Ruth Galea, Partner, has written an article in the recent issue of Acquisition International entitled “Malta – the binary option destination for your business”. The article addresses how Malta is fast becoming the new home for binary option businesses across the globe.
Read the article here:
Malta has firmly established itself as a highly reputable financial services hub over the past years. More recently, Malta has laid the groundwork for becoming the new home for binary option businesses across the globe. The Maltese legal framework, together with the regulator of financial services in Malta, the Malta Financial Services Authority (MFSA), provide for a comprehensive and efficient licensing and regulatory regime for binary options businesses.
In line with the clarifications issued at European level in respect to MiFID, in July 2013 the MFSA clarified that binary options of a financial nature qualify as regulated instruments under the Investment Services Act (ISA) thereby providing binary option businesses with the possibility of applying for a reputable licence to operate a business on a cross border basis across the European Union under the European passporting regime.
In order to provide more certainty to the binary options industry, in July 2015 the MFSA issued a notice fleshing out the criteria for the licensing of binary options businesses under the ISA. The notice establishes unambiguous guidance to the industry on various aspects of the business, including shareholding structure, track-record in operating in a regulated environment, competence requirements for the board of directors and the staff in general, IT systems and consumer protection measures.
Businesses intending to apply for an ISA licence to offer binary option products undergo a three-phase application process with the MFSA: (i) the first phase is the preparatory stage which includes preliminary meetings with the MFSA, drafting of the proposal and submission of draft application form; (ii) the second phase is the pre-licence stage where the MFSA issues an ‘in principle’ approval for the issue of the licence. Finalisation of the application and outstanding matters takes place during this phase; (iii) the final stage refers to the time after the issue of the licence where the licence holder will be required to satisfy certain post-licence requirements prior to the formal commencement of business.
In assessing an application for a licence the MFSA places emphasis on the ‘fitness and properness’ of the applicant and in so doing evaluates the integrity of the applicant, qualifications and competence of the management evidencing the capability to carry out the business, and the ability of the business to meet the financial requirements under applicable law.
By developing a sound and comprehensive legal and regulatory framework for the industry, Malta is establishing itself as a reputable binary option domicile. Certainty as to the legal and regulatory process and requirements coupled with an attractive tax regime and a European passport for offering services on a cross border basis will most certainly foster much interest from binary option businesses, whether these are already-established operators or start –ups.