Oversight of Financial Market Infrastructures
Definition of FMIs
An FMI is defined as a multilateral system among participating institutions, including the operator of the system, used for the purposes of clearing, settling, or recording payments, securities, derivatives or other financial transactions. In the capital market, we recognised Bursa Malaysia Securities Clearing Sdn Bhd, Bursa Malaysia Depository Sdn Bhd and Bursa Malaysia Derivatives Clearing Berhad as FMIs.
Bursa Malaysia Securities Clearing Sdn Bhd and Bursa Malaysia Derivatives Clearing Berhad are approved as clearing houses pursuant to Section 38 of the CMSA, whilst Bursa Malaysia Depository Sdn Bhd is approved as the central securities depository pursuant to Section 5 of SICDA.
SC's oversight objectives on the FMIs is to ensure the efficient provision of clearing house facilities in relation to securities and derivatives contracts that are cleared through its clearing facilities and depository services in relation to securities deposited with the central depository; and the proper regulation and supervision of its participants, having due regard to the protection of investors and public interest policy of fostering transparency, enhancing safety and mitigating and managing systemic risk.
SC's oversight activities are also focused towards ensuring that the operation of the FMIs is in accordance with the requirements set by the SC and benchmarked against international standards.
Compliance with international standards
In April 2012, the CPSS and IOSCO issued the Principles for Financial Market Infrastructures to replace the RSSS and RCCP. The report harmonizes and, where appropriate, strengthens the existing international standards for central securities depositories, securities settlement systems, and central counterparties. The report also incorporates new standards and additional guidance for trade repositories, which have emerged as an important category of financial market infrastructures. The Financial Sector Assessment Program conducted on these FMIs in 2012 was based on these principles.
Co-operative oversight arrangements