MFSA Streamlines Requirements for CFD and Forex Firms, Remains Focused on Governance

The Malta Financial Services Authority (MFSA) has issued a circular announcing amendments to Section 13 of Part A and Section 7 of Part BI of the Investment Services Rules for Investment Services Providers, introducing a more streamlined and proportionate framework for firms offering contracts for difference (CFDs) and rolling spot forex contracts.

Among the more significant changes is the removal of the "Trading Organisation" definition, which the MFSA found did not adequately cater for entities applying for authorisation, along with related references throughout the Rules. The Authority has also dropped the previous requirement that at least 10% of an applicant be held by a reputable investment services institution or regulated financial entity, though shareholders and ownership structures will continue to be assessed for suitability and governance.

Capital requirements have also been realigned. The specific €750,000 initial capital requirement for CFD providers has been removed in favour of the thresholds set out under the Investment Firms Directive, bringing minimum capital down to €75,000 or €150,000 depending on the services provided; firms seeking a downward revision from the previous threshold must submit written justification to the MFSA.

On governance, the competence assessment framework has been expanded to include the Money Laundering Reporting Officer, with Head of Trading assessments now conducted case-by-case. The MFSA has also removed IT audit certification and Malta-based systems requirements for online trading platforms, noting these are largely superseded by the EU's DORA framework, while introducing stronger oversight of liquidity providers and counterparties, including mandatory pre-appointment notification.

Taken together, the amendments reflect a shift towards a more principle-based, proportionate regulatory approach, easing certain administrative burdens while preserving the governance, competence and risk management safeguards the MFSA considers central to investor protection.