Malta Stock Exchange Announces Six Measures to Boost Liquidity in Capital Market

The Malta Stock Exchange is committed to enhancing growth and increasing participation in the Maltese capital market. As part of this commitment and continuous effort to improve market liquidity and the investor experience, the Exchange has just announced a series of six strategic initiatives. These initiatives were developed through discussions with stakeholders and were presented during a seminar held at the Exchange’s Valletta premises on Wednesday, June 19th.

Executive Chairman Joseph Portelli outlined the plans, which focus on reducing trading costs, improving investor-focused communication and information, and promoting market activity:

Reduced Trading Costs: A one-year elimination of the €4.50 transaction fee on all equity trades which will make trading on the Exchange more attractive for investors.

Enhanced Investor Research: A new research portal will provide investors with access to news, interactive charts, statistics, and technical analysis tools for all instruments traded on the MSE platform.

Strengthened Market Communication: The establishment of a research arm within the Business Development and Marketing department will allow for more interactive communication of company news through social media.

“These first three proposals aim to promote lower trading costs, introduce state-of-the-art research tools, and enhance company communication with investors,” stated Mr. Portelli.

Additional measures target increased market activity:

Share Buybacks: The Exchange will be encouraging companies by organizing workshops and seminars and assisting companies in implementing studies on whether share buyback programs can add value and enhance liquidity particularly if repurchased shares are held as treasury stock for future resale. Buybacks have been a proven method to create shareholder value in markets around the world.

Executive Share Compensation: The MSE recommends partial share-based compensation for c-suite executives and board members, aligning their interests with shareholders and potentially boosting investor sentiment.

Liquidity Providers: A new program will introduce Liquidity Providers who can buy and sell listed securities without incurring fees. In return for meeting specific quarterly trading volumes, these providers will receive financial compensation from the Exchange.

The Minister for Finance Clyde Caruana addressed the event, highlighted the importance of the capital market within the local economy and pointed out European initiatives currently being taken within the Capital Market Union (CMU) discussions. Edward Rizzo and Nick Calamatta delivered two keynote addresses that examined the present state of the local capital market. Dr Beppe Degiorgio explained in depth the legal background to share buybacks. Additionally, the topics of share buybacks and executive share rewards were explored in greater depth during panel discussions, which included input from industry representatives and the Malta Financial Services Authority (MFSA).

Looking ahead, the MSE plans to host quarterly roundtable discussions. The next event is scheduled for October 9, 2024.