FAQ On New Classes Of Registered Person Known As Registered Representative

New Classes of Registered Person known as Registered Representative (Trading Representative and Introducing Representative)

What are the two classes of registered persons?
The new classes of registered persons, known as Registered Representatives, are divided into two categories:
Trading Representative, who can accept clients’ orders for securities (“order taking”) and execute securities trades; and
Introducing Representative, who is able to refer prospective clients to the participating organisation he represents or acts for. This class will help in business development for the stockbroking industry.
What is the SC’s objective for introducing them to the industry?
The SC introduced these two new classes of registered persons with the objectives of expanding the licensed dealer’s representative (DR) base, promoting intermediation capacity and growing the stockbroking industry. This measure is intended to strengthen the role of dealers, facilitate provision of specialised services and broaden their client base.
Why are these representatives registered and not licensed?
A licensed representative is able to carry out the full scope of the regulated activities that he is licensed for, while the registered person will only be carrying out limited scope of activities. Should the registered person want to carry out the full scope of dealing in securities, he can apply to be licensed as a dealer’s representative.
What is the scope of the activities for these two classes of registered persons?
A Trading Representative can only carry out execution of trades in securities. As such, he is not allowed to give advice, persuade, induce or make specific recommendation on securities trades.

An Introducing Representative can refer prospective clients to the participating organisation with whom he is registered. He is not allowed to take clients’ orders, execute trades, make specific recommendations or give transactional advice.
What is the entry requirement for registration as a Registered Representative?
The applicant must be at least 21 years of age and have the minimum academic qualification i.e. degree, professional qualification or a diploma.

For a Trading Representative, the SC may accept SPM or its equivalent qualification but the applicant must have had at least three years prior working experience as a trading clerk.

An applicant is also required to attend a two-day familiarisation programme and pass an assessment at the end of the two-day programme (FP1).
Can a licensed representative have under his supervision more than maximum 3 Registered Representatives?
The SC may allow a variation of ratio from the current 1 licensed DR: 3 Registered Representatives to 1 licensed DR: 10 Registered Representatives. This variation is allowed under these conditions:-
the Registered Representatives are recruited directly by the PO;
the Registered Representatives are placed under the direct supervision of the PO and there is clear supervision arrangement in place; and
clear accountability has been assigned within the PO for oversight of these Registered Representatives.
Can an individual be registered for trading and introducing at the same time?
A Registered Representative can only undertake one activity i.e. either trading or introducing, but not both.
Can a Registered Representative execute derivative trades or introduce clients to a derivative trading company / futures broking company?
The current scope of activities is only in respect of securities.
Can an Introducing Representative distribute research reports[1] issued by the participating organisation to prospective clients?
Yes, as long as the Introducing Representative does not provide recommendation or advice on securities. The Introducing Representative will have to refer a client to a licensed person if the client asks for specific recommendation or advice on securities.
Will the introduction of the Registered Representative affect the status of the existing remisier / dealer’s representative?
It will complement the role of existing remisier / dealer’s representative by enhancing the scope of intermediation services in the stockbroking industry. The initiative will effectively help to build up the dealer’s representative (DR) base in the future.
How would this initiative help build up the DR base?
The initiative will facilitate a registered representative to become a full-fledged licensed DR via a fast-track route introduced by the SC. Under this route, the Registered Representative must satisfy the following conditions:
served for a minimum period of two years on a continuous basis in one participating organisation either as a Trading Representative or an Introducing Representative;
attended at least 10 days of training over two years on a continuous basis;
obtained a satisfactory report on the conduct of business from the participating organisation where the Registered Representative had served his two years;
attended a familiarisation programme and passed an assessment at the end of the two-year period (FP2); and
be fit and proper.
Upon satisfaction of the above requirements, such persons may be licensed without having to take the relevant SC licensing examinations. The familiarisation programme (FP1) undergone prior to registration and the continuous training over two years together with the FP2 are meant to equip the Registered Representative with relevant knowledge and skills in becoming a licensed dealer’s representative.
How can a Registered Representative become a full-fledged dealer’s representative or remisier?
Refer to the answer provided for question 10 above.
How is the remuneration structure for the Registered Representative determined?
The remuneration structure will be determined by the participating organisation.
Are the registered persons considered as full-time employees or agents of the participating organisation?
The status of these registered persons will be determined by the participating organisation. What is important is that the responsibility and accountability for the conduct of these registered persons rest with the participating organisation.
Are the Registered Representatives tied to the licensed DR / remisier?
They are representatives of the participating organisation. However, a licensed DR / remisier may assist the company in mentoring or supervising a Registered Representative.
Once a person has been registered as a Registered Representative, can he be called by a different title?
A Registered Representative may be called by any other appropriate name provided it does not imply that the Registered Representative is licensed. The business card issued by the participating organisation must state in some form that the individual is registered with the SC.
Schedule 2 of the Guidelines for Registered Person (Registered Representative) mentions the Key Performance Indicator (KPI) or performance targets of the Registered Representative. What is the rationale for this?
The SC’s introduction of the Registered Representative is to improve intermediation services in the stockbroking industry. The SC expects that individuals who are registered as a Trading Representative or an Introducing Representative to be actively involved in expanding intermediation activities of the participating organisation. As such, the KPI of the Registered Representative must be determined by the participating organisation at the outset. The KPI may include the registered person’s expected level of performance and business deliverables.
What is the role of a participating organisation over the Registered Representative?
The participating organisation will be responsible for the supervision, conduct, on-going training and development of the Registered Representative, as well as payment of annual fee for the continued registration. It will have to submit an annual report to the SC on the outcome of its supervision and the findings, if any, as well as training and development activities carried out for the Registered Representative.
Registered Representatives are required to undergo five training days in a year. How many hours should one training day consist of?
One day of training should consist of at least seven hours of training.
Can the training for Registered Representatives be conducted by a participating organisation?
Yes, it can. The training must be relevant in enhancing the Registered Representative’s competency to facilitate his transition towards becoming a full-fledged licensed dealer’s representative and understanding of the expected duties involved in the full spectrum of dealing in securities.
Can a Registered Representative assist in opening clients’ accounts on behalf of the participating organisation?
He may assist the licensed dealer’s representative in opening clients’ accounts but the accountability and due diligence rests with the participating organisation. The scope of his assistance may include collecting, authenticating and witnessing the relevant forms from the clients for purposes of account opening, be involved in part of the “Know-Your-Client” process in gathering the essential information from the clients and filling in the necessary information in the account opening form.
Can a Registered Representative be attached to more than one participating organisation?
A Registered Representative must, at any point of time, only act on behalf of one participating organisation.
Can a company apply to be registered to do trade execution or introducing on behalf of a participating organisation?
The current registration framework for Registered Representative caters for individuals to be registered either as a Trading Representative or an Introducing Representative.
Can a licensed financial planner apply to be registered as an Introducing Representative?
The current registration framework for Registered Representative requires the registered person to act for only one principal at a time. As a licensed financial planner who is employed with a Capital Markets Services Licence (CMSL) holder for financial planning, it would be contrary to the principle of a single tie-up / attachment with one company, where one principal is accountable for the conduct of its registered / licensed person.
Can an applicant on his own accord apply to the SC to be registered as a Registered Representative?
An applicant must apply through the participating organisation that he intends to represent. The Application Form for Registration of Registered Representative must be signed by the applicant and co-signed by the relevant signatories of the participating organisation as specified in the application form.
Can a Registered Representative seek a variation of principal i.e. transfer from one participating organisation (Company A) to another (Company B)?
The person would have to resign from Company A and submit the relevant cessation form to the SC. If he wishes to be registered again, he will have to apply to be registered with the SC through Company B.
In the scenario above, if a Registered Representative ceases his registration with Company A and goes to Company B, can his training be corroborated, and the satisfactory report be prepared, by Company A, but submitted by Company B to apply on behalf of the Registered Representative to become a licensed DR?
The SC expects a continuous two-year service with one principal, which is the same company that will be assessing the Registered Representative at the end of the two-year period for the company’s submission of a satisfactory report to the SC. Further, in this case, only Company A would be in a position to adequately assess if the Registered Representative has fulfilled his KPI as determined earlier at the point of his registration.
What is the process for cessation?
The participating organisation must submit the cessation form to the SC within 14 days from occurrence of event, stating the reason for cessation.
What will the familiarisation programme cover?
It will cover areas that are directly relevant to the permitted scope of activities, which include understanding of trading rules, business practices, market conduct, know-your-client (KYC) rules, and anti-money laundering policies and procedures. Reference may be made to the Securities Industry Development Corporation’s (SIDC) list of frequently asked questions on the familiarisation programmes conducted by SIDC.
Who will carry out the familiarisation programmes?
The familiarisation programme will be run by SIDC.
Must the applicant be attached with a participating organisation in order to attend the familiarisation programme?
Yes, he must be attached with a participating organisation before he is able to attend the familiarisation programme.
Are there going to be CPE requirements and CPE points to be accumulated?
The SC would not be imposing any CPE requirement on the Registered Representative but would require him to undergo a minimum of five days of training in a year. There will be no requirement for annual CPE points to be accumulated by the Registered Representative.
What is meant by “proper screening” as stated in sub-paragraph 4.2.3 of the Guidelines for Registered Person (Registered Representative)?
The participating organisation is responsible to conduct the necessary due diligence on the applicant’s qualification, experience requirement and his fit and properness before the submission for registration is made to the SC.
How will the submission of application be made to the SC?
Pending the Electronic Licensing Application (ELA) System enhancement, the submission for application for registration will have to be made manually to the Authorisation and Licensing Department of the SC.
Is the Registered Representative subject to annual submission of registration to the SC?
The registration process is a one-off exercise. However, the participating organisation will have to, as part of the company’s Form 4: Anniversary Reporting for Authorisation Activity (ARAA) submission, submit an annual report to the SC on the Registered Representative’s continued fit and proper status and compliance with the relevant requirements in respect of conduct and training. The participating organisation must also make annual fee payment for the Registered Representative’s continued registration.
Are these registered persons also required to be registered with Bursa?
The registration is only with the SC. Bursa will be notified of these registered persons by the SC.
What are the fees for registration?
Upon submission of an application for registration to the SC, the participating organisation will be required to pay a processing fee of RM50. Upon approval of registration, a fee of RM200 is payable to the SC. An annual fee of RM200 is also payable by the participating organisation for the continued registration of the Registered Representative.

¹Research reports from a participating organisation must be issued or promulgated by a licensed investment adviser of the same firm, having reasonable basis for making such recommendation in the research report.