Regulation

SURVEILLANCE MONITORING

Whilst trading exuberance and bullish sentiments were the defining characters in 2007, these market traits were reversed in 2008. Against a highly volatile and down trending market, market surveillance activities focused on being vigilant to ensure orderliness in the market place through the conduct of dynamic and timely regulatory measures.

While we continue to undertake real-time monitoring of securities and derivatives trading activities, the adoption of soft enforcement approach was in our view, effective in providing investor protection.

The sharp fall in crude oil and crude palm oil prices in the second half of 2008, affected oil & gas and plantation sectors. This consequently resulted in price correction and consolidation in these related securities. The volatility in CPO prices and KLCI movements during the year necessitated greater market vigilance against potential price manipulation and breach of speculative position limits in the futures market.

Whilst there were global concerns on short selling activities, this concern was well contained in Bursa Malaysia, given that naked short selling is prohibited, save for intraday short selling for Proprietary Day Traders. Bursa Malaysia only permits regulated short selling. Whilst we beefed up monitoring of instances of illegal short selling to a daily basis, we did not notice unusual trends of short selling. Nevertheless, we will continue to exercise vigilance to ensure the continued operation of a fair and orderly market.

In ensuring improved quality of listed issuers and investors' protection in the market place, we continued to be alert to potential breaches of the LR arising from our surveillance activities, complaints received from the public and reports from listed issuers' external auditors. Appropriate enforcement actions were taken for breaches of the LR.

We also monitor financially distressed companies vigilantly to ensure full and regular obligatory disclosures are made and regularization timeframes are adhered to. Distressed companies that fail to regularise their financial condition within the stipulated timeframe will be subject to delisting. In 2008, five companies were successfully regularised whilst another eight companies were delisted.