Page 77 - SC SCAR 2023 ENGLISH Flipbook

PART 3 STRENGTHENING THE SUSTAINABILITY AND COMPETITIVENESS OF THE CAPITAL MARKET
services and, in this regard, sought to provide greater opportunities for dealer representatives to increase their scope of activities to cover advisory-related services. This would lead to additional sources of revenue for dealer representatives while expanding the channel for investors to obtain advice and other services.
The expansion included removing the requirement for dealer representatives to be employed on a full- time basis and permitting them to be licensed and or registered for investment advisory, financial planning and distribution of unit trust and PRS to their clients.
These flexibilities are offered to dealer representatives who have been licensed for more than five years and meet the competency requirement for the relevant regulated activity. To ensure effective supervision and oversight to mitigate against any potential misconduct, the additional regulated activities must be undertaken within the same broking firm or within its group of companies.
Overall, these measures would continue to ensure that dealer representatives adapt to the changing investment landscape within the capital market while availing diversified services for investors in other capital market products and services.
Introducing the Foreign Exempt Scheme Framework
As the demographics of Malaysian investors mature, it is essential that investors are empowered with more investment fund options to meet their diverse risk appetites and needs. This includes exposure to varied strategies and geographies. While onshore funds do cater to investor needs, the SC recognises the potential foreign funds may offer in widening options available to investors.
In this regard, a new framework for Foreign Exempt Schemes was introduced to widen access to foreign funds and provide more options for sophisticated investors. This would allow foreign fund operators that are a related corporation to an SC-licensed fund manager to offer their foreign funds to institutional investors and high-net-worth entities (HNWEs).
Ultimately, the framework will make available more choices and add greater diversity to onshore fund options in the domestic capital market.
FOSTERING AN INCLUSIVE AND COMPETITIVE DERIVATIVES MARKET
In its efforts to foster an inclusive and competitive derivatives market, the SC has undertaken various initiatives, which include the mini-United States Dollar and Chinese Renminbi currency futures contract (FCNH) and soybean oil future contract (FSOY). These initiatives are expected to improve investors’ accessibility to risk management tools and broaden the derivative product offerings.
Mini USD-CNH Currency Futures Contract
On 24 February 2023, the SC granted approval-in- principal for the introduction of the FCNH on Bursa Malaysia Derivatives (BMD). The contract is based on a licensing agreement with the Hong Kong Futures Exchange (HKFE) for the settlement price of Hong Kong’s USD/CNH currency contract.
The settlement price in Hong Kong is used as reference on expiry of the FCNH contract. However, all other elements in the FCNH contract specifications such as trading hours, contract size and limits are determined by BMD.
The introduction of FCNH accords Malaysia’s largely export and SME-centered economy the ability to deepen its participation in the local exchange-traded derivatives market. It also fulfils a tangible ‘real economy’ need to ensure exchange rate volatility among the currencies of the world’s two largest economies can be hedged effectively on a domestic platform. Furthermore, the contract would broaden product offerings on BMD beyond the current suite of commodities, financial and equity-based derivatives. The contract was launched on 11 December 2023.
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