Bursa Malaysia Annual Report 2014

TO OUR STAKEHOLDERS

Bursa Malaysia

•

Annual Report 2014

We also embarked on several initiatives to enhance the management of cyber

threats, namely:

Issuing guidance notes to brokers on managing the risks of cybercrime and on

enhancing the resilience of their networks

b. Developing an inspection programme to assess and review brokers’ measures

to combat cybercrime/cyberattacks

Conducting continuous engagements and advocacy efforts to increase

awareness of these matters

ENFORCEMENT ACTIVITIES

Enforcement of the Listing Requirements and Business Rules is necessary to

secure market integrity and uphold investor protection. In initiating enforcement

proceedings, due process is undertaken to give defaulting parties the opportunity

to explain their actions prior to determination of breach and appropriate sanctions.

Where a breach is determined, sanctions are imposed appropriate to the nature,

circumstances and severity of the transgression, taking into account the character

and background of the defaulting party and any mitigating or aggravating factors.

Possible sanctions include public/private reprimands, fines, suspension or striking

off. Our focus is always on ensuring an adequate level of investor protection and

deterring violations through enforcement actions.

In 2014,a total of 78 enforcement actions (reprimand and above) were taken against

21 listed issuers and 38 directors of eight listed issuers for various breaches of the

Listing Requirements. As part of enforcement, we also issued directives against

the defaulting parties including, where relevant, directives for directors to undergo

mandatory training as well as for errant listed issuers to conduct limited reviews

on quarterly reports.

As a result of our regulatory and enforcement activities, we noted a declining trend

of more than 60% in the number of delays in submission of financial statements

and in the deviation of financial figures reported (i.e. profit and loss) between

audited and unaudited accounts since 2008.

A total of 44 enforcement actions (reprimand and above) were taken against

brokers, their key personnel and dealer representatives for various breaches of

the Business Rules, which included market offences or trading related breaches

(for which enforcement actions were taken against 14 Dealer’s Representatives

(DRs). In an effort to improve the conduct of errant DRs, we also issued directives

for mandatory training requirements when misconduct showed ignorance or lack

of understanding of the rules and requirements, similar to the approach under the

Listing Requirements.

REGULATORY STATEMENT

UTILISATION OF FINES AND TRANSFER FEES

In 2014, the functions of the Capital Market Education & Integrity Fund (CMEIF)

Committee were subsumed under the Regulatory and Conflicts Committee (RACC).

The CMEIF consists of all the fines imposed by Bursa Malaysia and its subsidiaries

and transfer fees collected, and does not form part of Bursa Malaysia’s revenue.

The CMEIF may only be utilised for, among others, education/advocacy programmes

with the aim to elevate standards of CG, disclosure and business conduct as well

as matters relating to the capital markets, including investing knowledge for our

market participants and investors.

In 2014, 62 advocacy programmes were conducted for Directors of listed issuers,

Chief Financial Officers, Chief Risk Officers, internal auditors, company secretaries

and brokers. These programmes were well-attended by 3,389 participants

representing 942 PLCs and 49 brokers (equities and derivatives).

“We see regulatory strength as a strong

value proposition for our markets”

• 99.5% timely submission of financial

statements

• Improved scores in ASEAN CG

Scorecard ratings from 62.3 in 2012 to

71.7 in 2013

• Analysis of Corporate Governance

Disclosures in annual reports showed

high level of adherence to the Listing

Requirements

• Efficient capital raising for secondary

fund raising- comparable with other

markets

• Trading remained fair and orderly

• No industry-wide breaches of our

business rules

• Our brokers’ Capital Adequacy

Ratios are well above the minimum

requirement