MFSA Revises Regulatory Framework For CFD And Rolling Spot Forex Providers

On 6 August 2026, the Malta Financial Services Authority (“MFSA”) issued a circular announcing amendments to Section 13 of Part A and Section 7 of Part BI of the Investment Services Rules for Investment Services Providers.

The changes primarily affect applicants and licence holders offering contracts for difference (“CFDs”) and rolling spot forex contracts. The amendments form part of the MFSA’s ongoing review of its Rulebook to ensure that regulatory requirements remain proportionate and aligned with applicable EU legislation and evolving supervisory expectations.

Streamlining Authorisation Requirements

One of the more significant changes concerns the removal of the definition of “Trading Organisation” together with the related references throughout the Investment Services Rules.

The definition had originally been introduced to capture investment services licence holders distributing CFDs and rolling spot forex contracts. However, the MFSA noted that the concept did not adequately cater for entities applying for authorisation, prompting its removal from the framework.

The MFSA has also revised the shareholding requirements applicable to applicants. The previous requirement that an application would only be accepted where a reputable investment services institution or other regulated financial services entity held at least a 10% shareholding interest has now been removed.

Notwithstanding this amendment, the MFSA will continue assessing shareholders and ownership structures to ensure that applicants satisfy the applicable suitability and governance requirements.

Alignment of Capital Requirements with the IFD Framework

The amendments also revise the prudential requirements applicable to firms operating in this sector.

In particular, the MFSA has removed the specific €750,000 initial capital requirement previously applicable to applicants and licence holders offering CFDs. Instead, firms will now be subject to the capital thresholds established under the Investment Firms Directive (“IFD”), resulting in minimum capital requirements of €75,000 or €150,000 depending on the nature of the investment services provided.

Investment firms seeking a downward revision from the previous €750,000 threshold will be required to submit a written justification to the MFSA setting out the basis for such reduction.

Greater Focus on Competence and Governance

The MFSA has also amended the competence assessment framework applicable to applicants and licence shareholders.

The scope of the assessment has been expanded to include the Money Laundering Reporting Officer (“MLRO”), while assessments concerning the Head of Trading will be conducted on a case-by-case basis. In this regard, the MFSA will take into consideration the firm’s governance arrangements, reporting lines and whether the Head of Trading reports directly to the Board of Directors or through another senior executive function.

Furthermore, the previous requirement relating to involvement in one or more regulated firms has been replaced with a requirement for relevant qualifications and/or experience in the field of CFDs and rolling spot forex contracts.

This revised approach places greater emphasis on demonstrable expertise and practical knowledge that is directly relevant to the firm’s business activities.

Risk Management and Organisational Substance

The amendments also introduce changes to the organisational requirements governing the risk management function.

Applicants and licence holders will be expected to maintain risk management arrangements that are functionally and hierarchically independent from operational business units. While the MFSA has removed the previous requirement for the risk management function to be physically based in Malta, it has confirmed that its broader expectations concerning local substance remain applicable.

The MFSA has further reiterated that the principle of proportionality will continue to guide its assessment of organisational structures. Firms must nevertheless demonstrate that appropriate safeguards are in place to address conflicts of interest and preserve the independence of the risk management function.

ICT Infrastructure and Operational Resilience

A further set of amendments concerns technology and systems requirements.

The MFSA has removed the obligation for firms operating proprietary online trading platforms to submit independent IT audit certification. It has also removed the requirement that core systems be physically located at the firm’s Maltese offices.

According to the MFSA, these requirements have largely been superseded by Regulation (EU) 2022/2554 on digital operational resilience for the financial sector (“DORA”), which now provides a comprehensive EU framework governing ICT risk management, operational resilience and related controls.

Enhanced Oversight of Liquidity Providers and Counterparties

While several of the amendments reduce prescriptive requirements, the MFSA has strengthened the framework governing the appointment of liquidity providers and counterparties.

Applicants and licence holders will be required to perform a robust assessment of proposed liquidity providers and counterparties, maintain appropriate documentation and make such documentation available to the MFSA upon request.

Firms must also notify the MFSA before making an appointment and provide details regarding the proposed provider’s or counterparty’s regulatory status. Responsibility for the appointment remains with the investment firm, although the MFSA may object where sufficient grounds exist.

Corresponding amendments have also been made to Rule R1-1.7.1 of Part BI of the Investment Services Rules to align the applicable requirements with this revised framework.

Recalibrating the Regulatory Framework for CFD Providers

Taken as a whole, the amendments reflect a shift towards a more principle-based and proportionate regulatory framework for firms offering CFDs and rolling spot forex contracts. While a number of requirements relating to ownership structures, capitalisation and ICT infrastructure have been streamlined or removed, the MFSA continues to place significant emphasis on governance, competence, operational resilience and risk management.

The revised framework therefore appears designed to reduce unnecessary regulatory burden while preserving the supervisory safeguards considered most relevant to investor protection and the sound operation of investment firms.