Asset management strategy – MFSA’s most recent discussion paper

Through this discussion paper, published on the 28th of October, the MFSA seeks to bolster growth in the asset management industry. To achieve this, the MFSA has identified four pillars in respect of which it will focus its efforts.

Specifically, the MFSA has recognised the need to become more pragmatic and dynamic in its regulatory approach. It is proposed that this is achieved through a revamp of the current asset manager and fund regulatory frameworks, while also improving upon internal supervisory processes. The scaling up of fintech across the asset management industry is another reality which needs to be understood and facilitated, while implementing adequate controls.

To achieve the above, the regulator will foster dialogue with industry players, both locally and internationally, thus enabling a holistic approach to asset management regulation and supervision.

To this end, some of the key initiatives proposed by the MFSA include the:

• introduction of a risk-based ranking framework wherein authorised entities will be differentiated using specified criteria, which the MFSA may use to assess their inherent risks;
• revision of the definition of recognised private CIS wherein, among other changes, it is being proposed that these become subject persons for AML/CFT purposes;
• issuance of guidelines for the application of the proportionality principle, in order to provide a more streamlined approach when granting derogations to AIFMs and/or UCITS ManCos;
• investment committee requirement becoming optional;
• introduction of a notified PIF;
• development of regulatory initiatives, efforts or incentives in relation to ESG funds and sustainable financing;
• set-up of a stakeholder consultation group which would be representative of the industry and would result in a forum to discuss sector-related issues formalised by terms of reference.

This consultation is open until 17th December 2021. Stakeholders may provide feedback on these proposals and/or provide new proposals on the subject.

The asset management strategy discussion paper can be found here.