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he Malta Stock Exchange (MSE) has only been around for 14 years, and lists only 14 companies. Despite its short life span and small size, however, it has been showing impressive results. Last year (2005), its index value rose more than 60 per cent, and its 14 equities ended the year with a total market capitalisation of just over Lm1.5 billion (£2.4 billion), a 50 per cent increase from the previous year.
Up to two years ago, the exchange used to act as a sector regulator, a role which has now been given to the Malta Financial Services Authority (MFSA). As a result, the MSE now operates in a purely commercial sense, with more freedom to reach out to companies and offer them other services. “We are in the process of developing a strategy on how we will move forward, and there are quite a few changes I would like to carry out. I wouldn’t mind privatising parts of the equity of the stock exchange itself. We would need to find a strategic partner, such as an exchange which is much larger than us but which could likewise benefit from the association as much as we do,” says Joseph Zammit Tabona, chairman of the MSE.
Membership in the EU gives the MSE the opportunity to expand by listing companies from other member countries. “We are looking at the overseas market. It is still in its early days but it’s certainly a target that I intend to act upon,” says Mr Zammit Tabona. One of the first steps towards making this a possibility is ensuring that all of Malta’s listing fees and charges are on par with what is being charged abroad, creating a level playing field. Also, Europe is not the only target. “If companies from the Middle-East wanted to get a particular listing within Europe, then Malta could be an appropriate stepping stone,” adds Mr Zammit Tabona.
The key is being proactive. “We need to carry out a certain amount of research so that we can then approach companies and try and convince them to come for a listing,” says the chairman. Support from the banks in this endeavour is also necessary. “The banks have all the money, meaning they are in a position to lend to any of the potential clients that would want to come into the market,” explains the chairman, who has already been engaging in dialogue with banks, brokers, accountants and lawyers to look at ways of bringing in more companies.
Making the MFSA the single regulator has benefited finance companies, which have seen a reduction in bureaucracy, better streamlining of procedures, a decrease in fees and costs, and a more consistent application of standards. “Our advantages include our transparent approach, our willingness to meet the parties, and our flexibility in dealing with institutions,” says Professor Joseph Banister, the MFSA chairman and president.
These advantages tally with the government’s objective of increasing the contribution of the financial services sector to GDP – currently around 12 per cent – to up to 25 per cent. This, says the MSE chairman, will in turn strengthen the bourse’s role. “We need to ensure that we have all the right instruments in place so as to get more and more companies listed on the exchange,” he says.
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