20 - 26 July 2000

Stockbroking brokerage liberalisation postponed 'to a later date'

by Anthony Manduca

The date for the liberalisation of stockbroking commissions and brokerage has been postponed, the chairman of the Malta Stock Exchange, Alfred Mallia, has told The Malta Business Weekly.

He said: "The date for the liberalisation of stockbroking commissions/brokerage, repeat, stockbroking commissions/brokerage, has been postponed by the council at the request of the stockbrokers to a later date which has not yet been communicated to the stockbroking community."

However the necessary legal amendments allowing a "person" to obtain a stockbroking licence rather than an "individual" have already been carried out and were issued in a legal notice last week. The amendment also prevents a person from keeping his licence if his nomination as a stockbroker is withdrawn by the Financial Services Organisation. These amendments are seen as paving the way for banks to offer stockbroking services.

The Malta Business Weekly had reported that stockbrokers and the Malta Stock Exchange were in talks over the liberalisation of stockbroking and that the Exchange had proposed a target date of 1 July 2000, which was criticised as being too early by local stockbrokers. Although Mr Mallia did not specify the date when liberalisation of fees would take place, sources told The Malta Business Weekly that this could happen next January 2001.

Asked if any legal amendments were necessary to bring about the liberalisation of stockbroking, Mr Mallia said: "As regards the commission/brokerage, these are in accordance with Council Notice No:1 and in terms of the Bye-laws the council may from time-to-time issue instructions by way of Council Notices."

The Malta Business Weekly asked Mr Mallia whether a stockbroking licence issued to a bank would be issued in the bank's or the individual's name, and whether any legal changes were necessary for a licence to be issued in the bank's name. He replied: "In terms of Section 9 (1) of the MSE Act 1990 (Cap. 345) no person shall act as a stockbroker in Malta unless he is in possession of a valid stockbroker's licence issued by the council in accordance with the statute. The licence is therefore issued in the name of the applicant.

"The recent amendment to the statute referred to in LN 124 published on 14 July, 2000 has not altered current procedures. The amendment protects the Financial Services Organisation (FSO) in the sense that a person nominated by an FSO to act as a stockbroker shall be deemed to have resigned from membership of the exchange if the council receives notice in writing from the FSO that it intends to withdraw its nomination of such person. In other words a person who obtains a licence to act as a stockbroker as a result of his nomination by an FSO does not carry the licence with him if his nomination is withdrawn by the FSO."

Asked what were the changes envisaged regarding stockbrokers' fees, Mr Mallia said: "The changes being envisaged, though not yet operational or indeed definite are to make the commission/brokerage subject to negotiation between a stockbroking firm and its customers. Currently stockbrokers are prohibited from sharing or rebating commission/brokerage."

Regarding the possibility of foreign stockbrokers being allowed to work in Malta, Mr Mallia said: "Currently, in terms of the Bye-Laws every applicant for registration as a member shall, among other qualifications required, be a citizen of Malta."