Risk Management Statement

In managing counterparty/settlement risks where Bursa Malaysia acts as the Clearing House for securities and derivatives trades, and to prevent any systemic impact on the market, Bursa Malaysia continues to employ a robust risk management process comprising:

• margin requirements for derivatives trades;
• risk-based minimum capital requirements on PO/Trading Clearing Participants (TCPs);
  
• managing credit exposures via price/trading/single client limits, cash flow requirements and provision of a bridging facility; and
• maintenance of the Clearing Guarantee Fund (CGF) and Derivatives Clearing Fund for securities and derivatives trading respectively.

Following the one day equities trading suspension on 3 July 2008, Bursa Malaysia is giving utmost priority to improving its business continuity and disaster recovery (DR) capability. Although mission critical systems at Bursa Malaysia's main site are configured with high availability, we acknowledge that multiple system failures, albeit rare, can happen. When they do, Bursa Malaysia must be able to recover within acceptable timeframes. In response to this situation, the business continuity management function has now been moved from the IT function to the CEO, signalling a change from a purely tactical to a more strategic perspective in business continuity. Bursa Malaysia also conducted an objective review of past system incidents, and analysed people, processes and technology with an objective to holistically address Bursa Malaysia's business continuity. As a result, enhanced disaster recovery processes, improved incident escalation procedures and recovery monitoring tools have been implemented. Enterprise-wide refresher training and rehearsals were conducted on business continuity plans to heighten awareness and preparedness. IT capability development and enhancements are in progress and will be a continuing process. Bursa Malaysia has conducted several DR tests since the 3 July incident to reaffirm our recovery capability for both the SCORE trading system and, importantly, the new BTS system prior to its launch.