Capital Market Masterplan 2 Tan Sri Zarinah Anwar CHAIRMAN, SECURITIES COMMISSION MALAYSIA KUALA LUMPUR APRIL 12 th 2011 1
Growth with Governance... describes the challenge for our capital market to expand its role in invigorating national economic growth while addressing concerns about the efficacy of markets in the aftermath of the global financial crisis. 2
From foundation-building to transforming competitive dynamics Equity market Bond market Investment management RM1,275 bil RM444 bil RM759 bil RM273 bil RM377 bil RM55 bil Different challenges in CMP2 Capital market exceeds RM2 trillion - Economies of scale Core segments are regional leaders - Connectivity - New opportunities 2000 Source: SC Islamic Capital Market RM1,050 bil 2010 RM294 bil Derivatives market RM43 bil RM7 bil Large institutional funds - Efficient intermediation - Diversity Liberalised participation - Further internationalisation - Hub opportunities 3
The evolving regulatory landscape Malaysia is well-regulated... Internationally benchmarked (IOSCO) Signatory to cross-border enforcement arrangements (IOSCO MMOU) Recognised by international regulators for high standards of regulation... and resilient Demonstrated resilience during the global financial crisis Regulatory challenges in CMP2 Global re-regulation - New international standards Changing landscape - Managing risks to investors Ensuring effective regulation - Facilitate new business models - Streamlining processes and removing redundant rules - Effective reach and oversight - Higher standards and capabilities of participants 4
Overview of CMP2 strategies GROWTH Promote capital formation GOVERNANCE Enhance product regulation to manage risks Expand intermediation efficiency and scope Expand accountabilities as intermediation scope widens Deepen liquidity and risk intermediation Robust regulatory framework for a changing market landscape Facilitate internationalisation Effective oversight of risks Build capacity and strengthen information infrastructure Strengthen corporate governance Broaden participation in governance 5
Promote capital formation to support economic transformation 120 100 80 60 40 20 0 241 PLCs with market cap growth exceeding 10% annually for 2000-2010 No. of companies 105 82 < RM100 mil RM100 - RM500 mil 21 RM500 mil - RM1 bil 33 > RM1 bil Creation of assets through financing wide spectrum of projects - Private sector participation in VC/PE - Venues for unlisted companies - Promote growth of small and midcap companies - Widen access to bond financing Widen asset classes and investment strategies Promote socially responsible financing and investment Source: SC Market capitalisation 6
Facilitate efficient intermediation and deepen liquidity RM billion 1,800 1,500 1,200 900 600 300 0 Assets under management 55.2 377.4 1,610.0 2000 2010 2020f Address savings concentration - Working with GLICs to enhance savings intermediation - Expand diversity and value-add of investment strategies Expand intermediation opportunities - Derivatives and other assets - New business models - De-coupling and outsourcing - Trading, small-cap, retail, pre-ipo Enhance market connectivity and efficiency through technology Source: SC 7
Maximise growth opportunities RM trillion 6.0 5.0 4.0 Size of Malaysian capital market Potential upside RM5.8 trillion Internationalise to expand scale - Foreign listings and issuances - Expansion into international markets Create hub opportunities - Middle and back office - Education and training 3.0 Baseline RM4.5 trillion Widen ICM s international base - Expand service infrastructure - Value-add Islamic fund management 2.0 Source: SC 2010 2012 2014 2016 2018 2020 8
Strengthen governance Conducive environment for product innovation and intermediation Widen asset classes and scope of intermediation Delineate regulation for fund-raising and product offerings Enable de-coupling and outsourcing of business functions Streamline licensing and registration process Enhance investor protection Ensure consistent investor protection for all capital market products and services Raise intermediary capabilities and standards of conduct Strengthen oversight of products and markets and enhance system-wide risk management Extend investor education Broaden participation in governance 9
Landscape in 2020 A developed capital market Broad and deep markets Highly innovative and liquid Multi-venue, multi-product and multi-asset Electronic environment New growth segments High standards of governance 10
Thank you