A number of hedge fund managers are shifting their operations to Malta in response to both the rising costs of business and the growing regulatory burden in their domiciles, according to FinanceMalta, the public-private partnership set up to promote Malta’s financial services sector.
"Malta is emerging alongside London, Geneva, Luxembourg and Zug, as another European location for fund managers keen to maintain flexible operating arrangements and reduce tax bills. Solid regulatory procedures ensure Malta is well placed to build its reputation further in the financial services industry,” FinanceMalta said.
In recent years, Malta has continued to strengthen its position as a reputable international financial services centre with financial services contributing about 12 per cent to the country’s GDP.
Furthermore, Malta enjoys an advantage as a European Union domicile, giving managers based here greater flexibility under the terms of recently-enacted rules to regulate the European hedge fund industry. Running an office from the island is also significantly cheaper than in London or Geneva, as is the cost of living for employees.
Joseph Bannister, chairman of the MFSA, although pleased with the inflow, said: “We insist on substance. We will be flexible, particularly with the smaller start-ups but they need to show us how they are going to introduce substance into the operation. As long as we see a good plan for development, there is no problem.”
The continuous influx of re-domiciled companies and the number of start-up funds prove that Malta is seen as the best option compared to Ireland, Luxembourg and even London.
FinanceMalta explains, “Certainly the costs of operating in Malta remain substantially below those of other European centres, but more importantly, Malta’s financial centre has developed a good reputation for its willingness to talk with the industry and find workable regulation to ensure a flow of new applicants.”