Malta Stock Exchange (MSE) recently announced a set of six initiatives with the aim of improving market liquidity and the investor experience.

These initiatives were developed through discussions with stakeholders and were presented during a seminar held at MSE’s Valletta premises on 19th June.

Joseph Portelli, Executive Chairman at MSE, outlined the plans, which focus on reducing trading costs, improving investor-focused communication and information, as well as promoting market activity.

The first initiative is the one-year elimination of a €4.50 transaction fee on all equity trades. This reduction in trading costs is aimed at making trading on the exchange more attractive for investors.

A new research portal was also announced, with this having the goal of providing investors with access to news, interactive charts, statistics, and technical analysis tools for all instruments traded on the MSE platforms.

Additionally, MSE stated that it will also be establishing a new research arm within the Business Development and Marketing department that is set to allow for more interactive communication of company news through social media.

Commenting on the first three proposals, Mr Portelli said that they “aim to promote lower trading costs, introduce state-of-the-art research tools, and enhance company communication with investors.”

Plans for three other measures with a focus on increasing market activity were also laid out.

MSE stated that it will be encouraging companies to review whether share buyback programmes can add value and enhance liquidity, especially if repurchased shares are held as treasury stock for future resale.

Share buybacks take place when a company, instead of paying out cash dividends, uses its excess funds to buy back its own stock from the market. This leads to a reduction in the number of outstanding shares, thus driving up the value of the remaining shares.

MSE said that it will be organising workshops and seminars, while also assisting companies in implementing studies on the feasibility of share buyback programmes. “Buybacks have been a proven method to create shareholder value in markets around the world,” the exchange said.

A discussion during MSE's recent roundtable event / MSE

The exchange will also be recommending partial share-based compensation for C-suite executives and Board members, aligning their interests with shareholders and potentially boosting investor sentiment.

Lastly, MSE said that it will also have a new programme that will introduce Liquidity Providers who can buy and sell listed securities without incurring fees. These providers will receive financial compensation from the exchange in return for meeting specific quarterly trading volumes.

In an address during the event, Minister for Finance Clyde Caruana highlighted the importance of the capital market within the local economy and pointed out European initiatives currently being taken within the Capital Market Union (CMU) discussions.

Rizzo Farrugia & Co (Stockbrokers) Ltd Director Edward Rizzo and CC Finance Group Co-CEO Nick Calamatta delivered two keynote addresses that examined the present state of the local capital market.

Beppe Degiorgio, an Associate within Ganado Advocates’ Capital Markets team, explained in depth the legal background to share buybacks.

The topics of share buybacks and executive share rewards were explored in greater depth during panel discussions which included input from industry representatives and the Malta Financial Services Authority (MFSA).