|1.||Bank A is a market player in the local bond market, dealing in government and corporate bonds from time to time. Bank A is not a Principal Dealer appointed by Bank Negara Malaysia to provide two-way price quotations for benchmark MGS bond. Buying or selling of MGS bonds is basically for own trading and investment purposes. Is Bank A considered to be undertaking regulated activities as defined under Part 1, Schedule 4 of the Capital Market and Services Act (CMSA)?|
|As Bank A only conducts trades for its own proprietary purpose, Bank A’s activities do not fall under Part 1 of Schedule 4 and thus Bank A is not deemed as a registered person.
Bank A’s trades are provided for under Schedule 3 of the CMSA where:
As provided for by Schedule 3, Bank A is deemed as a specified person and a specified person may engage in regulated activity without having to hold a license. However, it is important that these activities are carried on within the parameters set out in Schedule 3, where such activities are being performed by the specified person solely for his own benefit or for the benefit of a related corporation and through a CMSL holder.
|2.||For individuals planning to undertake dealings in debt securities and possessing qualifications equivalent to PPKM examinations in a foreign country, are they eligible to apply for recognition of their qualifications?|
|Such individuals can apply directly to PPKM for the recognition of their equivalent qualifications. If recognition is granted by PPKM, these individuals would be deemed to have complied with the qualification requirements under Appendix 2 of the Guidelines.|
|3.||For employees of registered persons (ERP) selling or marketing structured products, are they required to comply with the requirements of these Guidelines?|
|The selling or marketing of structured products that fall under the Guidelines on the Offering of Structured Products issued by Securities Commission would fall under 1(a)(ii) of Part 1, Schedule 4 of the CMSA as follows:
“Quoting two way prices for, and dealing in:-(ii) corporate debentures or other instruments which are not listed for trading in any stock exchange”
Based on the above, ERPs selling or marketing such structured products would need to comply with the requirements of the Guidelines
|4.||Are the Guidelines applicable to banks acting as Institutional Unit Trust Agents (IUTAs)?|
|Dealing in unit trusts is deemed as a permitted capital market activity. As such, the Guidelines are applicable to IUTAs. However, as IUTAs are already subject to the “fit and proper” requirements as set out by the Federation of Investment Management, the “fit and proper” requirements as set out in these Guidelines are not applicable to IUTAs.|
|5.||What is the extent of disclosure under section 91 of CMSA?|
|The purpose of section 91 is to draw the attention of clients of a registered person to the potential conflict of interest when the registered person makes a recommendation, either to buy, sell or hold any particular securities that the registered person also has interest in. For this purpose, a general disclosure that the registered person and its employees may at any time, in the course of its trading and banking business, hold positions, trade or otherwise effect transactions, for its own accounts or the accounts of customers, in the relevant securities, would allow clients to make further reasonable enquiries as appropriate to establish the nature and extent of the conflict. The provision is not intended to compel registered persons to make disclosures to other interbank players or institutional investors that can be reasonably used by them to secure a market advantage.
As an example, the registered person may disclose its interest in the securities in the following manner:
“Bank A is the principal advisor and is one of primary subscribers to the issuance of these securities. Following this, we hold proprietary positions on the securities. Bank A and its employees are engaged in securities trading and banking activities. In the ordinary course of its trading and banking business, Bank A or its employees have traded and may in the future trade or otherwise effect transactions, for its own accounts or the accounts of customers, on the securities.”
The example above is merely a guide and not intended to prescribe how disclosures are to be made by Registered Persons (RPs).
|6.||What can be construed as a recommendation under section 91?|
|A recommendation applies to any circulars or other similar written communications regardless of channels (e.g. e-mail) used. However, in the case of “bought deals”, both written as well as oral recommendation are subjected to the requirement for disclosure.|
|7.||Under what circumstances does the restriction under subsection 91(5) of the CMSA apply?|
|This requirement applies only to an underwriting agreement. However, in the case where such agreement exists, it does not prevent a registered person from making an offer to sell or make a recommendation with respect to the underwritten securities within 90 days provided it is accompanied by a proper disclosure to the effect that the offer or recommendation relates to the underwritten securities.|
|8.||Would section 97 apply in cases where both parties are either a registered person or a CMSL holder?|
|No, section 97 would not apply to transactions where both parties are either a registered person or a CMSL holder. In addition, section 97 also does not apply to transactions between a registered person and a client where the registered person is acting in substance as an agent for the client to facilitate settlement in relation to dealing in securities through RENTAS.|
|9.||Is an ERP allowed to open a personal CDS /securities trading account outside the organization (where the ERP the working)?|
|All ERPs dealing with pass-through activities are not allowed to open any account with another registered person. This is similar to the requirement imposed by Bursa Rules on Dealer Representatives where they are only allowed to open a personal trading account with their own participating organisation.|
|10.||How do ERPs register for CPE-approved courses?|
|ERPs can refer to the CPE website which is accessible via www.sc.com.my or www.sidc.com.my to view the CPE Training Calendar for the listing of approved courses by CPE Training Providers offering such courses (“Training Providers”). They have to contact the respective Training Providers directly should they have any enquiries or wish to register for the courses.|
|11.||Who keeps records of CPE points when ERPs complete and fulfil any of the CPE recognised activities?|
|The CPE Tracker System will maintain the CPE points’ records for each recognised activity undertaken by the ERPs. Information on an ERP’s CPE Points can be obtained from the CPE website which is accessible through http://ers.seccom.com.my/cpepublic/SearchLicensee.aspx.In order to obtain CPE points for attending CPE approved course(s), the Training Provider for the course will have to submit the ERPs’ details in the form of a participation record through the CPE Tracker System within three (3) working days after the completion of the course. Points for such course attendance will only be accorded once the participation record is received and accepted by the CPE Secretariat. Since it is the ERP’s responsibility to ensure that their CPE points records is complete and up to date, the ERP should contact the Training Provider if such points are not updated in the CPE Tracker System.
For activities other than attending CPE-approved courses, the ERPs would have to refer to the Guidelines of Awarding CPE Points which is available in the CPE website for the application procedures and awarding of CPE points for the respective activities.
|12.||Who monitors ERPs’ compliance with CPE requirements?|
|Registered Persons (RPs) are responsible for ensuring that the relevant ERPs adhere to and comply with the CPE requirements. RPs who want to verify their ERPs’ CPE compliance status, may do so by accessing the CPE Tracker System using their ERPs’ reference number.|
|13.||How many points do ERPs need to collect to carry out more than one permitted capital market activities?|
|ERPs are required to collect 40 CPE points every two years regardless of the number of permitted capital market activities the ERPs undertake.|
|14.||Would excess points be allowed to be carried over to the following year?|
|No, ERPs are not allowed to carry forward the excess of CPE points to the following two year cycle.|
|15.||When do ERPs begin to collect CPE points ?|
|Effective from 1 January 2011, all ERPs who have passed the required examinations specified in the Guidelines will be subjected to the CPE requirements. This means that ERPs who have passed the examinations BEFORE 1st January 2011 (“Effective Date”) will be required to collect and fulfill 40 CPE points for every two years from the Effective Date itself. As for those who passed the said examinations AFTER the Effective Date, the requirement to collect CPE points for each two year period will commence from the date they passed the said examinations.|