SC urges SBL applicants to submit complete documentation

Kuala Lumpur, 7 November 1996

The Securities Commission (SC) advises all applicants, borrowers and lenders who wish to engage in Securities Borrowing and Lending (SBL) to submit complete documentation. This arises from the fact that the majority of SBL applications forwarded to the SC were not supported by the complete set of required documentation.

Processing and consequently approval of SBL applications were hampered because the majority of those applications were lacking in terms of:

  • documentation on licences and clarification of organisational structure
  • details on background of SBL employees
  • details on audit certification and clarification on legal entities expected to be involved in the transactions
  • other documentation such as copies of identity cards (IC), passports and curriculum vitaes (CV)

Only one of the seventeen SBL applications received by the SC has been approved thus far. Another sixteen applications are in various stages of processing.

The SC has stipulated in its "Guidelines for Application for Authorisation to Engage in Securities Borrowing and Lending" that any person who applies for authorisation either in the capacity of a lender, borrower or both is required to submit an application which must be accompanied by the following information/approvals/certification:

  • particulars of company - name, registered office, telephone and facsimile number, contact person and principal place of business,
  • year/place of incorporation,
  • capacity in which securities lending is proposed to be carried out
  • relevant regulatory body
  • exchange membership (if applicable)
  • copy of last audited financial statements
  • equity structure of the company (including substantial shareholders and percentage of shareholding)
  • board of directors
  • certificate from auditors (adhering to the prerequisites stipulated in the Guidelines)
  • licences/approvals
  • reputation track record
  • particulars regarding staffing
  • internal guidelines and procedures governing SBL

SBL facilitates the settlement of failed trades, and permits the conduct of arbitrage and hedging strategies on Malaysian securities. It is a necessary precursor to the development of the options market. SBL is also expected to enhance valued added in the financial industry by bringing to Malaysia a set of practices which currently exist in developed capital markets.

Participants of regulated short selling, which began on September 30 this year, must make arrangements with approved SBL agents to avoid contravention of Section 41(3) of the Securities Industry Act, 1983.


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