Issue link: https://maltatoday.uberflip.com/i/1363999
8 NEWS COMMERCIAL maltatoday | WEDNESDAY • 21 APRIL 2021 CAPITAL markets are vital in any modern economy for the facilitation of movement of capital and its alloca- tion, as well as for fostering economic growth. Capital markets gain further impor- tance when the economy faces chal- lenges such as those caused by the coro- navirus pandemic. The effects of the current pandem- ic have clearly indicated the need of having a strong local capital market to assist businesses in accessing funds in these challenging times and to ensure a rapid economic recovery. Last month, the MFSA launched a consultation on its proposed Capital Markets Strategy, the ultimate objec- tives of which are to provide equal and fair opportunities to market players, safeguard the stability and integrity of the financial markets, and protect in- vestors. The Maltese capital market is a retail market, mainly consisting of, on the one hand, companies seeking funds to grow, and on the other, non-professional in- vestors who want a stable return at low risk to generally supplement their pen- sion or savings. The MFSA is conscious of the po- tential and need for growth of the lo- cal market and that it may spearhead such growth through the introduction of various novel proposals which may not currently fall within the parameters that are generally deemed to be accept- able to it. The proposed Capital Markets Strat- egy encompasses all the players in the market and aims to create a holistic approach to the local capital markets eco-system. Although clear and mod- ern rules are important, the strategy does not focus only on rules, but con- siders other aspects including risks, the role of the investors and intermediaries, such as the Sponsor, to protect market integrity. The Strategy document aims to en- courage fair, efficient and transparent capital markets. As outlined in the pro- posal, it seeks to establish the MFSA's risk appetite when considering applica- tions for admissibility to listing while enhancing the legal framework to im- prove efficacy, efficiency, and effective- ness. It also plans to strengthen the Spon- sors regime, build supervisory capacity as well as set out a strategy for investor education. Doreen Balzan, Head of Securities and Markets at the MFSA said that: "The proposed Capital Markets Strategy will not only serve to grow the local capital markets but also to create a transparent framework enabling the local capital market to function more efficiently and fairly." Following the consultation period which ended on the 5 April, the MFSA is currently reviewing and considering the responses provided by stakeholders and shall publish a feedback statement as soon as this exercise is completed. What is a Sponsor? Sponsors play a crucial role within the Maltese Capital Markets framework. An applicant applying for a primary listing of its Securities and requiring the production of a Prospectus (or equivalent document) needs to appoint a Sponsor. The role of the Sponsor is to provide guidance to the applicant with respect to the applicable framework, and to act as a point of liaison between the applicant, its advisory team and the Authority. MFSA strengthening capital markets to facilitate economic recovery