SC issues Practice Note – enhances UBs competitiveness by allowing more services to be offered at electronic access facilities

The Securities Commission (SC) today released a practice note that articulates the SC’s policy to further enhance the competitiveness of Universal Brokers by allowing them to offer a wider range of service at the sites of the electronic access facilities.

“As a result of this flexibility, Universal Brokers have the opportunity to expand their market reach to all parts of the country in a cost effective manner. This latest flexibility enhances the viability of the SC’s incentive for Universal Brokers which allows these brokers to establish electronic access facilities.

“We hope this incentive will further encourage the formation of Universal Brokers and spur the consolidation process for the stockbroking industry,” said the SC Chairman, Datuk Ali Abdul Kadir.

Entitled Practice Note 1 – Guidelines on the Establishment of Electronic Access Facilities by Universal Broker (Practice Note), the Practice Note supplements the SC’s Guidelines on the Establishment of Electronic Access Facilities by Universal Broker (released on 29 August 2001). The Practice Note was formulated after extensive consultation with Universal Brokers and is available on the SC website here.

Universal Brokers are presently free to determine the type, size, number and location of their electronic facilities. With the introduction of the Practice Note, Universal Brokers can now undertake the following additional activities at an electronic access facility:

” placement of licensed dealer’s representatives, futures broker’s representatives and dual licence holders;
” opening and closing of trading accounts and/or securities accounts;
” receipt and payment of clients monies;
” marketing and selling of approved financial products and services provided by Universal Brokers; and
” placement and utilisation of broker-front-end and CDS terminals and/or servers at the electronic access facility.

To undertake these new activities, Universal Brokers must put in place adequate resources, internal control procedures and safeguards and appropriate compliance mechanisms to ensure that security of transactions and client confidentiality are upheld.

Aside from the electronic access facility incentive, Universal Brokers, formed through the merger of four stockbroking companies and who have complied with the necessary requirements, are allowed to offer a full range of capital market services as well as establish additional branches throughout the country.

The introduction of the Practice Note and Guidelines on the Establishment of Electronic Access Facilities by Universal Broker is consistent with the Capital Market Masterplan’s initiatives to facilitate the use of information technology and e-commerce by intermediaries. Essentially, the Guidelines and Practice Note provide regulatory clarity and facilitate innovation through technology, in the capital market.

16 May 2002