A comparative study regarding the problems related to institutional investors in Malta and Australia

Abstract

The main objective of this dissertation is to answer the research question regarding problems which may arise from the fairly new ‘institutional investors’ concept in the financial sector. On a local scale, Malta follows the EU guidelines and Directives when it comes to dealing with institutional investors, therefore the primary source that must be analysed when looking at institutional investors, is EU Law. However, not every country deals with the concept and definition of institutional investors the same as Malta and other EU countries do, therefore to best analyse and study this difference the comparative research will be made with Australia, as despite it being a country which follows the common law legal system, it will also give a perspective of a country which does not necessarily follow within the EU’s footsteps and regulatory frameworks. Hence, the similarity with Malta is having a common law approach but with the difference of not following Malta’s position of adapting EU Directives to local legislation. Hence, the similarity with Malta is having a common law approach but with the difference of not following Malta’s position of adapting EU Directives to local legislation. Ultimately, this dissertation is a comparative study for the reason of learning and improving the known concept of institutional investors. Apart from this, the study will bring various problems to light which arise from institutional investors but contrastingly some problems which might be brought up will in fact have institutional investors as their core solution. Therefore, by analysing two different regulatory frameworks and treatments regarding institutional investors, it will be possible to further understand these problems and improve upon them, with adaptations from the other regulatory framework. This research identifies that Maltese Law has adapted well to recent developments. The MiFID Directive was first implemented in 2007, while the MiFID II was implemented in the beginning of 2018. Meanwhile, the AIFMD was implemented in 2014 within Chapter 370 of the Laws of Malta, the Investment Services Act, while the AIFMD II, which has recently been drafted is set to come into force by EU countries by not later than 2026. Therefore, despite not having local legislation ‘per se’, like many EU countries Malta has adapted very well to recent EU Directives which deal with the matter of institutional investors, as it is relatively quite a new concept. The author, in light of this, concludes the study by giving various legislative recommendations that ultimately if possible the EU legislation and Australian legislation could intertwine, hence by comparing between the two countries, the author will be able to deduce the best parts of each of the legislations and regulatory frameworks and if possible mould it into one regulation which would benefit both countries, and ultimately the research reaches a full circle and there could be a more unified meaning and understanding of the concept of institutional investors..