Funds Updates
25/07/2016
Holding your investment portfolio under nominee

Whether you are buying a house, a car or an immovable property, it is understood that certain items of value would typically require a contract or certificate that clearly states who the owner is. This is a very basic document that would otherwise make the buying or selling of such assets almost impossible because proof of title needs to precede any such sale, that is unless the law provides for exceptions. Indeed it makes the trade of such items possible.

You might ask, what has this got to do with nominee accounts?

Before answering that question, I will first bring in the idea of markets. These are venues where people meet to buy or sell items they own or which they require. We are probably more familiar with markets for fruit, vegetables and fish, however, a stock exchange is not much different in terms of concept. A stock exchange is where owners of shares, bonds and funds look for potential buyers and vice-versa. If an agreement on price is reached, then the trade occurs on the market.

This sounds very simple, but, when you put this in the context of the contract of ownership that was mentioned above, things get a little more complicated. If you hold your certificate of ownership of a security at home, how do you get to trade it on a stock exchange? You need to get this document to a financial intermediary before any trade can be done.

Nowadays, this is facilitated through technology. In the case of the Malta Stock Exchange, there is a central register where investors can have securities held under their personal names.

However, the most common method of holding securities is through nominee accounts.

A nominee account is a vehicle through which an investor remains the beneficial owner of his/her securities whilst at the same time passing on legal ownership to a financial intermediary. This does not mean that the financial intermediary has any right on the assets. In fact there is a very clear legal structure to protect your interests within this arrangement. The financial intermediary can never mix assets in a nominee account with its own assets and at any point in time, it needs to clearly be able to differentiate between the two via precise records of who the underlying investors are and which assets they are the beneficiaries of.

Nominee accounts make transactions much more efficient because it makes it possible to trade electronically. Specifically with online trading platforms such as the one provided by Mediterranean Bank, opening a nominee account will allow investors to trade from virtually anywhere in an effective and very cost effective manner.

How safe are nominee accounts?

Many investors do not exactly know how their investments are held and what the risks to their account are if something happens to the bank or financial intermediary through which they transacted. Unless you have been informed otherwise, your account is almost certainly a pooled nominee one. This means that the legal owner of the securities is your bank or financial intermediary and your investments are aggregated with those of other investors dealing with the bank or financial intermediary.

As already mentioned above, you should not get overly concerned because there are legal safeguards in place to protect your holdings. The Malta Financial Services Authority (MFSA) prescribes that your investments should be held separately from those of your financial entity. Nominee accounts are “ring-fenced” (that is, they are held separately) from the entity’s business accounts – so you should not worry that your investments are being combined with those belonging to the entity.

The separation between clients’ investments and the financial entity’s investments is crucial to how this arrangement operates. This is however not the only requirement, and the MFSA rules also require the bank or financial intermediary to keep proper records of each customer’s investments so that they can be easily distinguished from the investments of other clients, also held under nominee.

Furthermore, the law stipulates that in the case of liquidation of the bank or financial intermediary the creditors of that institution shall be unable to claim or demand any right of action on or against the investments held under the control of such entity for and on behalf of and in the interest of any of its customers. In the event of any such insolvency the institution shall immediately transfer the control, possession and title of all assets held by or in the name of an investor to another institution as may be instructed by the customer or the regulator. In the case of Malta this will be the MFSA. These rules obviously apply to Mediterranean Bank, which is regulated by the MFSA in addition to being regulated by the European Central Bank.

 


 

Meta ikollok assi miżmuma ‘under nominee

Sew jekk inkunu se nixtru dar, karozza jew propjetà immobbli, ċerti oġġetti ta’ valur normalment jitolbu kuntratt jew ċertifikat li jiddikjara ċar min hu sidhom. Dan hu dokument bażiku ħafna li mingħajru x-xiri jew il-bejgħ ta’ dawn l-assi jkun kważi impossibbli li jsir. Il-prova tat-titlu trid tkun hemm qabel isir kwalunkwe bejgħ, sakemm il-liġi ma tipprovdix għal xi eċċezzjoni. Imma fejn ma jkunx hemm eċċezzjoni, in-negozju ta’ assi bħal dawn ikun jista’ jsir biss b’dan il-mod – b’kuntratt.

Nistħajjel tgħidu, imma dan x’għandu x’jaqsam man-nominee accounts?

Qabel inwieġbu dil-mistoqsija, tajjeb li l-ewwel nitkellmu ftit fuq l-idea tas-swieq. Dawn huma postijiet fejn in-nies jiltaqgħu biex ibigħu u jixtru affarijiet li jkollhom jew li jkunu jeħtieġu. Aktarx li aħna midħla l-aktar mas-swieq tal-ħaxix, il-frott u l-ħut, imma l-borża, bħal Borża ta’ Malta, mhix wisq differenti minn hekk. Il-Borża hu l-post fejn is-sidien tal-ishma, il-bonds u l- funds jfittxu xerrejja prospettivi u bil-maqlub. Jekk jintlaħaq qbil fuq il-prezz, isir in-negozju fis-suq.

Din tinstema’ ħaġa vera sempliċi, imma, meta tpoġġi dan kollu fil-kuntest tal-kuntratt tas-sid li semmejna fil-bidu, l-affarijiet jidew isiru ftit aktar ikkumplikati. Ngħidu aħna, jekk ikollok iċ-ċertifikat id-dar ta’ xi sehem jew bond, kif tista’ tinnegozja fil-Borża? Fil-fatt, biex tagħmel dan, qabel ikun jista’ jsir xi tip ta’ negozju, trid tieħu dan id-dokument għand l-intermedjarju finanzjarju.

Illum il-ġurnata, it-teknoloġija tiffaċilita dan kollu. Fil-każ tal-Borża ta’ Malta, hemm reġistru ċentrali li fih l-investituri għandhom il-possibbiltà li jkollhom l-assi f’isimhom.

Madankollu l-aktar metodu komuni għaż-żamma ta’ dawn l-assi hu permezz tan-nominee accounts jew kif ngħidu jkunu miżmuma ‘under nominee’.

In-nominee account hu mezz li bih l-investitur jibqa’ s-sid benefiċjarju tal-assi li jkollu u fl-istess ħin jgħaddi dan il-pussess legali tiegħu lill-intermedjarju finanzjarju. Dan ma jfissirx li l-intermedjarju finanzjarju jew il-Bank ikollu xi dritt fuq dawn l-assi. Fil-fatt, hemm struttura legali ċara ħafna li tħares l-interessi tal-investitur f’dan l-arranġament. L-intermedjarju finanzjarju jew il-Bank qatt ma jista’ jħallat l-assi f’nominee account tal-klijenti mal-assi tiegħu, u jrid ikun dejjem kapaċi jiddistingwi bejn it-tnejn, billi jżomm rekords preċiżi fuq min huma l-investituri primarji u x’inhuma l-assi li kull investitur għandu jew għandha.

Bin-nominee accounts it-tranżazzjonijiet ikunu ħafna aktar effiċjenti u faċli għax l-intermedjarji finanzjarji jkunu jistgħu jinnegozjaw online jew b’mod elettroniku. Każ tipiku hija l-eWealth platform ta’ Mediterranean Bank. Bis-saħħa ta’ din is-sistema elettronika online, l-investituri jistgħu jiftħu kont ta’ investiment u jkunu jistgħu jinnegozjaw b’mod virtwali minn kullimkien, b’mod mill-aktar effiċjenti u b’mod irħis, għal dawk li huma spejjeż. L-investimenti li jinxtraw ikunu hekk miżmuma ‘under nominee’ minn Mediterranean Bank għan-nom tal-klijent.

Kemm huma siguri n-nominee accounts?

Ħafna investituri ma jifhmux eżattament kif jinżammu l-investimenti tagħhom u x’inhuma r-riskji tal-kont tagħhom fl-agħar sitwazzjoni. Sakemm ma tkunx ġejt infurmata mod ieħor, il-kont tiegħek hu kważi fiċ-ċert tat-tip “pooled nominee” jew kif diġa għidna miżmuma ‘under nominee’. Dan ifisser li s-sid legali tal-assi ikun il-Bank jew l-intermedjarju finanzjarju tiegħek u li l-investimenti li jkunu mpoġġija mal-assi ta’ investituri oħra li jkollu l-Bank jew l-intermedjarju finanzjarju.

Kif diġà semmejna, m’għandniex ninkwetaw għax hemm salvagwardji legali li jħarsulna flusna u l-investimenti tagħna.

Ir-regoli tal-Awtorita’ għas-Servizzi Finanzjarji ta’ Malta (l-MFSA) jistipulaw ċar li l-investimenti tal-klijenti għandhom jinżammu separatament minn dawk tal-entità finanzjarja stess. In-nominee accounts huma “ring-fenced”, jiġifieri, jinżammu separatament mill-kontijiet tan-negozju tal-entità – għalhekk m’għandniex ninkwetaw li l-investimenti tagħna jkunu qed jiġu kombinati ma’ ta’ oħrajn li jappartjenu għal bank jew l-intermedjarju finanzjarju.

Għalhekk wieħed japprezza l-importanza tas-separazzjoni ta’ bejn l-investimenti tal-klijenti u l-assi tal-kumpanija biex jaħdem tajjeb dan l-arranġament. Imma dan mhux l-uniku rekwiżit: ir-regoli tal-MFSA jitolbu wkoll li l-bank jew l-intermedjarju finanzjarju jżomm rekords korretti bl-investimenti ta’ kull klijent, b’tali mod li dawn ikunu identifikati faċilment mill-investimenti ta’ klijenti oħra, miżmuma wkoll taħt nominee.

Barra minn hekk, il-liġi Maltija u Ewropea tistipula li f’każ li jkun hemm likwidazzjoni jew falliment tal-bank jew tal-intermedjarju finanzjarju, il-kredituri (jew dawk li għandhom jieħdu mingħand) din l-istituzzjoni ma jkunu jistgħu jieħdu u jitolbu l-ebda dritt ta’ azzjoni kontra u mingħand l-ebda klijent tal-bank jew l-intermedjarju fuq l-investimenti li dawn ikollhom miżmuma ma’ din l-istituzzjoni taħt nominee. F’każ li l-istituzzjoni tisfaxxa, din għandha tittrasferixxi immedjatament il-kontroll, il-pussess u t-titlu tal-assi kollha f’isem jew fl-interess tal-investituri lil xi istituzzjoni oħra, kif mitlub mill-klijent jew mir-regolatur. Fil-każ ta’ pajjiżna din hija l-Awtorità tas-Servizzi Finanzjarji ta’ Malta (l-MFSA) responsabbli minn dan.

Naturalment, l-istess ħaġa tapplika għall-Mediterranean Bank, li hu wkoll bank irregolat mill-MFSA barra li issa huwa wkoll regolat direttament mill-Bank Ċentrali Ewropew (l-ECB).

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