Forex Trading in Malta Through MFSA Forex Brokers

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Malta is a member nation of the EU that has a stable political system, a sound economy, and an excellent environment for businesses to thrive in what is considered to be a promising financial center in Europe. Malta pays particular emphasis on the development of its economy for increased financial stability through proactive efforts such as incorporating new technologies in the financial markets and by creating a robust banking system. Malta is also marketed as one of the best locations in Europe for new companies to set up their base of operations, which is indeed helped by a lower tax regime for all foreign transactions.

The Regulatory Authority Responsible For Forex Broker Regulation In Malta

All Forex brokers in Malta are regulated by the MFSA, which not only oversees the licensing requirements of FX brokers but also regulates companies for their code of conduct and safeguarding the integrity of the Malta financial system. The MFSA (Malta Financial Services Authority) is an independent financial regulatory agency that comes directly under the MiFID derivative for regulating financial companies in different sectors of the Malta financial markets.

The MFSA is an autonomous body that reports directly to the Malta Parliament and has undergone several regulatory changes over the years. The MFSA was introduced in 1988 but witnessed huge reforms in 1994, 2002, and 2014 to incorporate new policies and guidelines to regulate and supervise all financial firms operating in the country. The MFSA took over the regulatory responsibilities of the Central Bank of Malta in different financial disciplines for overseeing the performance of various financial firms in the banking, insurance and pensions, securities, and other sectors.

The MFSA is an entirely independent authority that operates on its own funds that are raised through membership fees and revenue from its administrative operations. MFSA Forex brokers in Malta are regulated by the guidelines under the legal framework suggested by both the Malta Parliament as well as the European MiFID, which provides excellent protection for investors while trading with MFSA Regulated brokers. Malta’s participation in the European Union brings it directly under the European Economic Area (EEA) agreement that allows all European-based companies to render their services throughout Europe without opening up subsidiary establishments in individual countries.

Therefore, MFSA Forex brokers are authorized to operate in the entire EU zone and offer their services to investors from across Europe under the MFSA license.

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Influx of Foreign Forex Brokers In Malta

Malta is extremely cautious against international Forex brokers that are not regulated under the MiFID derivative. Malta has deemed it illegal for companies to operate in the Malta Financial market without proper authorization by the MFSA or under the MiFID through the EEA agreement. MFSA routinely publishes newsletters and press releases stating the new policies of the MFSA regulatory guidelines and any broker scams or fraudulent financial practices occurring in the region so as to prevent investors from losing their hard-earned money.

The MFSA has also updated its regulatory guidelines in 2014 according to input from various authorities to curb the increasing number of broker scams seen to be rising in the European continent. MFSA regulated brokers are now required to hold at least €730,000 in operating capital and should submit a detailed audit report of all financial transactions carried out by the broker on a periodic basis. Increased regulatory requirements also involve hiring an expert as well as a professional team of employees and ensuring that the company has its shareholders that have previous experience in the Forex markets. Brokers are also required to have an independent director that has extensive expertise in the market, and such separate license holders should have the sufficient authority to control the activities of other shareholders to prevent them from indulging in financial malpractices.

New MFSA guidelines also prevent Forex brokers in Malta from acting as market makers, as all client transactions should be passed to the interbank exchange through approved and licensed liquidity providers. MFSA Forex brokers are only allowed to forge partnerships with MFSA authorized entities, and any relationship with unauthorized firms will result in severe penalties and cancellation of licenses. MFSA is highly detailed in its licensing procedure and takes a wide variety of factors into consideration before granting a permit to financial firms. Apart from licensing and authorization of financial companies, the MFSA also inspects regulated businesses to ensure that they comply with all the regulatory guidelines and instruct companies about the accepted forms of practice in the financial markets.

The MFSA is known to be liberal in its approach for supervising firms and works with all parties tirelessly to ensure a highly stable financial system that guarantees continued growth. MFSA is not intent on slapping penalties or issues sanctions against companies for lack of compliance; however, severe financial irregularities do tend to attract the wrath of the MFSA if the company is found to break the regulatory guidelines consistently. The open and liberal legal framework offer an exemplary environment that provides protection for both companies as well as investors, which helps the Maltese economy to evolve into one of the major financial hubs in the world.

MFSA’s Attitude Towards Consumer Protection

Investor protection is the primary concern for MFSA, and the agency has created several departments to help consumers report any cases of financial abuses or broker scams. MFSA offers numerous programs and platforms that help the general public to report their grievances to the concerned authorities, and some programs even allow whistleblowers to report any significant financial discrepancies, which will help the MFSA to investigate financial scams through due diligence. The MFSA has initiated several financial educational programs and investor awareness platforms to help Maltese investors to gain extensive knowledge of the financial markets and to make sound investment decisions based on the tools available to them.

MFSA collaborates with both national as well as international experts and other regulatory agencies to deal with financial crimes effectively, and to provide a safe platform for their investors that are devoid of frauds. The MFSA has been highly successful in eradicating numerous scams and canceling licenses of various unethical Forex brokers in Malta that did not conform to the regulatory standards of the country. The higher regulatory requirements according to the MFSA’s recent change in legal framework also helped in reducing the number of inactive brokers that were only looking to establish a business presence to gain money from unsuspecting traders. The increased regulatory oversight also helped the MFSA to conform to the high standards of MiFID derivatives that have enabled several leading regulators in Europe to become extremely popular in the retail FX trading industry.

Malta is a great country with excellent economic and social indicators that help businesses to grow in a positive environment. The strict and efficient MFSA regulations on Forex brokers as well as other financial market participants also help investors to be assured of the safety and security of their trading capital while dealing with the risky Forex markets. Choosing MFSA regulated Forex brokers is certainly a very good idea, especially if you are looking for reliable and honest brokers based in mainland Europe.

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