Joseph Portelli, Chairman, Malta Stock Exchange (MSE), talks to us about the exchange's strong focus on SMEs and its exciting growth plans, following the recent WFE SME Conference, which was hosted by MSE in the historic city of Valletta.
MSE recently hosted the WFE SME Conference in Malta, with attendees including the Prime Minister and Finance Minister of the Government of Malta. Please tell us about the importance of this forum, and in particular, how it impacted the broader Maltese SME market?
We were thrilled to have been given the opportunity to host this mini-conference particularly since it was the first time we had ever hosted a WFE event – hopefully it won’t be our last. We had representatives from 20 stock exchanges attend and discuss the challenges SMEs face, and the difficulties stock exchanges face servicing them.
In early 2017 we inaugurated the Prospects MTF, a venue catering to SMEs. We believe SMEs have historically been under-represented within the global capital market landscape. It’s common knowledge that SMEs account for a very significant amount of global employment and output, and thus should have cost effective access to capital. In just one year, we have already attracted seven companies to Prospects and we anticipate having a total of 15 admissions by year end.
We were thrilled the WFE chose the Malta event to release the WFE SME research paper [focused on family owned businesses - you can read it here]. Malta is the EU’s smallest country and frankly we appreciate that small companies just like small countries have special challenges which need addressing. We expect the Prospects MTF will not only offer Maltese companies an avenue from where to raise capital, but also an opportunity to grow into more mature companies.
As shown by the Prospects MTF, MSE has a strong focus on SMEs. Could you tell us more about this part of your strategy?
By definition small companies have lower turnover than their larger counterparts and as a result are more sensitive to the cost of listing on an exchange. Likewise, they may not have the required governance and compliance culture necessary to transition to the next phase of their development cycle. At the MSE we have created a three-pronged approach to helping SMEs overcome the cost and complexities of seeking a listing. Firstly, at 5000 euros a year, we offer a very cost effective listing solution. Secondly, we have Corporate Advisors sanctioned by the exchange which help ensure these small companies get the governance, financial and compliance oversight they require. Lastly, through the Malta Stock Exchange Institute we offer over 40 courses, from accounting to marketing, which are partly designed to help equip entrepreneurs with the skills required to transform and grow their businesses.
What’s your long-term vision for the exchange?
Our long term vision is to modernise, institutionalise and internationalise the exchange. Last year the exchange celebrated its 25th anniversary, and for the first quarter century of our existence the Malta Stock Exchange did a good job servicing local companies' capital market needs. However, the Maltese economy is too small to drive future growth. We have no other choice but to seek out oversees business.
We recently created a new market geared toward wholesale securities with a minimum trade denomination of 100k euros called the IFSM or Institutional Financial Securities Market. Here we hope to list all types of asset backed and securitised products. We also soon hope to allow for the listing of ETFs and REITs.
Malta is also becoming something of a fintech centre so we will be embracing blockchain and cryptocurrencies. We also hope to sign agreements with exchanges from around the world, partnering with them to allow for dual listings on the MSE. Admittedly, we have been late entrants to the international capital markets landscape. However, we have taken steps to position ourselves as a cost effective and well-regulated international exchange with lots of growth potential ahead.