Issue link: https://maltatoday.uberflip.com/i/401761
10 Business Today maltatoday, WEDNESDAY, 22 OCTOBER 2014 Central Bank of Malta signs a collaborative agreement with Victor Pasmore Foundation The Central Bank of Malta has signed a collaborative agreement with the Victor Pasmore Foundation for the set- ting up of a permanent exhibition of the works of Victor Pasmore within the Bank's premises at the Polverista Con- ference Hall adjacent to the Annexe, St James Counterguard, Valletta. The agreement was signed on 21 October by the Governor of the Central Bank of Malta Professor Josef Bonnici. Professor Richard England and Dr David Tonna signed on behalf of the Victor Pasmore Foundation. The signing ceremony was held at the Polverista Conference Hall. Professor Josef Bonnici noted that "The Central Bank of Malta holds a number of works by Victor Pasmore in its art collection. As corporate sponsor of four works by Victor Pasmore, the Central Bank of Malta is proud to host the Victor Pasmore Gallery within its premises and present the works of one of the leading abstract artists of the twentieth century to the public." Professor Richard England said, "The Victor Pasmore Foundation is grateful and appreciates the support from the Victor Pasmore family and the Central Bank of Malta". Admission to the Victor Pasmore Gallery is free. For more information call (+356) 2550 3100. David Tonna, Richard England, Josef Bonnici and Mary Nice Financial services regulator gets tough with online forex traders Matthew Vella The Malta Financial Services Authority is setting out criteria for the licensing of entities offering online foreign exchange trading to retail clients, in response to various risk warnings issued at EU level alerting retail investors to the main risks involved in forex trading. "The high risks associated with forex trading by retail investors due to the reliance on automated systems, the complex nature of forex products and the accessibility to such products by retail investors, have led to a further tightening of the licensing criteria," the MFSA said. These licensing criteria are applicable with immediate effect to all new applications submitted to the MFSA, while applicants whose application is currently being processed by the MFSA will have a grandfathering period of one year on the appropriate shareholding structure and capital requirements. Applicants must have shareholders already regulated in the provision of financial services to a level which is satisfactory to the MFSA. The authority may also require active participation in the management of the proposed entity by the qualifying shareholders. The MFSA will take into consideration the quality and track record of the proposed management team of the applicant, and promoters should demonstrate several years of competence with reputable institutions to the satisfaction of the MFSA. The MFSA may request any applicant to submit audited accounts prepared by one of the major audit firms in respect of any corporate shareholders in the proposed shareholding structure or entities with which the promoters are involved. The authority will also ask the ultimate beneficial owner of the applicant to provide it with a statement of wealth signed by a CPA. Companies applying for a Category 2 licence will be subject to a higher minimum initial capital requirement of €730,000, similar to the initial capital requirement for Category 3 licence holders in light of the risks associated with this kind of business and potential loss of retail clients' money. The said capital should be satisfied on an ongoing basis and not just at licensing stage. The MFSA will also require that directors at board level collectively have the necessary competence to be able to effectively contribute to the decision- making process of the board. Other staff, such as senior manager, risk manager or head of trading, must have an adequate track record with one or more regulated firms that operate within the forex industry. "The trading of one's own funds is not deemed to be sufficient for the purpose of the Authority's competence assessment and shall not be taken into account in the review of an individual's eligibility to assume any of such position within an online forex company," the MFSA said, adding that the level of skills and expertise required of such employees will be considered in detail. The authority also wants to see sufficient human resources and adequate internal controls for the day-to-day management of their business, the monitoring of trades, handling of clients' enquiries and complaints and risk management. Applicants are expected to have a clear policy on the use by their clients of Expert Advisors as part of their trading strategy. This policy should be clearly communicated to the licence holder's clients from the outset. Whatever the medium used to carry out transactions with clients, counterparties and other third parties, the MFSA expects the licence holder to have in Malta real time access to and control over all transactional data. The MFSA would require full access to this data as and when required, including during compliance visits. The licence holder shall, moreover, have this data fully preserved in its records on an ongoing basis at its head office in Malta and shall have in place an appropriate offsite backup system for risk management and business continuity purposes. Adjusted deficit for 2013 at 2.7% of GDP In 2013, general government net bor- rowing (or deficit) was recorded at €202.0 million, down from €263.2 million for 2012. Last year, the General Government deficit was equivalent to 2.7 per cent of GDP, down from 3.7 per cent for 2012. At the end of 2013, the General Government nominal gross consolidated debt amounted to €5,241.0 million, or 69.8 per cent of GDP, up from €4,871.9 million, or 67.9 per cent for 2012. On 30 September 2014, Malta submitted its report on government deficit and debt levels for the years 2010-2013. This was done in accordance with Council Regulation (EC) 479/2009, the first transmission using the ESA 2010 methodology. Adjustments of -€223.1 million were made to the general government sector: positive adjustments included the time- adjusted cash transactions (€41.9 million), other accounts receivable and payable (€26.8 million), and the non- financial transactions in the treasury clearance fund (€4.9 million). On the other hand, the main negative adjustments were the equity injection to the national air carrier (€40.0 million), the net borrowing of Extra Budgetary Units (€11.4 million), interest received not included in the consolidated fund (€2.8 million) and the adjustment for stock premium proceeds (€1.6 million) The Stock Flow Adjustment (SFA) is the difference between the change in the stock of government debt and the flow of annual government deficit/ surplus. Deficits normally contribute to an increase in debt levels, while surpluses reduce them. However, the change in government debt also reflects other elements. In 2013, a positive SFA of 2.2 per cent of GDP means that the debt increased more than implied by the deficit. This rise in debt was the result of an increase in other accounts payable, loans, equity and investment fund shares and other adjustments which do not appear in the deficit figures. In 2013, the government deficit of both the euro area (EA18) and the EU28 decreased in absolute terms compared with 2012, while the government debt rose in both zones. In the euro area the government deficit to GDP ratio decreased from 3.6% in 2012 to 2.9% in 2013 and in the EU28 from 4.2% to 3.2%. In the euro area the government debt to GDP ratio increased from 89.0% at the end of 2012 to 90.9% at the end of 2013 and in the EU28 from 83.5% to 85.4%. In 2013, Luxembourg (+0.6%) and Germany (+0.1%) registered a government surplus and the lowest government deficits in percentage of GDP were recorded in Estonia (-0.5%), Denmark (-0.7%), Latvia (-0.9%), Bulgaria (-1.2%), Czech Republic and Sweden (both -1.3%). Ten Member States had deficits higher than 3% of GDP: Slovenia (-14.6%), Greece (-12.2%), Spain (-6.8%), the United Kingdom (-5.8%), Ireland (-5.7%), Croatia (-5.2%), Cyprus and Portugal (both -4.9%), France (-4.1%) and Poland (-4.0%). At the end of 2013, the lowest ratios of government debt to GDP were recorded in Estonia (10.1%), Bulgaria (18.3%), Luxembourg (23.6%), Romania (37.9%), Latvia (38.2%), Sweden (38.6%), Lithuania (39.0%), Denmark (45.0%) and Czech Republic (45.7%). Sixteen Member States had government debt ratios higher than 60% of GDP, with the highest registered in Greece (174.9%), Portugal (128.0%), Italy (127.9%), Ireland (123.3%), Belgium (104.5%) and Cyprus (102.2%).