Bursa Malaysia Annual Report 2015

TO OUR SHAREHOLDERS

Bursa Malaysia •

Annual Report 2015

MARKETPLACE REPORT:

FAIR AND ORDERLY MARKET

Our focus in the area of capital raising is to further enhance the effectiveness

of our capital raising framework by, among others, improving the efficiency

and cost-effectiveness of our processes. Arising from the review of the

ACE Market framework in 2014, the ACE Market LR were amended with

effect from 13 July 2015. These amendments included among others, the

liberalisation of the sponsorship framework and moratorium requirements,

enhanced clarity on admission criteria and putting in place an avenue for

guidance to be provided to prospective applicants through the requirements

for pre-Initial Public Offering (”IPO”) consultation. Response to the

amendments has been positive, with increased requests from Sponsors

and potential applicants for pre-IPO consultations as well as an increase

in the number of new ACE listings. We believe the aforesaid changes to

the ACE Framework have enhanced its attractiveness and competitiveness.

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 price discovery, which are key to

building and maintaining market confidence. Trading in both the equities

and derivatives markets on the whole have been fair and orderly. We

vigilantly monitored the trading activities and where trading concerns

arose, we undertook appropriate regulatory measures to address the

trading concerns.

For the purpose of maintaining orderly trading, regulatory measures

undertaken include the issuance of queries to intermediaries on suspicious

trading activities, issuance of Unusual Market Activity queries to listed

issuers for disclosure, issuance of Market Alerts for investors to exercise

caution and make informed investment decisions and referral of cases for

investigation.We

also provided guidance to intermediaries on strengthening

their internal trade monitoring and supervision systems to ensure any form

of disruptive trading practices are detected and acted upon promptly to

safeguard the integrity and orderliness of trading.

In undertaking corporate surveillance, our primary focus is to detect and,

where possible, pre-empt corporate irregularities or transgressions which

may give rise to, among others, breaches of the LR. To this end, we continued

to improve our detection capabilities and conducted thematic studies to

identify areas of concern and addressed them as necessary. In 2015, we

monitored the financial condition and corporate developments of listed

issuers, and concerns noted were addressed through effective regulatory

actions.Arising from our detections, we undertook pre-emptive actions where

possible, as well as made referral of breaches of the LR for investigation

whilst breaches of the law were referred to the relevant authorities.

QUALITY AND TIMELY DISCLOSURES

Whilst our efforts to enhance the quality of disclosure have improved the

standard of disclosures in our market, the dynamic nature of the market and

the increasing sophistication of investors who expect more transparency

and better quality of information require us to remain committed to

continue improving the quality of disclosures among our listed issuers.

Accordingly, our regulatory efforts in this area were focused on enhancing

and developing our disclosure framework, ensuring effectiveness of our

supervisory approach and inculcating a strong culture of disclosure among

listed issuers through education and advocacy programmes.

In 2015, in tandem with our enhanced supervisory approach in dealing with

advisers and grading of circulars submitted for our review, we conducted

a series of one-on-one sessions with advisers to highlight our enhanced

regulatory approach and common disclosure areas which could be

further improved. This approach is to ensure that advisers are effective in

discharging their roles and responsibilities in providing quality disclosures

in circulars for informed decision-making by shareholders.

We are cognisant of the growing importance of non-financial disclosures,

in particular information which provides an overview of the performance

of a business in the prior year as well as insights into its future prospects

to investors. We believe that the need for such information can be

addressed through disclosure of Management Discussion and Analysis

(“MD&A”). Given the importance of MD&A, we have proposed to mandate

the disclosure of a statement containing the MD&A of the listed issuers’

businesses, operations and financial performance in their annual reports

vide our public consultation paper dated 16 October 2015.

We also continue with our regulatory approach of inculcating a stronger

disclosure culture through advocacy programmes for identified

stakeholders. As we intend to mandate the requirements for MD&A in

listed issuers’ annual reports, we conducted Advocacy Sessions on MD&A

for Chief Executive Officers (“CEOs”) and Chief Financial Officers (“CFOs”)

of listed issuers in 2015 to enhance awareness and promote high quality

MD&A disclosure as part of our efforts to prepare listed issuers for the

proposed mandatory disclosures going forward.