10th September 2009

MFSA proposes changes to Professional Investor Fund Regime

On the 21st May 2009, the Malta Financial Services Authority (MFSA) issued a circular describing the proposed review of the 'Investment Services Rules applicable to Professional Investor Funds targeting Experienced Investors'. These proposed changes include the introduction of certain investment restrictions applicable to the Funds in question, the proposed revision to the definition of Experienced Investor and a reduction of the minimum investment threshold.

Following the feedback received from the industry, on the 10th September 2009, the MFSA issued its Feedback Statement* on the outcome of consultation proceedings related to the above mentioned changes.

The proposed changes are intended to ensure a minimum level of risk diversification for Experienced Investor Funds given that (with the exception of the five hedge fund rule for funds of hedge funds) there are currently no prescriptive requirements relating to risk-spreading, with the consequent risk that such funds may be excessively exposed to a single issuer or counterparty . The consultation document also proposes to reduce the minimum investment threshold in an Experienced Investor PIF from the current Euro 15,000 to Euro 10,000.

The MFSA is envisaging that the revised rules should be published and become operative by not later than 1st January 2010. Experienced Investor PIFS licensed before this date will have the option to reduce their minimum investment limit to Euro 10,000 subject to compliance with the new proposed revised Rules or continue to be subject to the current regulatory requirements.

Please click here should you wish to view the Feedback Statement.