Malta: new binary options regulation in 2018

Malta with new regulations for binary options 2020 Regulation in Malta in check High requirements for the granting of the license.

Companies wishing to act as brokers within the EU must purchase a binary options trading license. This is issued within the framework of the European directive on markets for financial instruments. In principle, this license can be used within the entire EU. However, member countries are allowed to place additional requirements on brokers in addition to the EU standard. Malta has exercised this right. The Mediterranean state introduced new and stricter rules for binary options trading.

Prevent registration of mailbox companies

Many companies with a business address in Malta are not really based there. Rather, the mailbox companies take advantage of the tax benefits on the island. So far, this was possible without major problems. Companies were almost always able to register a branch in Malta without actually being physically present. The Malta Financial Services Authority (MFSA) has long wanted to prevent this. The new regulations now ensure that measures against mailbox companies can be carried out unbureaucratically. Brokers with a business address in Malta must really have economic structures there. To do this, at least one risk manager must be employed in Malta who works full-time for the respective broker, while the MSFA also immediately checks the qualifications of a broker's employees. In particular, the board of directors or management must have sound specialist knowledge in order to be able to carry out financial services. This expertise must be credibly demonstrated to the MSFA. The management level of a broker can refer to many years of professional experience or corresponding degrees. In addition to the board itself, employees who work directly on it must also have qualified specialist knowledge. According to the MSFA, the risk manager and the head of trading in particular must be able to demonstrate their qualifications.

Malta: new binary options regulation in 2018

High license requirements

Companies wishing to offer binary options trading in Malta, must have a category 3 investment license in the future. Whoever acquires this license is entitled to manage customer funds and to offer all investment services. The companies are then also allowed to operate directly on the financial markets with their own funds. Traders whose brokers are based in Malta should now ensure that the respective company has the corresponding license. The broker should provide information about this on its own initiative. In addition, the licenses issued can be viewed directly at the MSFA. Malta also prescribes for brokers how high the capital stock of the companies must be. Every broker must have at least 730,000 euros. However, this is a minimum amount. If a broker manages a particularly large number or financially strong traders, the amount increases significantly.

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Creating transparency

The new regulations are primarily intended to protect traders. It is intended to ensure that brokers have experience in trading on the financial markets and a certain reputation in the industry. The companies must also work with absolute transparency. Certain business processes must be disclosed to the authorities so that any grievances of any kind are immediately apparent. In addition, brokers should be familiar with regulators and the MSFA has also made new rules to brokers regarding information requirements to help traders. Investors must be able to see at any time the risk of loss arising from opening a position. The general risk of binary options must also be described in detail. In addition, each broker is required to provide customers with introductory videos, demo accounts and other learning materials.

Malta: new binary options regulation in 2018

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