Kuala Lumpur, 5 October 2011
Significant amendment to securities laws to strengthen Capital Market
Major amendments to the Securities Commission Act 1993 (SCA) and the Capital Markets and Services Act 2007 (CMSA) came into force on 3 October 2011 to promote the development of the capital market in line with global standards pursuant to the strategies outlined in the Capital Market Masterplan 2.
The amendments include the following:
Legal framework for the private retirement scheme industry
In line with efforts to enhance the adequacy of savings for retirement needs, the amendments provide for a dedicated regulatory framework for private retirement schemes (PRS). The PRS framework will provide the public with options to make additional voluntary long term contributions to supplement their retirement savings within a well-structured and regulated environment.
Under the PRS framework, providers of funds may, subject to the SC’s approval, offer a range of funds from which individuals can choose to invest in, based on their financial needs, goals and risk appetites.
More efficient licensing framework
Consistent with efforts to internationalise and enhance the competitiveness of the Malaysian capital market, the amendments to the licensing provisions in the CMSA will promote ease of doing of business and facilitate a more cost effective regulatory regime without compromising investor protection. In this regard, the requirement for the annual renewal of CMSA licences has been removed. However the appointment of CEOs for licensed intermediaries will now require the SC’s prior approval. Supervision efforts will be enhanced and annual reporting of information by licensed companies and their representatives will be introduced which, amongst others, will form the basis for continued assessment on their fit and properness.
Regulation of OTC derivatives
The recent global financial crisis has highlighted the need for regulation of OTC products and regulators globally are looking at reforms to strengthen oversight. To promote transparency in the OTC derivatives market, the amendments introduce a framework for the reporting of OTC derivative contracts to a trade repository which will be established and operationalised within the next two years.
Oversight of foreign auditors
To enhance the oversight of foreign auditors, the amendments introduce a framework to enable the Audit Oversight Board to grant recognition to foreign auditors who audit the financial statements of foreign corporations listed on Bursa Malaysia.
Managing systemic risk
Recognising the importance of proper conduct of business within the capital market and its impact on systemic risk, amendments to the CMSA empower the SC to obtain information and issue directions to market intermediaries to take appropriate measures to monitor, mitigate or manage systemic risk.
The amendments also empower the SC to share information and cooperate with other supervisory authorities both domestic and foreign, who manage systemic risk in the capital market.
SECURITIES COMMISSION MALAYSIA