The Finance Ministry yesterday launched the dematerialisation, trading and listing of treasury bills in the Malta Stock Exchange and announced changes in the structure of the exchange.

Parliamentary Secretary Tonio Fenech explained how the listing of treasury bills would provide a higher degree of transparency to the market, enhance marketability, particularly for the private investor, reduce government administrative costs and possibly upgrade Malta’s credit rating as a sovereign issuer. He also announced that the exchange was working on changing its corporate format from a rigid governance structure to a modern and flexible company-style governance.

This measure, said Mr Fenech, would bring the country in line with the European jurisdictions. “In fact,” he said, “the issue of these bills on the market will now be supported by a general prospectus for investors, laying down the terms and conditions related to the various issues in accordance with modern practices in the international markets.”

Mr Fenech said that treasury bills were introduced in Malta in 1952 as a financial instrument by which the government managed its short-term borrowing requirements. In the 1990s, the Treasury Bill became the primary instrument used by the treasury to finance temporary shortfalls in its cash-flows and gradually a market for the bills began to develop. Last year, a total of Lm400 million was issued on the primary market, he said. The parliamentary secretary commented that treasury bills were sold by auction on a weekly basis and holders included not only institutional investors such as banks, investment funds and insurance companies, but also private companies and individuals.

The parliamentary secretary remarked that the financial services’ contribution to the national product had increased steadily over the past 10 years. “We have made unstinting efforts to provide the legislative and institutional platforms necessary to project Malta as an international financial centre of repute,” he said.

The government, said Mr Fenech, was also working to further the development of the capital market. In the budget speech for 2007, the government announced the issue and eventual listing of a Lm20 million Securitisation Fund, whereby interest in loans and other receivables was packaged, underwritten, and sold in the form of “asset-backed” securities.

“I am sure that the signal given by the government will be picked up by the private sector and be used to widen the range of financial instruments available to our investors,” said Mr Fenech.