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Speech by the Hon. John Dalli, Minister of Finance, at the Federation of European Stock Exchanges Meeting in Malta, - Floriana
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05/10/2001
05/10/2001
Mr Secretary General, Ladies and Gentlemen,
| This is the second time that we have had the pleasure to welcome you to | our island. The first time it was in 1996 and if I well recall, it was then a time of change as we were in the middle of an electoral campaign. And I must admit that we do tend to take an electoral campaign quite seriously and heatedly and it takes precedence over anything else at the time. |
| To-day, unfortunately, we have to say that once again | this is a time of change but due to very different reasons. The world, and not least the capital markets, are passing through a difficult time and we have even been told that nothing in the world will be the same again. |
| I must admit that our economy, and indeed our little | island, has been working hard to maintain the fast tempo of change. This was particularly in evidence during the past three years since when our application to join the EU was again revived following a period during which our application had been frozen. |
| Although the pressures of change are present in all | sectors of our life none is more urgent than in the financial sector. The infrastructure of our financial sector is in place and, I am pleased to say, in good health. The acceptance of our Exchange to Associate Membership after the usual quality-testing by the Federation of European Securities Markets is proof enough that the capital market sector too is in good shape. |
| Our Stock Exchange, which was set up by an Act of | Parliament some ten years ago, has in this short period of time built a name for itself and its operations have been quality tested both the International Federation if Stock Exchanges in 1999 and by your organisation earlier this year. In both cases they passed the test successfully. |
However, as I said earlier this is a time of change. Life is developing so fast that standing still will only mean that one is overtaken by events, ending up trailing behind times before even realising it. It is with this in mind that we are presently reviewing all the existing financial legislation particularly that relating to regulation and transparency. We are re-assessing achievements and setting goals for the future.
| Originally the Stock Exchange was set up mainly with | the regulatory function in mind. An unregulated capital market had, in fact, existed much earlier than the setting up of the Stock Exchange. Indeed, many of the local investors were investing in gilt-edged securities on the London Stock Exchange much before the setting up of the Malta Stock Exchange. In fact our stock exchange is probably quite unique in that apart from providing a trading platform and a listing board, it is also the regulator of the local securities market and offers the services of a Central Securities Register. Furthermore only recently the Exchange has switched on to a remote trading technology which I understand is working up to expectations. |
| We are now actively looking at the regulatory aspect | of the Exchange. At the moment the financial market is regulated by three independent and separate regulators, the Malta Financial Services Centre, the Central Bank of Malta, and the Malta Stock Exchange. We hope that by the end of this year legislation will be enacted in the House which will result in the creation of the Malta Financial Services Authority as a Single Regulator. The Exchange will then be able to focus its efforts at developing the market rather than controlling and regulating it. This is not to say that the Exchange will be relieved of all its regulatory responsibilities. Indeed we believe that market abuse which can only be controlled if appropriate self-regulatory mechanisms are in place in the securities exchanges. At the same time, we are also of the opinion that regulation can better be served if market education is taken up actively. I know that your organisation has in the past held various meetings on the subject of investor education. I commend you for it, Mr Secretary General, as I believe that this is an effective way to curtail and control abuse. |
| Furthermore we are looking to the exchange to take an | active part in our privatisation issues. One of the main problems facing the country is our considerable level of national debt. However, we are striving hard to reduce this deficit to more manageable limits and one of the areas we are looking at is the privatisation of the various assets and investments held by the central government. As we all know, privatisation has many forms; in certain cases it may be outright sale, in others the introduction of a strategic partner could be more in order. But we are laying considerable emphasis on wider public participation and we are therefore targeting that a number of entities be privatised by the end of the first quarter of next year. This will entail 5 new issues, which for a market of our size, is quite a substantial figure. |
| However, this calls upon us to ensure that the | securities market is working smoothly and efficiently and we are sure that the Malta Stock Exchange will rise to the occasion. |
| Having said that we would like to see greater foreign | participation on the local capital market. It is true that the Malta Stock Exchange has been quite successful in its bid to attract some of the more important foreign funds. In fact no less than 344 funds are listed on the Exchange including such names as Barclays, Fidelity and HSBC. |
| The Malta Stock Exchange is also eager to have a | closer relationships with other Mediterranean and middle eastern stock exchanges. We fully support the efforts that the Malta Stock Exchange is doing on this score. We also understand that the MSE had planned to hold a meeting of these exchanges as part of the events organised to coincide with the official opening, but prevailing circumstances have led to the cancellation, or rather the postponement, of this meeting. |
| We are fully aware of our strategic position. We are | fully aware of the situation in our region. We have good relationships with other countries in this region. We are also proud of the historical role that Malta has played during the past centuries. The role of a bridge between the North and South and the West and East. We are of the opinion that the time has once again arrived for Malta to play a peaceful and effective role by taking the lead in creating a centre for financial services in the area. There should be, therefore, no cultural, linguistic, historical difficulty for the Malta Stock Exchange to undertake the role of bringing together the various markets to create an association of Euro med exchanges. It is this effort that I would ask FESE to support fully the Malta Stock Exchange. |
| Ladies and gentlemen, I know that you have a very | busy schedule in front of you today and therefore I would not like to take more of your time. But allow me to wish you all a comfortable and successful stay in Malta and to each and everyone of you and your organisation growth and success in the years to come. |
Thank you.
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