Invest in Malaysia

Banking, Finance and Exchange Administration

3. The Securities Market in Malaysia

3.1 Securities Commission Malaysia

The Securities Commission Malaysia (SC), is responsible for the regulation and development of capital markets in Malaysia. Established on 1 March 1993 under the Securities Commission Act 1993, it is a self-funding statutory body with investigative and enforcement powers. It reports to the Minister of Finance and its accounts are tabled in Parliament annually. The SC's many regulatory functions include:

a.	Supervising exchanges, clearing houses and central depositories;
b.	Registering authority for prospectuses of corporation other than unlisted recreational dubs;
c.	Approving authority for corporate bond issues;
d.	Regulating all matters relating to securities and futures contracts;
e.	Regulating the take-overs and mergers of companies;
f.	Regulating all matters relating to unit trust schemes;
g.	Licensing and supervising all licensed persons;
h.	Encouraging self-regulation; and
i.	Ensuring proper conduct of market institutions and licensed persons.

Underpinning all these functions is the SC's ultimate responsibility of protecting the investor. Apart from discharging its regulatory functions, the SC is also obliged by statute to encourage and promote the development of the securities and futures markets in Malaysia.

For more information on the SC, please visit http://www.sc.com.my.

3.2 Bursa Malaysia

Bursa Malaysia is an approved exchange holding company under Section 15 of the Capital Markets and Services Act 2007. A public company limited by shares under the Companies Act 1965, Bursa Malaysia operates a fully-integrated exchange, offering equities, derivatives, offshore, bonds as well as Islamic products, and provides a diverse range of investment choices globally.

Bursa Malaysia Securities regulates and operates the securities trading activities in Malaysia, a stock market with about 1,000 companies across 50 economic activities. Companies from any economic sectors are listed either on the Main Market for large-cap established companies, or on the ACE Market for emerging companies of all sizes. The Exchange adopts the FTSE Bursa Malaysia KLCI values as its main index.

Bursa Malaysia Derivatives (BMD) is a subsidiary of Bursa Malaysia Berhad which provides, operates and maintains a futures and options exchange. BMD’s star product, the crude palm oil futures (FCPO) contract has been the global benchmark for the pricing of palm oil and palm oil-based products. In 2009, Chicago Mercantile Exchange (CME) Group acquired a 25% equity interest in Bursa Malaysia Derivatives Berhad. BMD’s products were migrated onto the CME Globex® electronic trading platform to provide greater product visibility and accessibility to international traders.

To leverage on its strengths in Islamic capital markets, Bursa Malaysia’s long term objective is to elevate its Islamic offerings to mainstream status. Bursa Malaysia is the first exchange to establish Bursa Suq Al-Sila’, the first end-to-end Shari’ah compliant commodities trading platform.

Bursa Malaysia is committed to making the Malaysian capital market attractive to investors worldwide. The exchange places great emphasis in ensuring a fair and orderly market at all times, with high priority on investor protection. Its strength lies in its progressive regulatory approach to ensure that high standards of conduct are practiced by market players.

 

(i) Market Participants

a)	Stockbroking Companies
	Currently, there are more than 35 stock broking companies which 14 are categorised as Investment Banks. These banks offer services in the dealing of securities listed on Bursa Malaysia Securities. Investment banks hold merchant banking license issued by Bank Negara Malaysia under the Banking and Financial Institutions Act 1989 (BAFIA) as well as Capital Markets Services license issued by the Securities Commission under the Capital Markets & Services Act 2007. As such, investment banks are able to offer a full scope of integrated capital market and financial services which include corporate finance, debt securities trading and dealing in securities. One stock broking company still holds the universal broker status. A universal broker is able to offer integrated capital market services.
b)	Trading Participants
	A Trading Participant is a company which owns at least one Preference Share of Bursa Malaysia Derivatives to conduct business as a futures broker licensed by the Securities Commission under the Capital Markets & Services Act 2007 and carries on trading in Contracts traded on the Bursa Malaysia Derivatives.

(ii) Investor Protection

In the interest of protecting investors, Bursa Malaysia currently maintains three compensation funds, namely Compensation Fund of Bursa Malaysia Securities, the Fidelity Fund of Bursa Malaysia Derivatives and the Compensation Fund of Bursa Malaysia Depository to compensate investors who have suffered losses falling within the circumstances specified under the relevant securities laws and rules. The funds are administered by the Compensation Committee.

(iii) Risk Management

Bursa Malaysia's enterprise risk management framework, through the supervision of the Risk Management Committee (RMC), is aimed at managing and controlling risks appropriately for the Group. Key risks are identified and ranked for likelihood of occurrence and magnitude of impact while the appropriate action plans are developed to manage significant residual risks.

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