DBR is a market-based approach to regulation which focuses on the quality of information disclosed by issuers when they issue, offer or list securities so as to enable investors to make informed investment decisions. The Securities Commission (SC) had progressively implemented DBR since 1996 under a three-phased programme whereby the assessment process of corporate proposals for the issue, offer and listing of securities had gradually been liberalised while maintaining regulatory standards.

The SC is targeting to implement the final phase of the DBR programme early next year. As stated in the Capital Market Masterplan, the full implementation of DBR will be premised, in part, on an assessment of market readiness by the SC. In this regard, the SC had appointed an external consultant in 2001 to undertake a survey to assess the readiness of capital market players for the final phase of DBR.

“The survey showed that market players are highly aware of, and support, DBR as a mode of regulation,” said the SC Chairman, Datuk Ali Abdul Kadir.

The highlights and key findings of the survey are available here.

The survey was targeted at all key market players, namely, public listed companies, the institutional group (institutional investors, analysts, media) and advisers (merchant banks, legal advisers, accountants, valuers).

“The market appears reasonably ready for a disclosure-based regime. The level of market readiness would be taken into consideration in further enhancing the DBR framework,” said Datuk Ali.

While market participants felt that there were some costs, such as higher compliance cost, in the implementation of DBR, they also perceived that there were significant benefits to be derived from a DBR environment. The market cited a faster approval process, greater access to funds, greater transparency, better corporate governance, higher quality of disclosure and greater investor protection as some of the benefits of DBR.

“On balance, respondents agreed that the benefits of DBR far outweigh the associated costs,” said Datuk Ali.

He highlighted that, in preparation for the move to the final phase of DBR, the SC had issued a consultation paper to various industry bodies and associations. The feedback from these bodies/associations will also be taken into consideration and incorporated into the DBR framework where appropriate.

On 23 September 2002, the SC had a closed-door dialogue with market participants to discuss the framework for the final phase of DBR.