The Malta Financial Services Authority (MFSA) has published findings from inspections conducted between 2020 and 2024. These inspections targeted investment services providers licensed under Malta’s Investment Services Act. The main goal was to assess compliance with the EU’s Market Abuse Regulation (MAR).

The review covered a range of firms but is particularly relevant to CFD brokers and other providers of leveraged trading to retail clients licensed under the Act.

Insufficient Training Raises Market Abuse Risks

“These inspections form part of the Authority’s broader supervisory strategy aimed at raising industry standards and fostering a culture of compliance,” said Lorraine Vella, Head of Capital Markets Supervision.

The MFSA identified several gaps in how firms monitor and report suspicious trading activity. Some lacked adequate systems to detect suspicious orders. Others failed to submit any Suspicious Transaction and Order Reports (STORs), despite operating in active trading environments.

Concerns were also raised over staff training. In several cases, training was infrequent or insufficient, increasing the risk that employees might overlook signs of market abuse. This issue is particularly relevant for fast-moving platforms such as CFDs.

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MFSA Calls for Updated Procedures

Firms must update their procedures to match their specific trading risks, including those with large retail client volumes or algorithmic trading.

“Firms are expected to assess the adequacy of their current frameworks, update their procedures, and provide targeted staff training to close any identified gaps,” Vella added.

MFSA Investigations Target Scams, Unlicensed Firms

The MFSA conducted 474 investigations in 2023, with over 25% involving suspected unauthorized financial activity or scams. These cases included unlicensed platforms, clone companies, and other potentially harmful schemes. Most enforcement actions related to late submissions of statutory documentation, while others involved governance, market abuse, and financial crime.

The MFSA imposed 60 administrative penalties totaling €444,800. It also introduced new internal policies to improve transparency and proportionality in enforcement. In a separate update, the regulator warned of risks tied to finance-related content on social media platforms.

This article was written by Tareq Sikder at www.financemagnates.com.Retail FXRead More

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