Zarattini International CEO Francesco Sotto: "Malta has transformed from a promising niche player to a mature, globally competitive domicile"

In an exclusive interview, Francesco Sotto, CEO of Zarattini International Ltd, reflects on Malta's evolution as a fund domicile over the past decade, drawing from his company's extensive experience operating in the jurisdiction. Sotto discusses Malta's competitive positioning in the European funds landscape, sharing insights on the regulatory environment, the broader ecosystem of fund services providers, and his experiences working with local authorities.

Zarattini has been in Malta for over 10 years. How did you see Malta evolve as a fund domicile over this time span? 

Over the past decade since Zarattini International Ltd established its operations in Malta, I have witnessed the jurisdiction's remarkable transformation from a promising niche player in the European funds landscape to a mature, globally competitive domicile. In the mid-2010s, Malta was building momentum with a focus on professional/alternative investor funds, but the sector has since experienced steady, resilient growth, even amid global disruptions like the credit crisis and the COVID-19 pandemic. By the end of 2024, the total net asset value (NAV) of funds domiciled in Malta reached €23.8 billion, marking a 19.2% year-on-year increase, underscoring the jurisdiction's appeal to international managers and investors.

This evolution has been driven by proactive regulatory enhancements from the Malta Financial Services Authority (MFSA), fostering clear governance and innovation in fund structures, while a burgeoning ecosystem of skilled professionals has accelerated time to market. Malta's recognition as Europe's "most favored domicile" for hedge funds in recent surveys highlights its professionalism and service quality, positioning it firmly among the continent's top fund jurisdictions. Today, operating as a leading depositary, we see Malta not just as a domicile but as a strategic hub that balances efficiency with robust oversight, attracting diverse asset classes from alternatives to sustainable investments. This favorable environment has enabled Zarattini to grow its business steadily over a relatively short span of time and to place the Company as a leading depositary operating in Malta.

What would you think are Malta's competitive advantages as a fund domicile?

Malta's competitive edge as a fund domicile lies in its unique blend of EU membership benefits, agile regulatory frameworks, a responsive regulator, and a cost-effective, innovation-driven environment that prioritizes speed and professionalism. As an EU and Eurozone member, Malta offers seamless passporting rights across the single market, enabling funds to efficiently target European and beyond investors without the frictions faced in non-EU jurisdictions.

What sets Malta apart is its rapid time to market—notification-based regimes allow funds to launch in weeks rather than months—coupled with a highly skilled workforce in fund administration, legal advisory, and asset management, ensuring high-quality, tailored services. The jurisdiction's commitment to clear governance and innovation, including fintech integrations and sustainable finance initiatives, further enhances its appeal, providing fund managers with a stable yet forward-looking platform that rivals larger centers like Luxembourg or Ireland but at a fraction of the operational costs.

What are your thoughts about your engagement with the Malta Financial Services Authority, as the single regulator of financial services in Malta?

Our engagement with the Malta Financial Services Authority (MFSA) has been exemplary, characterized by collaborative, transparent, and proactive dialogue that exemplifies Malta's strengths in clear governance and robust regulation. As the sole regulator, the MFSA provides a unified, efficient oversight framework that minimizes bureaucratic hurdles while upholding the highest standards of investor protection and market integrity. Over the years, we've appreciated their strategic initiatives, such as the 2023-2025 priorities focusing on sustainable and digital finance, which have directly supported our depositary services by aligning regulatory expectations with industry innovation.

The MFSA's advisory role to government ensures policies evolve in tandem with global trends, fostering an environment of trust and professionalism. Regular consultations and swift responses to queries have not only streamlined our compliance processes but also accelerated time to market for our clients, reinforcing Malta's reputation as a jurisdiction where regulation empowers rather than impedes growth. The cooperation between the MFSA and licensed entities such Zarattini International Ltd, has been instrumental in Zarattini's success and underscores why the MFSA is a cornerstone of Malta's thriving financial ecosystem.

Apart from depositary services, how would you describe Malta's ecosystem vis a vis other fund services provider?

Malta's fund services ecosystem is a comprehensive, integrated network that rivals more established hubs, offering a full suite of specialized providers under one roof, all underpinned by exceptional professionalism and local expertise. Beyond depositary services, the jurisdiction boasts a vibrant array of fund administrators, legal firms, auditors, and tax advisors who deliver end-to-end solutions—from fund formation and compliance to investor reporting and fintech integrations. This ecosystem's strength lies in its depth and accessibility; with over 2,380 licensed entities contributing to an 8.2% share of Malta's Gross Value Added in recent years, it provides cost-effective, high-caliber support that leverages the island's multilingual, EU-trained talent pool. Compared to other domiciles, Malta stands out for its innovation focus, including top tier fintech capabilities that rank it among Europe's leading ecosystems, enabling seamless digital onboarding and ESG reporting. The close-knit professional community ensures rapid collaboration and reduced time to market, making it an ideal base for fund managers seeking reliable, scalable services without the complexities of fragmented offshore or larger onshore alternatives.

What are your thoughts about the Notified Alternative Investment Fund and Notified Professional Investor Fund regulatory framework?

The Notified Alternative Investment Fund (NAIF) and Notified Professional Investor Fund (NPIF) frameworks represent Malta's regulatory ingenuity at its finest, offering streamlined, investor-centric structures that embody clear governance, innovation, and accelerated time to market. The NAIF, introduced in 2016, provides a flexible, notification-based pathway for alternative funds targeting professional or qualifying investors, exempting them from full licensing while ensuring oversight by a full-scope AIFM—ideal for hedge fund managers seeking efficiency without compromising compliance.

Building on this, the NPIF framework, launched in late 2023, caters to smaller AIFMs with under €100 million in AUM, introducing self-managed options that empower high-net-worth individuals and family offices with greater control and even faster launches, often within weeks. These regimes highlight Malta's professionalism, with MFSA's rigorous yet pragmatic guidance ensuring robust investor safeguards. For prospective promoters, they underscore Malta's advantages: EU passporting, tax neutrality, and a skilled ecosystem that supports diverse strategies, positioning these funds as go-to vehicles for agile, global operations.

Looking ahead, how do you see Malta placed to meet the emerging challenges for the fund sector?

Looking forward, Malta is exceptionally well-positioned to navigate and capitalize on the fund sector's emerging challenges—from geopolitical volatility and sustainability mandates to digital transformation—thanks to its forward-thinking regulation, innovative ecosystem, and reservoir of professional talent. The MFSA's 2025 strategic updates emphasize expertise in sustainable and digital finance, equipping the jurisdiction to address ESG reporting demands and AI-driven disruptions head-on, while reforms like enhanced cross-border supervision mitigate risks in a fragmented global landscape.

With initiatives such as new asset management structures and a focus on resilience, Malta is fostering opportunities in venture capital and green funds, supported by a Vision 2050 blueprint that aligns economic growth with sectoral innovation. The island's agile time to market and skilled workforce—bolstered by ongoing talent development—will enable fund managers to pivot swiftly amid inflation or regulatory shifts. In essence, Malta's clear governance and proactive stance will not only sustain its growth trajectory but also solidify it as a resilient, opportunity-rich domicile for the next decade. At Zarattini we look forward to being part of this growing success and we remain confident, ambitious and optimistic of what lies ahead as we aim to consolidate our position as a leading depositary within the sector.