The MFSA’s latest circular on safeguarding clients’ funds through investments in secure, liquid and low‑risk assets[1] highlights a direction that has been gradually taking shape over the past few years. Safeguarding is no longer a matter of placing funds in compliant instruments. It is increasingly about building a framework that is designed to remain robust under regulatory, operational and evolving market conditions.
From negative rates to a defensible framework
As a group, we have worked with Electronic Money Institutions since 2021, in a market environment that was fundamentally different from today. At the time, interest rates were negative and many institutions were effectively paying to hold excess liquidity with credit institutions. Within that context, the challenge was not only to identify viable alternatives, but to do so within a regulatory perimeter that was still being interpreted in practice.
Over time, we contributed to the development of investment approaches that were designed with the objective to be compliant with safeguarding rules and also structured in a way that could be clearly articulated, documented, and justified. What started as a set of portfolios became a framework that continues to guide our work today.
Compliance as a partnership, not a checkbox
GuildAM operates as a treasury manager with a strong focus on capital preservation and liquidity, but our role does not stop at portfolio construction. In practice, safeguarding requires institutions to demonstrate that their investment choices meet the criteria of being secure, low-risk and liquid, and to evidence this on an ongoing basis.
This is why we work alongside our clients as a partner in the compliance process itself. This includes supporting the structuring of investment strategies, assisting with documentation and regulatory notifications, and helping ensure that the overall safeguarding of client funds by investment setup remains consistent and aligned with the MFSA expectations as they evolve. In many cases, the value we add lies in which assets are selected, and more in the institution’s ability to explain, monitor and report on them coherently when asked.
Institutions remain fully responsible for their regulatory obligations, and our role is limited to supporting them within our area of expertise.
Direct portfolios, and a complementary fund structure
Our direct investing approach, in use since 2021, reflects this philosophy by combining transparency, control, and strict alignment with regulatory requirements. At the same time, the growing operational burden associated with managing diversified fixed-income portfolios has led to the development of complementary solutions.
The launch of the Stronghold Allocation Fund EUR marks an important step in this evolution. The UCITS fund has been specifically designed for EMIs and Financial Institutions. It mirrors the same safeguarding constraints that apply to direct portfolios, while simplifying several operational aspects such as valuation, reconciliation and reporting. While maintaining a focus on capital preservation and liquidity, investments remain subject to market, credit and liquidity risks. At the same time, it facilitates the “look-through” requirement increasingly expected by regulators, making it easier for institutions to demonstrate compliance without compromising on liquidity or prudence.
What the circular confirms
The latest MFSA circular reinforces what our experience since 2021 has already shown: safeguarding frameworks are becoming more structured, more demanding, and more closely assessed. In this environment, treasury management expertise on its own is no longer sufficient.
What institutions need is a partner that combines investment capability with regulatory understanding and hands-on experience in navigating supervisory expectations.
GuildAM continues to support EMIs and Financial Institutions in that dual capacity, not simply as a treasury manager, but as a partner in navigating the complexities of safeguarding client funds, in a documented, explained and defensible manner.
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Guildam