Brokerage Entities authorization process is typically initiated through a meeting with the applicants. The scope is to facilitate our understanding of the strategy and business model being proposed and to explain our processes and requirements in relation to this proposal. This is the start of an interactive approach involving ongoing engagement with the applicant should the application materialize.

The applicant is invited to submit an application pack which should contain the complete set of required documents in accordance with the authorization applied for. The requested documentation is listed in the appropriate application form for the specific category of license or recognition.

The application process will start once the complete application pack is submitted.

The process is twofold and is carried out in parallel. One part relates to the analysis of the business model and strategy proposal; the second part entails a fitness and properness assessment for involved parties per applicable legislation.

Application documentation supporting the business model will generally include the business plan, governance arrangements, financial projections as well as risk management policies, investment policies, and outsourcing arrangements as applicable depending on the authorization applied for. The assessment here aims to ensure that the applicant is able to satisfy regulatory requirements in relation to the business model being applied for on an ongoing basis. As part of the process, any clarifications and requests for further information are submitted to the applicant through a feedback letter. Once the applicant’s replies are received these can be followed by further engagement through correspondence or meetings as may be required until the criteria for authorization are satisfied.

In parallel, the due diligence process is commenced in respect of all involved parties who are in a position to effect the direction of the applicant, including key functionaries and direct and indirect qualifying shareholders, up to the ultimate beneficial owner. Checks on the applicant’s competence and integrity are carried out with a view to ascertain that the applicant is able to carry out the proposed role within the ambit of the proposed business model to an expected high standard. Fit and proper checks involve third-party verification of personal information, exchange of information through close collaboration with foreign regulators, and intelligence reports from specialized sources.

Once the above assessments are satisfactorily concluded a decision to proceed to authorization is taken. Prior to formal authorization, an applicant is notified of an in-principle decision and a list of conditions to which the authorization will be subject. At this stage of the process, the applicant will address matters such as incorporation and capitalization of the company and provide confirmation that it will be in a position to comply with the conditions of the authorization.

The certificate of authorization is issued following the satisfactory conclusion of the above.

Following the merging of the Brokerage Entities Authorisations functions within the sectoral supervisory teams, the MFSA is issuing a Circular outlining who the primary contacts are for each sector, making it easier for firms to reach out to the Authority during the application process.