Bursa Malaysia Annual Report 2014

TO OUR STAKEHOLDERS

Bursa Malaysia

•

Annual Report 2014

“Building on our Regulatory Strengths for Sustainable Growth”

We have an obligation to ensure that our markets operate in a fair and orderly manner. To this

end, we have established sound regulatory foundations for our markets, achieving favourable

outcomes in key areas such as disclosure, corporate governance, and standards of business

conduct. There is high level of compliance with our rules. In 2014, we focused on enhancing

market quality and facilitating sustainable growth of the markets we operate.

REGULATORY STATEMENT

DEVELOPMENT OF THE RULES FRAMEWORK

Rules are essential for market regulation and development. We continuously

review our rules to ensure that they are balanced, current, effective, consistent

and facilitative of market development, providing a clear, comprehensive and

accessible set of rules to regulate the market and its participants. In 2014, the key

developments of our rules framework included:

Changes to enhance the regulatory framework and market efficiency

(including changes to the Rules of Bursa Malaysia Derivatives in relation

to amendments to Contracts, Position Limits and Specified Exchanges and

changes to the Rules of Bursa Malaysia Depository in relation to the closure of

dormant accounts);

b. Changes to facilitate the offer of new or enhanced products or services

(including changes to the Rules of Bursa Malaysia Derivatives in relation to

the introduction of the USD Refined, Bleached and Deodorised (RBD) Palm

Olein Futures (FPOL) Contract and the changes to the contract specifications

of the 5-Year Malaysian Government Securities Futures (FMG5) Contract); and

Changes to achieve compliance or consistency with changes made during the

year to the guidelines of the Securities Commission (including amendments to

the Securities Commission’s outsourcing requirements).

In 2014, we issued four public consultation papers on the following initiatives to

seek public feedback on proposed rule changes:

Review of Main Market Listing Requirements e.g. related party transactions,

regularisation plans for financially distressed listed issuers;

b. Closure of dormant accounts in respect of the Rules of Bursa Malaysia

Depository;

Non face-to-face verification for account opening in respect of the Rules of

Bursa Malaysia Depository; and

d. Review of the ACE Market Listing Requirements to enhance the attractiveness

of the ACE Market.

EFFICIENT CAPITAL RAISING FRAMEWORK

We are focused on enhancing the effectiveness of our capital raising framework by,

among others, improving the efficiency and cost-effectiveness of our processes.

We continue to ensure that our time-to-market for secondary fundraising is

competitive and on par with other markets in the region. Capital raising through the

secondary issuance of securities remained active in 2014, with total funds raised

increasing from RM14.34 billion in 2013 to RM18.38 billion in 2014.

In 2014, Bursa Malaysia embarked on a review of the ACE Market framework to

enhance its competitiveness, with the objective to clarify the admission criteria

and liberalise certain requirements on sponsorship and moratorium on sponsors.

Following industry engagement to gather feedback, a consultation paper containing

various proposals to enhance the ACE Market framework was issued on 18

November 2014 for public comment. The proposals, once approved, are expected

to be issued in 2015.

SURVEILLANCE OF THE MARKET AND OF LISTED ISSUERS

Our main focus in the area of market surveillance is to detect and deter abusive

trading practices and facilitate genuine price discovery, which are key to building

and maintaining market confidence. Trading in the securities and derivatives

markets remained dynamic in 2014, with necessary measures taken to ensure

they remained fair and orderly.We monitored vigilantly trading activities and utilised

the various regulatory tools at our disposal to address trading concerns, including

suspected market manipulation, and safeguard the orderliness and fairness of

dealings. We also engaged market participants to address instances of trading

concerns. Possible violations were referred for investigation and enforcement. We

also issued unusual market activity queries to listed issuers to obtain disclosures

that could explain unusual movements in price and/or volume.

Additionally, we engaged brokers to enhance their surveillance of trading activities

that take place in their respective broking houses. To this end, during our inspection

of brokers, we reviewed the effectiveness of front office monitoring implemented

by brokers and provided recommendations to further improve the effectiveness of

their monitoring capabilities, including, where possible, recommendations to invest

in electronic monitoring systems. We continued to provide guidance to brokers in

establishing surveillance monitoring functions by recommending key indicators

and alerts that should be present in their system.