Malta Forex License

Introduction

The Investment Services Act, 1994, provides the legal framework for the provision of the Forex Services in Malta.

Permitted Activities

As per the Act, a Forex means Foreign Exchange or ‘the currency market’ and is the market in which all world currencies are traded. Malta Forex License Categories

Category 1

The category 1 license is of two types:

• Category 1a - Licence Holders authorised to receive and transmit orders in relation to one or more instruments and, or provide investment advice and, or place instruments without a firm commitment basis but not to hold or control Clients’ Money or Customers’ Assets.
• Category 1b - License holders authorised to deal as agent, arrange deals or provide advice in terms of the Act solely for non-private customers but not to hold or control clients’ money or customers’ assets, deal for their own account or underwrite

Category 2

license holders are authorised to provide investment services, and to hold or control clients’ money or customers’ assets, but not to deal for their own account or underwrite.

Category 3

License holders are authorised to provide investment services, to hold and control clients’ money or customers’ assets, and to deal for their own account or underwrite.

Category 4

License holders are authorised to act as trustees or custodians of collective investment schemes.

Legal Requirements

Categories

Entity Requirements

The entity making the application is a Malta company under the Companies Act (CAP. 386) Company includes:
a) A company,
b) Limited partnerships,
c) Unit trust or
d) International holding companies.

Director’s Requirements

The license will need at least three (3) directors who are Fit and Proper, with at least one (1) Maltese resident.

Shareholder requirements

• The Payment Service Provider/Money Transfer Provider, will need at least 2 (two) shareholders.
• Corporate shareholding is allowed and 100% foreign ownership is permitted.

Compliance Officer

The License must establish and maintain an appropriate and effective compliance function within the firm which operates independently of all operational and business line functions and senior or supervisory management.

Money Laundering Reporting Officer

The License must establish and maintain an appropriate and effective Money Laundering Reporting function within the firm which operates independently of all operational and business line functions and senior or supervisory management..

Risk Officer

The License must establish and maintain an appropriate and effective Risk management function within the firm which operates independently of all operational and business line functions and senior or supervisory management.

Auditor

The License shall establish an internal audit / audit committee in order to undertake the internal audit function of the company and which shall be independent for the management of the company or outsource.

Minimum Capital Requirements

The Applicant must have the prescribed minimum paid-up capital and is able to meet the prescribed minimum net liquid capital requirement in cash or readily marketable securities. The prescribed minimum paid-up capital;
i. Category 1a - 50 000 euros
ii. Category 1b - €20,000 (with PI cover) - €50,000 (without PI cover)
iii. Category 2 - 125 000 euros
iv. Category 3 - 730 000 euros

Ongoing Obligations

• A Forex License is issued for a period of 5 years. On expiration of such term, the Malta Financial Services Authority may renew such licence for further 5 year periods, subject to continued compliance by the Licensee and upon payment of the renewal fee.
• Filing of Audited Accounts: Filing of Audited Accounts: The financial statements must be approved within 10 months from the accounting year end and must be filed with the Registrar of Companies within 10 months plus 42 days from the accounting year end. However if the 1st accounting period is longer than 12 months, then the approval and submission date need to be decreased by the number of days that the accounting period is longer than 12 months .If these deadlines are not adhered to, penalties of €25 plus €0.50c per day will apply accordingly
• The Licensee must maintain appropriate policies of insurance for the purpose of indemnifying such licensee against any liability that may be incurred as a result of any act or omission by the licensee or any of its officers or employees in the conduct of the licensee’s securities business.