Good afternoon and let me wish all of you a Happy New Year.
This is a momentous occassion - the signing of the MOU today to introduce the Malaysian Futures and Options Module into ITM's
Bachelor of Business Administration (Honours) (Finance) is a milestone to foster joint education efforts between the Securities Commission and the universities. This event is even more significant as training and education has been much neglected by the industry at large. This was confirmed in a recent study conducted on 20 stockbroking firms in the Klang Valley by SC and KLSE. There are severe skill shortages in funds management, research, derivatives, risk management and corporate finance. The long term success of our capital market will depend on efforts by regulators, academics, market institutions and professionals to provide adequate and sufficient funds, time and resources to education programmes. It is therefore important that we understand the education challenges before us and gear ourselves for the direction we have to take. All too often we grumble and mumble about staff pinching, lack of qualified personnel and insufficient numbers of qualified and trained Bumiputeras. These are challenges that cannot be resolved by a single group, but must be addressed on a wider national scale.
When financial futures began trading on KLOFFE in December 1995, the business and management schools of many local universities approached us to assist them in preparing students to play an active role in this field when they graduate. There was a gap between what was taught in the universities and the requirements in the Malaysian Futures and Options Registered Representative (MFORR) examination. The problem required a long term solution. The Securities Industry Development Centre (SIDC) took on a number of programmes in 1996, with the assistance of the exchanges, the futures brokers and consultants to specifically address the needs of the universities.
Firstly, we provided training and refresher courses for university lecturers. Four such programmes were completed involving lecturers from ITM, UIA, UPM, UKM, UM (Kuala Lumpur and Selangor), USM and UUM from the Northern states, UTM from Johor, as well as UNIMAS and UMS from East Malaysia. The first was a MFORR revision course held in March, followed by a risk management workshop in May. Two further workshops were held in June and September, using specialised computer software that provided trading games which replicate real life situations in a dealing room.
The next stage was to find ways and means to standardise materials that can be used at the universities. Hence the idea of developing a futures and options module was conceived. We then sourced for organisations with proven capabilities to develop the materials and the Securities Institute Education (ISE), Australia, was selected for that purpose. The materials cover the full scope of the MFORR syllabus. It is designed as a one semester course containing 13 topics covering KLIBOR futures, stock index futures, options, business rules of the exchange and clearing house and futures regulation. Students who complete the course will be sufficiently prepared to sit for the MFORR examination. The development of this module also involved representation from the exchanges, clearing house and industry practioners who sat in the task force to ensure that the materials are accurate and sufficient. No exemption, however is given to those who complete the degree for the MFORR licensing examination. This will allow flexibility of testing by the universities, whilst the MFORR examination is a standard examination administered by Malaysian Institute of Futures and Options (MIFO).
Will this Malaysian Futures and Options module be available only to ITM? The answer is no. Already we have enquiries from many other universities. We will pilot test it with ITM for two semesters, and will make it available to all universities by 1998.
Increasing Bumiputera Participation
We believe that these programmes will lay the foundation in the long term to produce graduates that will be equipped to enter the options and futures industry. However the SC remains dissatisfied with the level of Bumiputera participation. The numbers speak for themselves. As at 1 December 1996, 306 Futures Broker Representatives (FBRs) were licensed. Sixty two or 20.26% are Bumiputeras. The MFORR examination results tell a similar story. Since the first examination was conducted in February 1995 to the end of October 1996, 500 candidates have passed all modules, and only 65 or 13% are Bumiputeras.
What steps were taken to address this imbalance? Specifically, SIDC organised two MFORR classes, both targetting at graduating Bumiputera students. The first course was held in UKM, Bangi, for 61 students from UM, UKM and UIA from 6 - 15 May. The same course was held in June in UUM, Sintok, for 46 Bumiputera students. Although SIDC have taken the lead to address this situation in fulfilling national policies and objectives, I hope that the exchange companies and individual firms in the securities and futures industry will do more in terms of training, including their obligations and responsibilities to train Bumiputera professionals.
The training needs of Bumiputeras go beyond these efforts in the derivatives industry. As mentioned earlier, the SC and KLSE conducted an examination of 20 stockbroking firms within the Klang Valley from May to July 1996, to ascertain compliance with the Government's broad policy on active Bumiputera participation in the stockbroking industry. The results of the examination revealed a lack of commitment to provide training and human resource development at all levels. The SC, having met with the stockbroking firms and KLSE, have agreed to set up a
Bumiputera training fund to be administered by the SC. The SIDC will provide training programmes that would be comprehensive and go beyond technical skills. The programmes would cover management, communication, marketing and credit control targetted at Bumiputera remisiers, back office personnel and directors. We look forward to universities who can provide capable and adequate resources in assisting to meet these urgent needs.
Long term plans for SIDC
Work on the SC / SIDC building is currently in progress. When the building is completed in 1998 the industry will have a conference hall with a capacity of 1000, many lecture rooms, an auditoriun for 400, a library resource centre, and two specially designed classrooms for computer assisted learning. These facilities will be made available to universities, stockbroking firms and the industry at large. It will substantially reduce the costs of training, as currently, most training are conducted in expensive hotels and even then, bookings have to be made six months in advance.
The main thrust of the library resource centre is to offer a full range of information relating to capital markets. Apart from the usual collection of books, journals and annual reports, collection materials such as conference papers, articles and publications will be made available in electronic form. The collection is already in progress, and covers full range of securities laws, derivatives, risk management, Islamic products, fund management and exchanges. The UMI CD ROM will also be made available to the public, providing users with worldwide coverage of bibliographic citation of periodicals.
The year 1996 was a very successful year for SIDC. A total of 4579 attended SIDC programmes. Year 1997 promises to be another busy year. Again, as in previous years, we take a top down and bottom up approach. The roadshows will continue. Last year the response was overwhelming and emphasised the depth of interest in the development of our capital market on a national scale. We visited six states and had 450 participants in Penang and 880 in Johor Bahru. This year we will be visiting Kota Bharu and Malacca for the first time and a revisit to East Malaysia where the first roadshow began in September 1995. A series of upmarket workshops are also planned in the areas of fund management, bonds and risk management.
The series of seminars that accompany policy and development work will also continue to the benefit of the industry. Right after the Hari Raya holidays we will release the blueprint on the much awaited 'Over the Counter Market' at a seminar to be held on February 18. This will be followed by a 'Clearing and Settlement' seminar on March 3 and 4. Seminars on Foreign Listing, Electronic Commerce, Corporate Governance for Bumiputera Directors and a second Islamic Capital Market are already in the planning stage.
Meanwhile, development work on the dealer's representative examination is in progress. When completed in July 1998, stockbrokers will have, on their desk, a set of training materials that will help trainee dealers to prepare themselves for the trainee dealer's representative examination conducted by KLSE. The new syllabus will comprise four modules: Malaysian stock market, securities law, accounting and financial statement analysis, and asset valuation.
In closing, I wish to thank members of the task force from KLOFFE, MME, KLCE, MDCH, Rashid & Zaki Derivatives, CIMB Futures, Kenanga DMG Futures and CSH Consultancy Services for their dedication and commitment in making this project a success.
I feel proud of their work, which together with the staff of ITM and the SC, completed a job that is of the highest quality, setting a high standard for all future endeavours. I look forward to SIDC spearheading more of such projects, with the participation and support of the industry.
Thank you.
