Potential of, scope for, and obstacles facing the hedge fund industry in Malta

Abstract

There is large scope for Malta in the Alternative Investments Industry yet this potential is tainted and limited to how well prepared Malta may be. This industry known to be results-based and cut-throat will pass Malta by in a 'flash' given the continual moving parts the ongoing and stiffening competition with other similar jurisdictions (competitors of Malta as a Hedge Fund Industry jurisdiction) which include larger well established and considered as more 'secure' jurisdictions. The potential for Malta is from both Hedge Funds as well as Hedge Fund Managers. The latter though will always have direct employment opportunities as well as require support services in Malta and consequently this is where the main growth opportunity lies from a workforce stand point. However, with an increase in Hedge Funds there will equally be an increase in demand for skilled labour through the service providers of such Hedge Funds. This thesis thus speaks to the general industry but encompasses the potential for Malta from both the Hedge Funds and the Hedge Fund Managers be it directly with the managers or indirectly through service providers. Malta has a unique situation which can lend towards its further growth in financial services. English being its main business language is of significance given the large number of hedge funds operating in or from the UK, as well as the business language used in the financial markets in UK and US amongst others. Malta is well positioned from a geographical and political stand point with access to Southern European, Northern Africa and the Middle Eastern block. Human Resources, though in dear need of further training, have in generations proved to quickly grasp change which is a key driver within the industry. Above all though is the size of Malta and its recognized regulated status and EU membership. The latter has proved, as seen in this document, that Malta has structured itself well over the past decade which should serve well in the years to come. The size of Malta and its workforce of approximately 160,000, 3.8% (or 6,000) of which are in financial services ( outside of the practitioners) , can be highly impacted with a small change. Malta's plans are to increase financial services to 12% of the work force so an expected increase of 13,200 or triple the current work force, with an increase from 12% as reported currently to 25% of GDP as reported by the Finance Minister at a recent Conference held by the MaltaFinance. The overall scope of the thesis as the title notates, is to review the potential opportunities brought to our shores from the hedge fund industry and compare and contrast various elements to other jurisdictions including a review of how Malta claims to be organized and ready for the managers /promoters and investors alike taking into account what investors and managers/promoters set-up in Malta have to say. [...]