Securities Commission An Introduction

Transcription

1 Securities Commission An Introduction

2 The Securities Commission (SC) was established on 1 March 1993 under the Securities Commission Act Its purpose is spelt out in its Mission Statement: To promote and maintain fair, efficient, secure and transparent securities and futures markets and to facilitate the orderly development of an innovative and competitive capital market.

3 THE SECURITIES COMMISSION Prior to 1993, no single authority in Malaysia that was entrusted with the responsibility of regulating and systematically developing the capital market. Supervisory powers were shared between industry organisations like the stock exchange and government institutions. To streamline the regulatory structure of the capital markets, the Securities Commission (SC) was established under the Securities Commission Act 1993, as 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: registering authority for prospectuses of corporations other than unlisted recreational clubs; approving authority for corporate bond issues; regulating all matters relating to securities and futures contracts; regulating the take-overs and mergers of companies; regulating all matters relating to unit trust schemes; licensing and supervising all licensed persons;

4 supervising exchanges, clearing houses and central depositories; encouraging self-regulation; and 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. There are nine Members of the SC appointed by the Minister of Finance, including an executive chairman, deputy chief executive and seven private and government representatives. Divisions, departments, and units performing different activities yet complementing one another s functions in a synergistic relationship make up the rest of the SC. The Team As the market regulator and mover, having the right blend of manpower is of prime importance. The strenght of SC s manpower is built around a team consisting of professionals and specialists holding qualifications in various fields of study.

5 MARKET SUPERVISION This division carries out SC s oversight functions of the market and intermediaries licensed by the SC, reviews primary market regulations and listing requirements of exchanges, as well as compliance with accounting standards by public-listed corporations. There are five departments within this division. 1. Intermediary Supervision Undertakes supervisory functions and examinations on market institutions, brokers, dealers and other licensed intermediaries. 2. Licensing Formulates licensing policies and processes applications for licences by brokers, investment advisers, fund managers and their representatives in the securities and futures industries. 3. Market Surveillance Detects irregularities in trading activities that may breach trading rules or securities laws. 4. Primary Market Regulation Develops and co-ordinates policies to support the process of securities issuance and the framework of disclosure-based regulation (DBR); develops appropriate

6 guidelines and rules on the issuance of securities and corporate exercises; reviews proposals by the stock exchanges in relation to their listing rules; and tracks the SC s DBR programme. 5. Financial Reporting Surveillance and Compliance Facilitates the financial reporting surveillance and enforcement programmes of the SC; examines annual audited accounts and interim reports of listed corporations for compliance with approved accounting standards and financial reporting requirements; attends to queries pertaining to financial reporting and accounting treatments and monitors submission of audited annual accounts of listed corporations. ENFORCEMENT This division discharges the enforcement powers of the SC against activities that contravene securities laws. 1. Complaints Unit Inquires into complaints on improper conduct and other irregularities in the securities and futures markets to assess whether they disclose offences under securities laws. 2. Investigation Investigates possible contravention of securities laws and regulations and recommends appropriate actions with the aim of protecting public investors.

7 3. Prosecution Conducts prosecution of securities offences upon obtaining consent from the Public Prosecutor, and institutes civil enforcement actions against breaches of trading offences which include insider trading, market manipulation and offences relating to fund-raising exercises. MARKET POLICY AND DEVELOPMENT This division is entrusted with a broad range of responsibilities in relation to regulatory policy and capital market development. These responsibilities range from legal and regulatory reform to development of institutions, products and market infrastructure, overseeing development of IT infrastructure for the market, to training and education for all capital market participants. 1. Law Reform and Regulatory Policy Provides policy recommendations for the development of the Malaysian capital market; initiates and facilitates reform of the regulatory framework governing the securities industry and its activities, for example, laws enhancing standards of disclosure in the issuance process and increasing transparency in the secondary market. The capital market development activities undertaken by the department range from the development and implementation of a framework for electronic commerce and enhancing standards of corporate governance

8 especially among listed companies, enhancing the legal and regulatory framework for the clearing and settlement of securities and providing support to other departments within the SC on a broad range of issues involving both the primary and secondary market. The department additionally provides input to the government on wider issues affecting the capital market; involves itself in broader national policy formulation, for example, in relation to Malaysia s market access commitments under the General Agreement on Trade in Services (GATS) and the ASEAN Framework Agreement on Services (AFAS); represents the SC at international forums such as the World Trade Organisation (WTO), Asia Pacific Economic Co-operation (APEC) and Association of South East Asian Nations (ASEAN). 2. Bond Market Unit A unit established under the Law Reform and Regulatory Policy, this unit conducts studies, identifies, recommends and implements appropriate strategies and regulatory policies in order to provide direction for the orderly development of the Malaysian corporate bond market. 3. Product Development Initiates and facilitates development of new products and institutions in the capital market which includes the setting up of new markets such as the futures market and the Malaysian Exchange of

9 Securities Dealing and Automated Quotation (MESDAQ). The department also oversees the introduction of new instruments such as call warrants and structured derivatives; initiates and facilitates development of new forms of collective investment schemes as well as makes policy recommendations to promote the growth of the fund management industry; facilitates development and promotion of the financial planning industry and the venture capital industry, including certifying venture capital companies or funds applying for tax incentives. 4. Islamic Capital Market Unit Initiates and facilitates the development of the Islamic capital market by conducting research and studies and making policy recommendations, in relation to Islamic capital market products and activities; examines conventional products and listed securities to ensure compliance with Syariah principles and at the same time seeks to facilitate the origination and introduction of new Islamic products by the market; provides the necessary input and support to the Syariah Advisory Council of the SC in their deliberations on and review of, capital market products and activities. 5. Information Technology Oversees and facilitates the development of a viable IT architecture for the capital market which includes conducting systems reviews to ensure new systems

10 for trading, clearance and settlement, and information dissemination are fit and proper and meet industry standards of security and reliability. It also plans, develops, implements and maintains business application systems and computer facilities to support SC s strategic objectives and operations, and provides support services to the users of SC s IT systems. 6. Securities Industry Development Centre (SIDC) Established in July 1994, the SIDC promotes training, education and research in the development of the capital market. The SIDC achieves its objectives and functions through six units, namely the Training and Education Unit, Examinations Unit, Publications Unit, Corporate Services Unit, Information Services Unit and Accounts Unit. Training The SIDC organises seminars, workshops and computer-based training programmes for a wide-ranging audience that includes directors, market intermediaries, and retail investors. It administers the Continuing Professional Education (CPE) programme to ensure continued competence and professionalism among licensed representatives in the capital market. Providing training for SC staff members through in-house courses or external training programmes is also a responsibility of the SIDC. The Bumiputera Training Fund (BTF), administered by the SIDC, was established in 1997 to increase

11 the technical competencies and enhance the level of awareness of industry changes among Bumiputera employees of stockbroking firms. Licensing Examinations The SIDC conducts examinations for those seeking to be licensed under the Securities Industry Act 1983 and Futures Industry Act It also develops licensing examination study guides and CD-ROMs to assist candidates in their preparations. Investor Education and Information Resource The SIDC publishes educational material and provides general information on the capital market. A quarterly bulletin informs market intermediaries and institutions about current developments and activities of the SIDC. The SIDC Library, which specialises in the capital market, serves as an important resource centre for both SC staff and the general public. ISSUES AND INVESTMENT This division carries out the SC s regulatory functions in relation to the issues/offerings/ listing of securities, take-overs and mergers and all matters pertaining to unit trusts and other collective investment schemes. 1. Securities Issues Regulates offerings and issues of securities by public companies, including debentures by private companies, and/or listing of such securities on the stock exchange.

12 2. Take-overs and Mergers Regulates take-over and merger transactions under the Malaysian Code on Take-overs and Mergers Trusts and Investment Management Oversees and facilitates the development of unit trusts and other collective investment schemes in an orderly manner; reviews application and proposals submitted by the industry; compiles statistics pertaining to the industry; conducts review, registration and lodgement of prospectuses and deeds pertaining to unit trusts; and regulates the unit trusts and other collective investment schemes to ensure compliance with the guidelines and securities laws. 4. Asset Valuation Audit Reviews property asset valuations which form part of corporate proposals requiring the SC s approval. STRATEGY, RESEARCH AND CORPORATE AFFAIRS This division is made up of four departments to provide strategic and policy advice to the Chairman and the SC as well as conduct analysis and applied research in relation to economic, financial and accounting related to capital market issues. This division is also responsible for co-ordinating the SC s international affairs, including driving the SC s

13 involvement with international organisations, as well as major projects related to international financial regulation. This division also handles corporate relations matters, including interfaces with the public and media and upholding the SC s image. 1. Research and Strategy Conducts research and provides strategic and policy advice on regulatory and developmental issues relating to the Malaysian capital market; conducts research and analysis of developments in international capital markets that have a bearing on the Malaysian capital market; responsible for the co-ordination of work on the Capital Market Masterplan; provides timely and analytical input and reports on various issues that require accounting, taxation and financial reporting-related research and analysis, including in the area of accounting standards; maintains contact with international standard setting bodies as well as regulators in other jurisdictions involved in financial and accounting policy activities. 2. Economic Analysis Conducts economic analysis and applied research on a wide range of capitalmarket-related issues; works on projects related to international financial markets; among other things, the department engages in regular discussions with market participants and international financial institutions; provides reports on global and domestic market and

14 economic conditions, with a view to assessing their implications for the Malaysian capital market; this involves, among other things, analysing past and future trends in financial market activity and monitoring developments in the global economy; where relevant, the department makes use of a range of quantitative techniques to support and enhance its analytical and research functions. 3. Corporate Affairs Provides responses to the public and media queries on SC related matters; plans and manages corporate events, for example, dialogue sessions, exhibitions, dinners and lunches; handles visit arrangements for visiting foreign guests; serves as the contact point for members of the media; develops and monitors the content of the SC homepage, electronic information kiosks and electronic messages display; and facilitates the production of print and electronic corporate information publication. 4. Bumiputera Unit Deals with Bumiputera-related enquiries, information and issues in the capital market, this unit collaborates with SIDC and other Bumiputera organisations/ associations in promoting development programmes to enhance the level of participation and professionalism among Bumiputera as well as facilitates nurturing of potential Bumiputera companies that are pursuing initial public offering (IPO).

15 5. International Affairs Represents the SC s interests in international organisations and forums by participating in international committees or working groups; provides technical assistance in relation to the SC s international work; encourages the adoption of high regulatory standards; promotes international co-operation by negotiating information-sharing arrangements and co-operative frameworks for enforcement, technical and developmental matters; serves as the central liaison and co-ordination point for all international regulatory matters. CORPORATE RESOURCES This division supports the SC s daily operations through four departments. 1. Finance and Administration Provides financial and accounting services and is responsible for the financial management as well as the administrative support of SC; handles the payroll, placing and monitoring of investment, cash management, payments and claims, budget, tax and preparation of the annual statement of accounts.

16 2. Human Resources Supports overall employee activities of the SC through the implementation of policies and procedures on human resources planning, organisation development, recruitment and selection, performance management, employee relations, compensation and rewards, career planning and succession management, and implementation of activities in facilitating the development of corporate values. 3. Property and Facilities Management Provides facilities management services for the maintenance and efficient operations of the office building, rented premises, all other properties and assets. 4. Security Provides a safe and secure working environment for the SC s employees and visitors; detects and prevents the occurrence of any criminal activities and averts any waste of resources.

17 OFFICE OF THE CHAIRMAN 1. Internal Audit Placed under the office of the Chairman, this department is responsible for inspecting systems and activities in all divisions, departments and units of the SC to ensure reliability and integrity of information, compliance with laws, regulations, plans, policies and procedures; and ensures assets are safeguarded. It also functions to ensure the economy and efficiency of SC operations and systems; and accomplishment of established activities.

18 REGULATORY JURISDICTION OF THE SECURITIES COMMISSION SC Equity Market Institutions Futures Kuala Lumpur Stock Exchange (KLSE) Securities Clearing Automated Network Services Sdn Bhd (SCANS) Malaysian Central Depository Sdn Bhd (MCD) Malaysian Exchange of Securities Dealing & Automated Quotation Bhd (MESDAQ) Malaysia Derivatives Exchange Bhd (MDEX) Malaysia Derivatives Clearing House Berhad (MDCH) Market Intermediaries Dealer (Share Broker) Investment Adviser Fund Manager/Unit Trust * Futures Broker Futures Trading Adviser Futures Fund Manager/Unit Trust * Dealer s Representative Investment Representative Fund Manager s Representative/Unit Trust * Futures Broker s Representative Futures Trading Adviser s Representative Futures Fund Manager s Representative/Unit Trust * *Unit trust management companies and representatives are exempted from the licensing requirements under the Securities Industry Act 1983 and Futures Industry Act 1983 and Futures Industry Act 1993.

19 ORGANISATION STRUCTURE MEMBERS OF THE SECURITIES COMMISSION CHAIRMAN INTERNAL AUDIT DEPARTMENT DEPUTY CHIEF EXECUTIVE MARKET SUPERVISION ENFORCEMENT ISSUES & INVESTMENT MARKET POLICY & DEVELOPMENT CORPORATE RESOURCES STRATEGY, RESEARCH & CORPORATE AFFAIRS Market Surveillance Investigation Securities Issues Law Reform & Regulatory Policy Finance & Administration Research & Strategy Licensing Prosecution Take-Overs & Mergers Product Development Human Resources Economic Analysis Intermediary Supervision Complaints Unit Trusts & Investment Management Information Technology Property & Facilities Management Corporate Affairs Primary Market Regulation Asset Valuation Audit Securities Industry Development Centre Security International Affairs Financial Reporting Surveillance & Compliance