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Conditions for Custodians/Prime Brokers ➜ Malta-based UCITS and non-UCITS retail funds must have a custodian. The custodian has regulatory and fiduciary obligations which involve monitoring compliance with investment restrictions and the verification of the net asset value. ➜ PIFs promoted to Qualifying or Extraordinary Investors can choose whether to have a custodian/prime broker, although the MFSA recommends and would ordinarily expect the appointment of a custodian or prime broker. Where no custodian is appointed, responsibility for the establishment of proper arrangements for the safe keeping of the PIF’s assets remains with the Directors/General Partner(s)/Trustee and officers of the PIF. If a custodian/prime broker is appointed, the custodian/prime broker would not have any monitoring function and would be merely required to implement proper safe-custody arrangements. ➜ PIFs targeting Experienced Investors are obliged to have a custodian/prime broker. They are responsible for the safe keeping of the assets of the PIF and for undertaking monitoring duties over the fund manager. ➜ The custodian of retail schemes must be established in Malta and must be in a possession of an investment services licence (category 4). Custodians/prime brokers of PIFs need not to be based in Malta. ➜ The custodian must be separate and independent from the fund manager.
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➜ Malta’s domestic regulatory framework also allows the use of multiple custodians to minimise institutional risks that the fund may face.
Investment Services for Funds Malta’s regulations do not require an investment advisor to be based in Malta. Individuals or companies can choose a service provider based in another jurisdiction. However, with approximately 120 investment services firms licensed in Malta, corporations seeking assistance in the management of their assets are spoilt for choice and often find services of equal quality to that in other finance centres but at a substantially reduced cost.
Conditions for Investment Advisors ➜ Maltese UCITS, non-UCITS retail funds and PIFs are not obliged to appoint an investment advisor, nor does the advisor need to be established in Malta if one is appointed. ➜ Fund managers of retail schemes can appoint an investment advisor themselves, in which case the advisor would be subject to the MFSA’s prior approval. ➜ If the manager of a PIF (and not the PIF) appoints an advisor, there will be no eligibility requirement to obtain MFSA’s prior approval. However, if an advisor is appointed by a PIF, the advisor must have a licence and authorisation to provide investment services.