Jurisdiction shopping for an investment services business : a comparative analysis of the regulatory landscape of an EU licence versus a non-EU licence

Abstract

This dissertation presents a comparative analysis of the licensing frameworks of the Malta Financial Services Authority (MFSA) and the Mauritius Financial Services Commission (FSC) for investment service providers offering contracts for differences on an execution-only basis. The research focuses on three regulatory stages: 1. Authorisation and Licencing; 2. Conduct of Business Obligations and Ongoing Regulatory Compliances; and 3. Enforcement and Corrective Actions. Each stage is explored in detail through dedicated chapters, supported by in-depth legal and regulatory research in both jurisdictions. Following the individual jurisdictional analyses, a side-by-side comparison is presented to assess the similarities, divergences, and regulatory effectiveness. The MFSA is observed as a strong rule-based regulator with extensive requirements and supervisory expectations, whereas the FSC applies a more principles-based approach with limited detail on obligations. While the weight of the regulatory burden differs between the two jurisdictions, one key area of convergence is identified. Most prominently, both jurisdictions demonstrate closely aligned structures and powers in the area of enforcement and corrective actions, with only marginal differences. This highlights a common regulatory philosophy concerning the handling of breaches and supervisory intervention. Another point of convergence, which in essence simultaneously highlights divergence, is that most regulatory topics or elements align in the authorisation and conduct of business stages. However, Malta extensively covers more topics than Mauritius - for example, product governance is not addressed in the Mauritian framework. The points of divergence, where similar topics are included, lies in the scope and depth of requirements. The conclusion is that the approach in Mauritius is significantly lighter, with fewer requirements and less rules, detailed guidance and regulatory upkeep. In some aspects, the stricter philosophy of the MFSA’s regulatory approach, being rooted in and driven by European Union legislation, may be seen as a hindrance to business development and burdensome in a licensee's goal to achieve operational success. Conversely, the softer framework that the FSC provides may expose consumers to greater risk and may also create ambiguity for a licensee striving to maintain high compliance standards, as the absence of clear requirements hinders the ability to understand regulatory expectations and to ensure measures are in place to protect customers.