Code of Conduct for Market Institutions Ready

Kuala Lumpur, 25 May 2000

The Securities Commission (SC) is pleased to announce the release of the Code of Conduct for Market Institutions in the Malaysian capital market. The Code of Conduct ("Code") was developed in response to the increasing attention and scrutiny given to corporate governance issues and, in recognition of the fact that corporate governance should not be construed as an issue that is only relevant to companies. Market institutions such as exchanges, clearing houses and central depositories must act in the public interest and in doing so, observe the highest standards of governance in conducting their affairs.

Work on the Code commenced with the SC's announcement at its Annual Dialogue with industry participants last July that a Code would be established to provide guidance to market institutions on standards of governance and conduct expected of them. This would ensure that market institutions would perform their regulatory functions and responsibilities with integrity and in a way that commands public confidence.

The Code sets out the principles of conduct and best governance practices for market institutions, decision-makers and other relevant personnel within these institutions. It complements the regulatory system established under securities and futures legislation which set out provisions on the governance structures and statutory responsibilities of market institutions.

The Steering Committee set up to deliberate and establish the Code is chaired by the Chairman of the Securities Commission and comprises the Deputy Chief Executive of the SC, Executive Chairman of the Kuala Lumpur Stock Exchange (KLSE), Executive Chairman of the Malaysian Exchange for Securities Dealing and Automated Quotation (MESDAQ), Executive Chairman of the Kuala Lumpur Options and Financial Futures Exchange (KLOFFE), Executive Chairman of the Commodity and Monetary Exchange of Malaysia (COMMEX), and the Chief Executive Officer of the Malaysian Derivatives Clearing House (MDCH). The Code principally requires market institutions to ensure the following:

regulatory processes within the market institutions must be clear, consistent, fair, equitable and transparent;
best practices of governance by the market institutions, particularly in ensuring fairness and probity of regulatory and other decisions; and
procedures to ensure accountability for decisions and actions of market institutions and personnel within the market institutions.

The Code of Conduct will form the basis for each market institution to establish detailed policies, procedures and decision-making structures at all levels within the market institution. The Code of Conduct applies to all personnel of market institutions, with emphasis on those individuals within the institutions who are decision-makers handling confidential information. This would include, among others, the directors, chief executive officers, members of any committee and management of market institutions.

Please click here to view the Code of Conduct for Market Instituitions.

SECURITIES COMMISSION MALAYSIA