SC grants Universal Broker status to four stockbroking companies

Kuala Lumpur, 12 April 2001

The Securities Commission (SC) has granted Universal Broker status to the first four stockbroking companies - Hwang-DBS Securities Berhad, Kuala Lumpur City Securities Sdn Bhd, OSK Securities Berhad and Rashid Hussain Securities Sdn Bhd. The SC is processing one more application.

Hwang-DBS Securities currently has branch offices in Shah Alam, Taiping and Johor Bahru.

Kuala Lumpur City Securities already has a branch office in Kuantan. The SC has now approved the conversion of Upen Securities Sdn Bhd into a branch office of Kuala Lumpur City Securities in Kangar and the acquisition and conversion of Alor Setar Securities (2000) Sdn Bhd Bhd into a branch office of Kuala Lumpur City Securities in Alor Setar.

OSK Securities currently has branch offices in Ipoh and Melaka and the SC has approved the conversion of Ke-Zan Securities into a branch office of OSK Securities in Penang.

The SC has also approved the acquisition by Rashid Hussain Securities of the entire issued and paid-up capital of Mercury Securities Sdn Bhd, SJ Securities Sdn Bhd and Straits Securities Sdn Bhd, and the conversion of the acquired stockbroking companies into branch offices of Rashid Hussain Securities in Butterworth, Subang Jaya and Melaka.

All the four companies have met the relevant conditions to become Universal Brokers, which include the requirement of one stockbroking company to merge with at least three others.

The merged stockbroking companies must also have a minimum paid-up capital of RM250 million, a minimum core capital of RM250 million and a capital adequacy ratio of at least 1.5 times before they can commence business as Universal Brokers. The merged stockbroking companies must also satisfy the SC's fit and proper requirements and adhere to the requirements as set out in the SC's Guidelines issued pursuant to the Policy Framework for Stockbroking Industry Consolidation.

The SC would like to stress that the above requirements for Universal Brokers as well as the overall Policy Framework apply to all stockbroking companies, including those that are part of banking groups which also own merchant banks.

The formation of a core group of well-capitalised stockbroking companies known as Universal Brokers is in line with the SC's Policy Framework for Stockbroking Industry Consolidation as announced during the second quarter of year 2000. The consolidation of stockbroking companies is amongst the efforts of the SC to strengthen the industry and to equip market intermediaries to face the challenges of globalisation and liberalisation. These are detailed as part of the recommendations in the SC's Capital Market Masterplan which sets the strategic position and future direction of capital market development for Malaysia.

To date, the progress of the stockbroking industry consolidation has been encouraging. The SC will continue to closely monitor industry consolidation efforts.


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