Capital Requirements for Investment Service Providers
Investment service providers in Malta are regulated by the Investment Services Act (the Act) and are subject to Investment Service Rules (the rules). Depending on what service the investment firm would like to offer, the service will fall under a category of investment service and will require the specific capital related to that category. It is possible for a firm to fall under more than one category, for example a financial advisory firm also acting as a trustee, and this require a dual license. Here the capital requirement will be calculated as the higher of the two categories.
Different License Categories and Requirements
The four different categories of Investment Service licenses and their relevant capital requirements are as follows;
Category 1a
License holders authorized to receive and transmit orders in relation to one or more instruments and, or provide investment advice and, or place instruments without a firm commitment basis not to hold or control clients’ money or customers assets.
The paid-up regulatory capital requirement for category 1a is €50,000. If License holders are registered under the Insurance Mediation Directive then the initial capital requirements fall to €25,000.
Category 1b
License holders authorized to receive and transmit and, or provide investment advice and, or place instruments without a firm commitment basis solely for non-private customers but not to hold or control clients’ money or customer assets.
The paid-up regulatory capital requirement for category 1b is €50,000. If License holders are registered under the Insurance Mediation Directive then the initial capital requirements fall to €20,000.
Category 2
License holders are authorized to provide any investment service, and to hold or control clients’ money or customers’ assets, but not to operate a multi trading facility or deal for their own account or underwrite or place instruments on a firm commitment basis.
The paid-up regulatory capital requirement for category 2 is €125,000.
Category 3
License holders are authorized to provide any investment service, to hold and control client’ money or customers assets, and to deal for their own account or underwrite.
The paid-up regulatory capital requirement for category 3 is €730,000.
Category 4
License holders are authorized to act as trustees or custodians of collective investment schemes.
The paid-up regulatory capital requirement for category 2 is €125,000.
