Published in Hedge Week
Over the last 18 months, Calamatta Cuschieri Fund Services (CCFS) has seen the number of Funds it administers grow steadily as the Mediterranean island continues to attract a fair deal of new business, enticing both start-up & seasoned Fund Managers to Malta. Mr Michael Galea, CCFS’s Head explains that the influx of interest, extends across a wide range of strategies from plain Vanilla Long-Only strategies through to Fund-of-Funds and high frequency trading strategies involving derivatives.
CCFS, a company four years in the making, stems from parent company Calamatta Cuschieri. Calamatta Cuschieri has a 41 year history as one of Malta’s leading Financial Services companies that provides Investment Management, Investment Advisory and Online Trading services.
“We have a good mix of funds on our books. The large majority of these are Professional Investor Funds (PIFs) but we also administer retail funds, including our proprietary funds, which are sold under the UCITS regime,” says Galea.
Getting the right operational platform in place is vital to the success of any fund administrator, especially as they now have to accommodate myriad fund structures of differing complexity. Since 2009, CCFS partnered up with Dublin-based Linedata, who boast over 700 clients operating in 50 jurisdictions globally, to provide the backbone of its systems architecture. Of equal importance to CCFS though was finding the right talent. Not only has it built a team of specialists with deep experience in fund accounting and transfer agency services, CCFS has also been able to leverage on the excellent relationships it has built with fund houses throughout the years: a clear advantage to having its own investment management division.
Galea explains that “our offering is particular in that clients can expect to receive a tailor-made solution where we understand the needs of our clients and are able to adapt our services to deliver to their expectations. Furthermore, we pride ourselves on speaking the same language as our clients, the Investment Managers, as we too have been managing clients’ assets for many years.”
One trend that Galea has picked upon is that of larger Investment Managers coming to Malta to essentially ‘test the waters’.
“A number of clients come to us to test Malta as a domicile, to see whether the service providers are up to scratch. To see whether the PIF regime is as robust as it is made out to be. I think by far the large majority have been satisfied as they’ve come back, and made a number of additional sub-fund launches. Others have even gone so far as to set up other additional structures or management companies of their own altogether.”
“I’m bullish that this trend can continue notwithstanding the extremely challenging environment around us.”
It’s understandable that managers take this cautious approach to Malta. After all, as a European domicile of choice it is competing with the likes of Ireland and Luxembourg, both of which have significantly longer histories and more established names in the investment funds world.
“Notwithstanding the very good work that has been done in recent years, Malta is still a relatively new proposition in this field,” adds Galea, noting that particularly with respect to UCITS funds, the large asset management houses have been using the likes of Luxembourg for many years “and it is indeed one of our biggest challenges to change this perception in the market”.
Nevertheless, UCITS is a growing part of Malta’s fund regime that CCFS is well placed to capitalise on. Galea confirms that its investment management arm has recently converted its four sub-funds into UCITS.
“We appreciate that the UCITS brand is indeed extremely strong and has become the ‘Gold Standard’ EU investment fund product. We already administer a good number of the 64 UCITS funds currently domiciled in Malta and look forward to welcoming more funds of this type to our fold. We definitely see this as an area of future growth both for Malta as well as for CCFS.”
Galea also sees the AIFM Directive as an opportunity for the firm to grow.
“At CCFS, we believe that with the right approach our clients will be successful in implementing the provisions of the directive. Certain alternative investment fund managers might not be able to provide all the functionality as required by the directive and we are therefore viewing this as an opportunity to provide ancillary services to our clients. We believe that in our role as fund administrators, we are appropriately positioned to assist managers with their disclosure and compliance requirements both to investors and regulators alike. There are also certain synergies that could be explored together with custodians to effectively share the ‘burden’ to ensure that AIFMD rules around cash management and asset safekeeping, for example, are met. Lastly, we are also closely assessing the implications of integrating the depository ‘lite’ offering within the scope of our services.”
Should Malta keep its niche market status for small asset structures or should the country think bigger?
“There is no doubt that to-date Malta’s growth story has largely been impinged by how successful we have been in attracting start-up fund managers. This should not come as a surprise, given the task we have of competing with more established jurisdictions, which have decades of experience in servicing the world’s largest players.
In my opinion though, while we should continue to strive for excellence within our niche market offering, Malta appears to be well-positioned to gain further market share in the form of larger international mandates. This will be a gradual process as we endeavor to convince the larger fund managers that our regulatory regime is robust, that the level of expertise amongst our service providers is second to none and that our service offering is very cost efficient.”