"],"acf":[],"_links":{"self":[{"href":"https:\/\/my.legal500.com\/developments\/wp-json\/wp\/v2\/legal_developments\/50038","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/my.legal500.com\/developments\/wp-json\/wp\/v2\/legal_developments"}],"about":[{"href":"https:\/\/my.legal500.com\/developments\/wp-json\/wp\/v2\/types\/legal_developments"}],"wp:attachment":[{"href":"https:\/\/my.legal500.com\/developments\/wp-json\/wp\/v2\/media?parent=50038"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}