SC introduces guidelines for establishment of electronic access facilities by Universal Brokers

Kuala Lumpur, 29 August 2001

The Securities Commission (SC) today released guidelines for Universal Brokers to set up electronic access facilities.

"Electronic access facility" is the generic term employed to refer to a range of physical sites, locations or premises which contain facilities that enable clients to initiate orders or obtain market or investment advisory information electronically.

The Guidelines, entitled "Guidelines on the Establishment of Electronic Access Facilities by a Universal Broker" (Guidelines), evolved from recommendations made in the SC's Consultation Paper entitled "Framework for the Implementation of Electronic Commerce in the Capital Market" that was released last year.

The introduction of the Guidelines is in line with the SC's efforts to create a framework for the orderly and effective implementation of electronic commerce in the capital market. The SC also aims to further facilitate the progress of stockbroking industry consolidation through the additional incentives to encourage the formation of Universal Brokers that have been set forth in the Guidelines.

The SC hopes that Universal Brokers will be encouraged by the Guidelines to establish electronic access facilities to increase accessibility to their clients, as well as to bridge the digital divide by offering investors greater access to online systems.

These Guidelines have been formulated after extensive consultation with the Sub-Working Group on Online Trading, which comprises representatives from the exchanges as well as industry associations, and in particular with all the members of the Association of Stockbroking Companies Malaysia (ASCM). The Sub-Working Group on Online Trading was established under the umbrella of the Working Group on Electronic Commerce, launched by the SC as a collaborative effort between regulatory authorities and market participants to develop a facilitative framework for electronic commerce in the Malaysian capital market.

Scope of the Guidelines

Electronic access facilities may include devices such as Internet kiosks or booths, as well as investment centres housing personal computers that allow investors access to their broker's website or other online order-routing system, but are not confined as such. The device-neutral approach was taken in recognition of the speed of change in information and communications technology (ICT), and the possible advent of new and innovative means of communications between brokers and clients.

Electronic access facilities will appeal to independent investors, who want direct access to order-routing and advisory information, without having to invest in cost-intensive hardware and software. The Guidelines are designed to cover situations in which Universal Brokers wish to establish physical devices and sites in physical locations other than their existing principal office or branch office(s).

These Guidelines do not govern the provision of virtual applications such as websites or dial-up extranet systems that are covered by other rules, such as the Kuala Lumpur Stock Exchange (KLSE) Code on Electronic Client Ordering Service (ECOS). The Guidelines also do not cover the use of a private personal computer by an investor or dial-up devices placed at an investor's premises, so long as those computers or devices are not used by the investor for commercial purposes by allowing access to other investors for a fee.

Benefits and incentives to Universal Brokers

The establishment of such electronic access facilities by a Universal Broker will not be considered a branch office of a Universal Broker, provided the SC's approval is obtained under these Guidelines.

Universal Brokers will be free to determine the type, size, number and location of these facilities. However, the Universal Broker must ensure that the facility is reasonably secure from unauthorised tampering and intrusion, both at the application level as well as on the physical level. Security of transactions as well as client confidentiality should be paramount.

The Universal Broker's dealer's licence will reflect the SC's approval for the Universal Broker to establish the electronic access facility.

Universal Brokers will be allowed to station employees at the facilities only to provide technical support to investors and safeguard any equipment placed there. The Guidelines are aimed at allowing the development of more physical facilities in various locations that are designed to provide online access to independent investors, who wish to trade without a remisier, either to key in their orders or to obtain investment advice.

The approval process is therefore expected to be facilitative and expeditious given the objectives of these Guidelines.

Commission rates

As a further step towards developing a more facilitative electronic commerce framework, particularly with regards to online trading, Universal Brokers will be given the flexibility to provide discounts of up to 25% of the current commission rates applicable to trades with contract values of RM100,000 and below, for all electronically-routed trades executed by them.

The Guidelines are available on the SC's official website at


about the SC
The Securities Commission Malaysia (SC) was established on 1 March 1993 under the Securities Commission Act 1993 (SCA). We are a self-funded statutory body entrusted with the responsibility to regulate and develop the Malaysian capital market.

General Line: +603-6204 8000
General Email: [email protected]
© Copyright Securities Commission Malaysia.  Contact Us   |    Disclaimer   |   The site is best viewed using Microsoft Edge and Google Chrome with minimum resolution of 1280x1024
Generic Popup