Changes to the Malta Stock Exchange listing rules could result in the setting up of a Second Tier market, which would qualify as a multilateral trading facility, according to Finance Minister Edward Scicluna.

He said that a proposal on this would be issued for consultation in due course and that it was envisaged that the facility would be operated by the MSE as a separate market.

Mr Scicluna was speaking at the Malta Stock Exchange’s first international two-day conference entitled Sustaining Economic Growth Through New Financial Centres and Boutique Exchanges. His speech outlined the various changes being made to extend financing options, particularly to SMEs.

He also said that a framework for the licensing and regulation of reinsurance special vehicles (RSPV) was in the pipeline, which will allow the securitisation of insurance risk via SPVs, fully funded through the proceeds of a debt issuance or other financing mechanisms.

“This would allow insurance companies to transfer risks to RSPVs for an agreed premium and RSPVs to issue notes or other securities to the capital market, the returns on which depend on the realisation or otherwise of the underlying risk. This type of instrument may also be listed on exchanges targeting professional investors,” he said.

The conference was opened by MSE chairman Paul Spiteri, who gave an overview of the exchange’s activities, adding: “The high participation rate of the Maltese public investing in financial instruments – roughly a third of the adult population – has been instrumental in our market and economy, avoiding the worse effects of the ongoing financial turmoil.

“It is clear that local economic conditions remain strong and investor confidence continues to be very positive. However, in order to sustain our rate of growth and development, and in order to continue to support our economy, we need to continue examining how we can expand our operations to a wider international market place,” he said, adding that small exchanges were able to offer a tailor-made service that larger ones could not.

The exchange will next year migrate to a pan-European platform, following a considerable investment.

He identified one of the main problems facing the exchange as the fact that many investors in Malta “buy to hold”.

“This stifles liquidity and discourages institutional investors from participating in the market as they see a restricted exit route from the market. We are therefore hopeful that the market-making structure regulations introduced on October 1 may ease this situation somewhat, and hopefully encourage and attract foreign issuers to list on our market,” he said.

MSE chief executive officer Eileen Muscat noted that there were 15,000 trades a year through exchange, but that while last year investors were tending to go for Government paper, this year, the trend had swung towards equities.

Malta Stock Exchange by numbers

• €3bn raised through MSE for the private sector since it was set up in 1991.

• €15bn worth of Government paper issued.

• 8,000 investors in 1992 – now 75,000 hold over 250,000 accounts.

• Over 360 financial instruments quoted, with a total market capitalisation of over €9bn.

• 23 equities, 42 corporate bonds, 50 Government stocks listed.

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