Stockbrokers seeking legal advice over proposed change to MSE 1990 Act

by Anthony Manduca

Private stockbrokers are seeking legal advice over whether the government has the right to change the 1990 Malta Stock Exchange Act simply through a legal notice, sources have told The Malta Business Weekly.

The changes would liberalise the stockbroking practice in Malta, meaning that both banks and foreign stockbrokers would be allowed to compete with the private local practitioners.

The Malta Business Weekly had reported last week that stockbrokers had written to the chairman of the Malta Stock Exchange, Alfred Mallia, requesting that a proper timeframe is established before liberalisation comes about.

The stockbrokers had requested that liberalisation be brought about after the country's referendum on EU membership and certainly not with immediate effect, as initially suggested to them by the Malta Stock Exchange.

A source close to the stockbroking community told The Malta Business Weekly that stockbrokers were of the opinion that any changes done to the 1990 Malta Stock Exchange Act should come about through Parliament and not just by issuing a legal notice.

"The proposed changes in the legal notice would allow a financial services organisation to appoint a 'person' which could be a company, as opposed to an 'individual' which is what the law states today, to practice as a stockbroker.

"This would require a change to the law in Parliament and not a legal notice to change the bye-laws. If the changes had to be brought about through a legal notice that would create two types of members of the Malta stock Exchange, an individual and a person," the source said.

The source also said that stockbrokers have not been consulted regularly by the Malta Stock Exchange and that they were often kept in the dark over developments. "We have not even been informed whether the deputy chairman of the Malta Stock Exchange had resigned or not.

We simply read in the press that a new deputy chairman had been appointed. Our previous committee had on a number of occasions tried to meet the directors of the Malta Stock Exchange but to no avail," he said.

The source said that, should liberalisation come about, stockbrokers would expect to be reimbursed on a pro-rate basis for the money they provided every year to the Exchange towards a compensation fund.

The reimbursement would come from the new competitors, the source said.

"Telecoms and exchange control will not be liberalised until end 2002. Why can't the same arrangement be made for stockbroking?" the source added.