Bursa Malaysia Annual Report 2014

GOVERNANCE

Bursa Malaysia

•

Annual Report 2014

We will continue to review and enhance these tools and

mechanisms to address new and increasingly sophisticated cyber

threats.

iii. Talent Management Risk

In 2014, we undertook several initiatives to ensure accelerated

growth in behavioural, technical and functional competencies

with an emphasis on increasing our employee value proposition

and motivating our employees. These initiatives included:

• Embarking on a Senior Leadership Development Programme

to harness leadership capability and groom future leaders

for mission critical positions;

• Introducing the Individual Development Plan/Programme

to equip our employees with the necessary behavioural,

technical and functional competencies to increase

the capacity and productivity of the talent within the

organisation;

• Performance improvement planning to help identified

employees attain the desired level of performance and

behaviour; and

• A Bursa Malaysia-wide team building programme for all

employees to internalise our core values, instil behavioural

values and develop a strong commitment towards making

Bursa Malaysia a High Performance Organisation.

iv. Competition Risk

In order to maintain Bursa Malaysia’s competitive position, we

have established a Blueprint to guide us in our journey to become

Asia’s Leading Marketplace. We have identified various initiatives

in our 2014-2016 strategy to enable Bursa Malaysia to:

• Stay relevant in a more competitive environment;

• Leverage our strength and infrastructure to facilitate capital

market development and capture new opportunities; and

• Tap regional growth through alliances and collaborations.

Counterparty Credit Risk

Bursa Malaysia has set in place robust risk management

processes and procedures to manage counterparty/settlement

risks and prevent any systemic impact on the market. In the

area of managing counterparty/settlement risks, Bursa Malaysia

Securities Clearing Sdn Bhd and Bursa Malaysia Derivatives

Clearing Berhad act as the clearing houses for equities and

derivatives trades, respectively. These processes and procedures

of the clearing houses are in line with the Principles for Financial

Market Infrastructures issued by the Committee on Payment and

STATEMENT ON INTERNAL CONTROL AND RISK MANAGEMENT

Settlement Systems, Technical Committee of the International

Organisation of Securities Commissions, which include the

following:

• Daily mark-to-market positions, initial and variation margin

requirements and collateral management;

• Monitoring capital requirements and adequacy;

• Managing credit exposures via price, trading, single client,

equity and position limits;

• Monitoring monthly the financial health of the clearing

settlement banks via the risk weighted capital ratio and

credit ratings. The concentration risk is also monitored

based on the Trading Clearing Participant’s (TCP) or Clearing

Participant’s (CP) total trade settlements with the relevant

clearing settlement banks;

• Maintenance and stress-testing the adequacy of the Clearing

Guarantee Fund (CGF) and the Clearing Fund for equities and

derivatives trading, respectively; and

• Conducting annual default drill exercises by stimulating

default scenarios to test the effectiveness of the Default

Management Procedures.

In 2014, there were no settlement defaults by any TCP or CP and

neither the CGF nor the Clearing Fund was called upon.

We will continue to review and enhance the above processes and

procedures in accordance with best practices and standards to

ensure they are viable and robust.

vi. Market Regulation Risk

The discharge of our regulatory functions ensures that our

market continues to operate in an orderly and fair manner with

sound investor protection. In regulating the market we adopt a

five-pronged approach comprising development, supervision,

engagement, enforcement and education. We also adopt a risk-

based approach in regulating the market and seek to ensure

that the key risk areas are identified, monitored and managed

effectively.

7. Performance Measurement

Key Performance Indicators, which are based on the Corporate and

Divisional Balanced Scorecard approach, are used to track and

measure staff performance.

b. Yearly employee engagement and customer satisfaction surveys are

conducted to gain feedback on the effectiveness and efficiency of

stakeholder engagement for continuous improvement.