The Malta Financial Services Authority (MFSA) has launched a public consultation on proposed amendments to its Capital Markets Rules, which notably include the introduction of a regulatory framework for sukuk – Shariah-compliant financial instruments – within Malta’s capital markets.

This consultation marks a significant step in the MFSA’s strategy to diversify and modernise Malta’s financial landscape. Through this initiative, the Authority aims to position Malta as an attractive jurisdiction for Islamic finance products, starting with sukuk.

Sukuk are Islamic financial instruments comparable to bonds in conventional finance. However, unlike traditional bonds, sukuk adhere to the principles of Shariah law, which prohibits the charging or payment of interest (riba). Instead, sukuk represent ownership in an underlying asset or business, with returns generated from that asset. They are structured to ensure compliance with Shariah, typically involving leasing, partnership, or profit-sharing arrangements.

Currently, Malta’s regulatory framework does not offer clear guidance on how Islamic financial products can be introduced or structured locally. Recognising this gap, the MFSA is proposing specific rule changes to facilitate the listing of sukuk on the Institutional Financial Securities Market (IFSM), a regulated market operated by the Malta Stock Exchange for wholesale securities with a minimum denomination of €100,000.

The proposed rules clearly outline the conditions for listing sukuk, as well as related requirements for prospectus approval and ongoing obligations for issuers. The objective is to provide legal certainty for prospective issuers while ensuring market integrity and investor protection.

Beyond introducing sukuk provisions, the MFSA is also seeking to modernise and streamline the IFSM’s overall Capital Markets Rules. Key proposed changes include:

• Clarifying the scope and application of the rules, explicitly defining “professional securities”;
• Removing outdated rules related to the Prospectus Directive, which has been replaced by the directly applicable Prospectus Regulation;
• Introducing a new Sponsors’ Regime to replace the existing role of listing agents, aiming for greater regulatory consistency across Malta’s capital markets.

Stakeholders are invited to submit their feedback by 8th August 2025 via email at [email protected]