Kuala Lumpur , 8 April 2008
New SC guidelines to raise standards of market conduct
The Securities Commission (SC) today introduced a set of new guidelines to strengthen investor protection by promoting responsible conduct among stockbrokers and their representatives .
The introduction of the Guidelines on Market Conduct and Business Practices (Guidelines), which are aligned with international best practices, supports the Capital Market Masterplan (CMP) strategic initiative of ensuring that the Malaysian intermediation services are anchored on appropriate prudential standards, with high levels of business conduct and professional skills.
The new Guidelines identify 11 core principles of supervision applicable to stockbrokers and their representatives pursuant to the SC’s principles-based approach to regulation. The Guidelines also specify the expected market and business conduct standards of stockbrokers, their representatives and employees. Examples and scenarios are provided to illustrate activities which constitute market abuses and unethical business conduct.
In addition, the Guidelines elaborate on how established principles of anti-money laundering and the suppression of the financing of terrorism may be carried out by the industry. The SC will be guided by the Guidelines in considering whether any stockbrokers or stockbrokers’ representatives have taken reasonable steps to organise and manage their business affairs responsibly .
Under the principles-based approach, the SC will focus on the desired level of regulatory outcomes. Proactive on-site visit and engagement with the industry will be conducted to provide regular guidance and clarification to enhance investors’ protection and promote market integrity.
To ensure this, the Board of Directors and senior management of the stockbroking company will be held primarily accountable and responsible in ensuring adequate policies, procedures, and resources are put in place to meet the core principles.
All stockbrokers and licensed representatives are given a grace period of one year to comply with the requirements of the Guidelines.
The Guidelines, which took effect on 8 April 2008, are available here.