MFSA Report on SFDR Compliance

The Malta Financial Services Authority (“MFSA”) Report on Operational and Compliance Readiness by Financial Market Participants and Financial Advisers (the “Report”) has been issued following the MFSA’s first supervision exercise into the state of readiness and compliance by financial market participants with the Sustainable Finance Disclosure Regulation (“SFDR”). The supervision exercise was conducted by the MFSA with financial advisors and financial market participants that fall within the scope of the SFDR.

Being considered as a key element for economic recovery at European Union (“EU”) and national levels, sustainable finance is notably one of the main areas in which increased focus and active participation are consistently on the increase. Preparatory work at national level is being adopted in order to reflect the EU’s holistic and strategic approach to sustainable finance and to ultimately implement the effectiveness of these systems domestically.

In addition, the MFSA seeks to promote the importance of sustainable finance by integrating the requirements emanating from the applicable legislative instruments relating to sustainable finance with other supervisory requirements, while following the guidelines issued by the European Supervisory Authorities.

Furthermore, the importance of assessing the state of operational readiness and compliance status of market participants stems from the drive of assisting market participants in better addressing the challenges in this new supervisory area and ensuring a stable regulatory environment. The Report intends to present the state of compliance of financial market participants and financial advisors following the entry into force of the SFDR.

Moreover, the Report also intends to increase awareness on sustainable finance among the respective entities under the supervision of the MFSA and improve the state of readiness through the provision of recommendations.

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