Malta set to introduce a Sukuk Framework by Q1 2026

Malta is positioning itself as an emerging player in Islamic finance as the Malta Financial Services Authority (MFSA) develops a dedicated Sukuk regulatory framework under the Institutional Financial Securities Market, with launch expected by Q1 2026.

Speaking on the IFN OnAir podcast, MFSA Chairman Jesmond Gatt explained that the initiative builds on Malta's ongoing efforts to strengthen and internationalise its capital markets. "The MFSA has been trying to strengthen its capital market for quite some time, and this initiative builds on that ongoing effort," he said. "We believe that the financial landscape is evolving and Islamic finance is growing steadily around the world. Sukuk, in particular, has become very important and is fast expanding."

Gatt emphasized that Malta's financial services infrastructure, supported by English law, a skilled workforce, and a strong regulatory environment, makes it attractive to international participants. "Introducing a clear framework for Sukuk allows us to build on these strengths and opens up new opportunities both for local entrepreneurs and for international market participants," he noted.

Clare Farrugia, the MFSA's Head of Strategy, Policy and Innovation, stressed that regulatory certainty and robust Shariah governance are central to the framework's development. "Since Malta is relatively new to the space, our focus has been on giving both issuers and investors full clarity and confidence from the outset," she said. The proposed framework will include disclosure requirements for Shariah advisers, ensuring oversight and transparency in how Shariah principles are applied.

The MFSA's consultation period for the proposed framework closed in August, with industry feedback helping refine the final rulebook. Malta is also developing guidance notes on Shariah-compliant funds, expected to be released shortly.

While acknowledging challenges including investor awareness and market depth, both officials expressed confidence in Malta's readiness to establish itself in the Islamic finance sector, signalling the jurisdiction's commitment to diversifying its capital markets and attracting new investment streams.