The MFSA has just updated its policy on online forex trading service providers, licensed as Category 2 or Category 3 Investment Service Licence holders.
In its revised policy, the MFSA has lowered its threshold in relation to the requirement of a direct qualifying shareholding by a licensed entity in every application for an online forex trading platform. If the applicant is not already authorised as an investment service provider either in Malta or in its own country of origin, the MFSA may require an active participation by way of shareholding interest by an investment services institution of repute or by any other entity involved in the provision of financial services regulated activities which is regulated to a level which is satisfactory to the MFSA and whose activities are relevant to the application in question.
Whereas previously this was a requirement applicable at the outset, it is now a requirement that is applicable at the discretion of the MFSA and therefore there is still the possibility for an applicant without a qualifying shareholding by a licensed entity to obtain an online forex trading licence.
In deciding whether to require such shareholding participation, the MFSA will take into consideration the following criteria:
The shareholding structure;
The quality and track record of the proposed management team;
The target market;
Due diligence investigations;
The capital structure being proposed; and
The level and nature of operational and business risk involved
The MFSA has also included the requirement to have adequate consumer protection measures, including warnings on the risk of engaging in forex trading, which should appear on the website of the service provider and any promotional material, together with clear educational material available to the traders to ensure that they are made aware of the nature and specifications of forex trading.