SC introduces guidelines for universal brokers to deal directly in unlisted debt securities

The Securities Commission (SC) today issued a set of guidelines to enable universal brokers to deal directly in unlisted debt securities. Previously, universal brokers can only deal in unlisted debt securities through a licensed financial institution.

“These guidelines which allow universal brokers to participate directly in the unlisted debt securities markets, expand the scope of activities that these brokers can undertake. They also provide issuers and investors with another avenue, aside from financial institutions, to deal in unlisted debt securities,” said Datuk Ali Abdul Kadir, the SC Chairman.

The guidelines, entitled “Guidelines on Dealing in Unlisted Securities by a Universal Broker”, also subject universal brokers to the highest level of professional conduct and standards in their dealings in unlisted debt securities.

Datuk Ali said under the operational requirements, for example, universal brokers would be required to develop a risk management system which is commensurate with the nature, size and complexity of universal brokers’ dealings in unlisted debt securities.

The guidelines, which will be effected through Rules of the Kuala Lumpur Stock Exchange (KLSE), were formulated in consultation with industry and relevant regulatory authorities. The guidelines complement the existing regulatory framework that the SC and KLSE have already put in place in relation to dealings in debt securities.

The introduction of the guidelines is consistent with the SC’s plan to allow universal brokers to participate in the full range of capital market activities, as stated in the policy on stockbroking industry consolidation. It is also in tandem with the recommendation of the Capital Market Masterplan to broaden the intermediation structure for the bond market.

The guidelines are available here in PDF.


30 October 2002