The key feature of ISS is that membership in SCANS is now extended to non-broker institutions. Clearing membership in SCANS has thus far been limited to stockbroking companies. The new service would allow for the exchange of funds directly between SCANS and non-broker clearing members including custodian banks.

In announcing this, Securities Commission (SC) Chairman Encik Ali Abdul Kadir said the introduction of ISS, which is an optional service would benefit, amongst others, foreign institutional clients who trade in Malaysian securities.

Encik Ali said that the ISS is a significant step towards reducing risks in the clearing and settlement system. The implementation of ISS is in step with the National Economic Recovery Plan which calls for measures to enhance confidence in the KLSE as an attractive investment market. The DVP model, on which ISS is based, is benchmarked against best practices internationally.

To ensure that the ISS is business and user friendly, the SC had actively worked with relevant market participants and regulatory bodies.

The SC views the development of a sound clearance and settlement system as a matter of high priority. In this regard, the SC had adopted a multi-pronged approach. Initiatives taken so far include the full immobilisation of all securities listed on the KLSE into the central depository and the closing of the trade settlement mismatch with the successful implementation of final settlement on T+5.

A separate Press announcement by the KLSE will provide the details of the ISS.