Bursa Malaysia Annual Report 2015

FROM THE BOARD OF DIRECTORS AND SENIOR MANAGEMENT

Bursa Malaysia •

Annual Report 2015

DRIVING THE SUSTAINABILITY AGENDA

We conducted a number of workshops and seminars to educate PLCs

and stakeholders on the merits of sustainable practices. Our engagement

sessions with both PLCs and institutional investors are targeted at creating

a realignment of practices and expectations in line with ESG best practices

and thereby creating a sustainability-based ecosystem. We will continue to

enhance and diversify our engagements with PLCs in 2016 and the years to

come. The launch of the Malaysian ESG Opportunity Fund by Valuecap Sdn

Bhd, a Government fund manager investing proprietary funds, benchmarked

against the FTSE4Good Bursa Malaysia Index is a positive sign that investor

interest in ESG is growing.

ENHANCING MARKET PARTICIPATION

Breadth and depth of market participation is key in maintaining the health of

the Exchange. To this end, we have continued our outreach activities that we

had started more than 10 years ago.

We continued to leverage on our established engagement channels including

the Invest Malaysia Programme and on our Beyond Malaysia initiatives in

Japan and Thailand to reach out to new stakeholders. Market participation

was further enhanced by an increase in investor participation in our structured

warrants (“SW”) and securities borrowing and lending (“SBL”).

The inclusion of the new market participants has made our Exchange a more

vibrant and diverse trading hub. In terms of institutional investors and market

participants, Bursa Malaysia reached out to 1,200 different institutions in 2015.

MARKET DEVELOPMENT INITIATIVES

Initiatives to enhance the market structure in 2015 were focused on increasing

trading vibrancy through a number of enhancements including:

• Promoting the issuance and trading of SW

• Promoting SBL to facilitate regulated short-selling (“RSS”) activities

In promoting SW, we offered various listing fee incentives, which resulted in

a rise in Index Warrants listings, increasing the diversity of SW available for

trading in Malaysia. Our efforts to diversify the SW market were rewarded

with greater trading activity in 2015 after market volatility made SW a product

popular with investors. Total new SW listings as at 31 December 2015 rose

18% to 644 from 546 in 2014. Meanwhile, total listings for Index Warrants

rose almost five-fold to 160 from 33 over the same period.

2015 also saw an increase in investor participation in our SBL market, with

outstanding loans valued at RM7.7 billion at the end of 2015 compared to

RM2.4 billion at the end of 2014. Consequently, RSS trading value, which

SBL facilitates, rose to RM9.5 billion in 2015, up more than three times from

RM2.7 billion in 2014.

MOVING FORWARD

We aim to launch our new Equities Margining (“EM”) framework in 2016

to bring it in line with Principle 6 on Margin of the Principles for Financial

Market Infrastructures (“PFMI”) developed by CPMI-IOSCO; the Committee

on Payments and Market Infrastructures (“CPMI”) and the International

Organisation of Securities Commissions (“IOSCO”). The EM framework

further safeguards our market infrastructure from disruptions due to defaults

from Trading Clearing Participants, and reinforces the robustness, integrity

and capability of our markets.

In addition, Bursa Malaysia plans to hold more engagement sessions on

sustainability with our PLCs following the launch of our reporting guide and

toolkits in 2015. While we have already started working with our PLCs to

help them better understand the overall aim of sustainability, our next step

will see us organising sessions aimed at report preparers, CEOs and Board

Members to help them better understand their roles in driving sustainability

in their organisations.

CEO’S MESSAGE

AND MANAGEMENT

DISCUSSION AND ANALYSIS

SECURITIES MARKET