New Guidelines to Strengthen Domestic Futures Industry

Kuala Lumpur, 4 November 1998

The Futures Industry Act 1993 (FIA) was recently amended with a view to strengthen the domestic futures industry. These amendments which came into force on 1 November 1998 have inter-alia facilitated the participation of fund managers and unit trust management companies in futures trading. The amendments enable an existing fund manager licensed under the Securities Industry Act 1983 (SIA) to apply for a licence as a futures fund manager. Unit trust management companies and trustees of unit trust schemes can under the amendments be exempted from the licensing requirements of the FIA subject to compliance with the Guidelines on Unit Trust Funds.

In conjunction with the said amendments to the FIA, the Securities Commission (SC) wishes to announce the release of the Guidelines for the application of futures fund managers licence, futures fund manager representative's licence and the registration of compliance officers, which have been prepared after consultation with relevant industry groups.

The Guidelines will apply to all applicants whether they manage accounts on a discretionary basis for a client's individual portfolio or on a "pooled" basis.

Under the Guidelines, an application for a futures fund manager's licence requires a paid-up capital of RM2,000,000 and a deposit of RM150,000 to be paid to the SC. However, current holders of fund manager's licence under the SIA would not be required to add to their existing paid-up capital or deposit an additional RM150,000 to the SC.

To ensure the interest of investors is protected, the applicants for futures fund manager's licence will also be required to provide comprehensive policy and operational manuals/procedures inclusive of, but not limited to, its risk management system, organisation structure, investment policies, procedures for compliance with the applicable laws, regulations, rules and guidelines, its system and internal control.

Additionally, a futures fund manager must have a compliance officer who will ensure compliance with the laws, rules and regulations, and the said officer must be registered with the SC.

The amendments also enable existing unit trust schemes to participate in futures contracts for hedging purposes provided the key personnel of the management company possess the necessary qualifications, expertise, experience and overall capability to ensure effective management and administration of the scheme. The SC will be issuing practice notes on this matter.

Those who wish to obtain the Guidelines and the Practice Notes may contact the SC Corporate Affairs Department at tel: (03) 250 7497 (Mimi Aizah Baba) or tel: (03) 250 7582 (Raja Mohd Nasir) or fax: 253 6184 or e-mail: [email protected]. The Guidelines and Practice Notes will also be available on the SC homepage at


Issued on behalf of the Securities Commission. For assistance, please contact 03-2597164 (Karen De Cruz) / 03-2507513 (Ann Teoh) or fax no. 03-2536184.
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