Speech by

YBhg Dato’ Zarinah Anwar

Chairman, Securities Commission

at the


Monday, 26 June 2006, 8.30AM

Kuala Lumpur

YABhg Tun Mohamed Dzaiddin Hj Abdullah,
Chairman, Bursa Malaysia Berhad

Encik Yusli Yusoff, CEO Bursa Malaysia

Mr Donald Keith, Deputy Chief Executive, FTSE

Board of Directors Bursa Malaysia,

Ladies and gentlemen,

Good morning.

Firstly, I would like to thank Bursa Malaysia (Bursa) for inviting me to this occasion marking the launch of the FTSE-Bursa Malaysia Index Series. The launch of this benchmark Index series marks a further step forward in efforts to enhance the value proposition of the Malaysian capital market.

In this regard, Bursa should be congratulated for their initiative in responding to the product requests of international and domestic clients.

The new indices, calculated on free-float methodology, offer the characteristics of tradeability, investibility and transparency – features that typically appeal to investors around the world.

The indices, in themselves, are an attractive asset class for investments. FTSE’s tradeable indices will provide a platform for the development of new multi-market products and instruments. This will create opportunities for Bursa working together with other capital market intermediaries to package a broad range of attractive products as a means of generating value-add from the FTSE-Bursa indices.

The probabilities of matching the needs of issuers or originators with investor requirements are therefore increased through wider product choice and this would contribute to greater liquidity and enhance the overall vibrancy of the Malaysian capital market.

As outlined in the recently-launched Ninth Malaysian Plan and the Capital Market Masterplan (CMP), it is the government’s objective to position Malaysia as an internationally competitive capital market. Such a market must be well stocked with a full complement of high quality products to raise its international profile and positioning.

It is therefore timely that as we enter the first year of the final phase of the CMP, Bursa has been rapidly expanding its product range. Apart from the free-float index, Bursa has also recently introduced Exchange Traded Funds (ETFs) and single stock futures.

The recent product initiatives demonstrate Bursa’s commitment to respond to the growing needs of customers for increasingly sophisticated products.

In this regard, the Bursa efforts complement other initiatives being taken to enhance the quality of the market and to support the strategy of positioning Malaysia as a premier market.

For example, you would have read that the Securities Commission (SC) last week published the guidelines on cross border listings, aimed at heightening the integration of the Malaysian capital market with the rest of the world, and to widen the breadth of listings in the equity market. We hope that by liberalising the foreign listing rules, we will be able to attract high-quality foreign listings – particularly in instances where there may be synergies with Malaysia – or to create greater avenues for corporate transformation through the cross-border merger or acquisition route. In this manner, the liberalisation would expand the pool of quality stocks listed on Bursa and the range of investment opportunities for investors.

There is also little room for sub-standard products in a quality market. As you are aware, the SC has already implemented measures to strengthen the disciplinary process and to tighten gate-keeping controls. There must be zero tolerance for bad apples if Malaysia is to achieve its aspiration to be an internationally competitive market.

Overall from a strategic perspective, it is critical to build the momentum and unleash a wave of product innovation to drive the growth of our capital market at a faster pace. For capital market intermediaries and other participants, there is a need for more innovative thinking as well as the attention to detail required to translate a concept into a viable product.

As the regulator, the SC will review all areas that may inadvertently impede private sector innovation and that may hinder execution of ideas. This is an area that clearly requires greater collaboration, and for which greater resources need to be invested. Having said that though, while the SC can establish the regulatory framework to facilitate and encourage the introduction of new products and services, it is up to the private sector to optimise on the opportunities afforded by the liberalised rules to manufacture the deals to be brought to market.

Clearly, product innovation and executing the process of “taking it to the market” requires many supporting factors to increase the success rate. The most critical factor perhaps is intellectual capital. While we mobilise the resources required to expedite the learning process and work at cultivating an innovation culture, a quick approach is to seek the right partners as a means of filling any skill gaps even as we strengthen our own capabilities.

In this regard, I am pleased to note Bursa’s partnership with FTSE. The FTSE is a globally recognised franchise, and Malaysia should tap on their expertise and capabilities to accelerate innovation in our market-place and to extend our reach to international clientele. Much intrinsic knowledge and value can be derived from meaningful partnerships with international capital market participants. I wish Bursa and FTSE a successful relationship.

Thank you.