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© 2013 International Monetary Fund

March 2013

IMF Country Report No. 13/59

Malaysia: Publication of Financial Sector Assessment Program Documentation—Detailed Assessment of Implementation of IOSCO Objectives and Principles of Securities Regulation

This Detailed Assessment of Implementation of IOSCO Objectives and Principles of Securities Regulation in Malaysia was prepared by staff of the International Monetary Fund and the World Bank as background documentation for the periodic consultation with the member country. It is based on the information available following the FSAP discussions that ended on September 7, 2012, with the officials of Malaysia. Based on the information available at the time of these discussions, the assessment was completed in February 2013. The related ROSC was published together with the FSSA on February 28, 2013. The views expressed in this document are those of the staff team and do not necessarily reflect the views of the government of Malaysia or the Executive Board of the IMF.

The policy of publication of staff reports and other documents by the IMF allows for the deletion of market-sensitive information.

Copies of this report are available to the public from

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International Monetary Fund

Washington, D.C.

Front Matter Page

Financial Sector Assessment Program

Malaysia

IOSCO Objectives and Principles of Securities Regulation

Detailed Assessment of Implementation

February 2013

International Monetary Fund

Monetary and Capital Markets Department

The World Bank

Financial and Private Sector Development

Vice-Presidency

East Asia And Pacific Region Vice-Presidency

Contents

  • Glossary

  • I. Summary, Key Findings, and Recommendations

    • A. Introduction

    • B. Institutional and Market Structure—Overview

    • C. Preconditions for Effective Securities Regulation

    • D. Recommended Action Plan and Authorities’ Response

  • II. Detailed Assessment

  • Tables

  • 1. Summary Implementation of the IOSCO Principles—Detailed Assessments

  • 2. Recommended Action Plan to Improve Implementation of the IOSCO Principles

  • 3. Detailed Assessment of Implementation of the IOSCO Principles

Glossary

ABS

Asset-Backed Securities

AML

Anti-Money Laundering

AMLATFA

Anti-Money Laundering and Terrorist Financing Act (2001)

ANC

Adjusted Net Capital

AOB

Audit Oversight Board

ARAMIS

Automated Real time Alerts for Market Intelligent Supervision (Bursa Malaysia Market Surveillance System)

ARMADA

Automated Risk Management and Decision Making Analysis System

BAFIA

Banking and Financial Institutions Act 1989

BNM

Bank Negara Malaysia (Malaysian Central Bank)

BPA

Bond Pricing Agency

BTS

Bursa Trade Securities (Bursa Malaysia Securities Trading System)

Bursa Malaysia

Bursa Malaysia Berhad (Malaysian Exchange Holding Company)

CAR

Capital Adequacy Ratio

CBA

Central Bank of Malaysia Act 2009

CG Code

Malaysian Corporate Governance Code (for publicly listed companies)

CIS

Collective Investment Scheme

CMDF

Capital Markets Development Fund

CME

Chicago Mercantile Exchange

CMP1

Capital Market Masterplan 1 (2001–2010)

CMP2

Capital Market Masterplan 2 (2011–2020)

CMSA

Capital Markets & Services Act, 2007 (as amended)

CMSL

Capital Market Services License

CMSRL

Capital Markets Services Representative License

CP

Clearing Participant (at the derivatives clearing house)

CPO

Crude Palm Oil

CRA

Credit Rating Agency

CUTA

Corporate Unit Trust Adviser (sells unit trusts and provides financial planning)

ED

Executive Director (of the SC)

ETF

Exchange Traded Funds

ETP Bond

Electronic Trading Platform (for trading and reporting OTC bond transactions)

Exchange Group

The subsidiaries under Bursa Malaysia that operate the securities and derivatives exchanges, the securities and derivatives clearing services, depository services and bond trading and trade repository services: Bursa Malaysia Securities Berhad; Bursa Malaysia Derivatives Berhad; Bursa Malaysia Securities Clearing Sdn Bhd; Bursa Malaysia Derivatives, Clearing Sdn Bhd, Bursa Malaysia Depository Sdn Bhd; and Bursa Malaysia Bonds Sdn Bhd

FIMM

Federation of Investment Managers Malaysia

FMC

Fund Management Company (discretionary portfolio manager)

FRA

Financial Reporting Act, 1997

FRF

Financial Reporting Foundation

FRS

Financial Reporting Standards (Malaysian)

FSEC

Financial Stability Executive Committee

High Level Group

High Level Financial and Market Stability Group

JSG

Joint Surveillance Group

IAC

Independent Advice Circular

IASB

International Accounting Standards Board

IAS

International Accounting Standard

ICM

Islamic Capital Markets

IFAC

International Federation of Accountants

IFRS

International Financial Reporting Standards

IO

Investigating Officer

IOSCO

International Organization of Securities Commissions

ISA

International Standards on Auditing

ISQC

International Standards on Quality Control (auditors)

IUTA

Institutional Unit Trust Adviser (financial institution or other regulated entity authorized to sell CIS)

KLCI

Kuala Lumpur Composite Index

MASB

Malaysian Accounting Standards Board

MGS

Malaysian Government Securities

MIA

Malaysian Institute of Accountants

Minister

Minister of Finance

Ministry

Ministry of Finance

MMOU

IOSCO Multilateral Memorandum of Understanding Concerning Consultation and Cooperation and the Exchange of Information

OTC

Over-the-counter

PAC

Persons Acting in Concert (in a take-over bid context)

PIE

Public Interest Entity (these include companies listed on the stock exchange and institutions that are subject to supervision by Bank Negara Malaysia and the Securities Commission)

PID

Public Interest Director

PIDM

Perbadanan Insurans Deposit Malaysia (the Malaysian Deposit Insurer)

PIDM Act

Perbadanan Insurans Deposit Malaysia Act, 2011

PO

Participating Organization (member firm in Bursa Malaysia Securities)

RAC

Risk Adjusted Capital

REF

Registered Electronic Facility

REIT

Real Estate Investment Trust

Regulatory Guidance

Guidance on the Regulatory Role of Bursa Malaysia Berhad

SAC

Shariah Advisory Council (part of the SC)

SC

Securities Commission Malaysia

SCA

Securities Commission Act 1993

SICDA

Securities Industry (Central Depositories) Act, 1991

SIDC

Securities Industry Development Corporation

SIDREC

Securities Industry Dispute Resolution Centre

SIFI

Systemically Important Financial Institution

SMARTS

Securities Markets Automated Research Trading and Surveillance System

SRO

Self-Regulatory Organization

SROC

Systemic Risk Oversight Committee

Take-over Code

Malaysian Code on Take-overs and Mergers, 2010

TCP

Trade Clearing Participant (at the Securities Clearing House)

TP

Trading Participant (member firm at Bursa Malaysia Derivatives)

UTC

Unit Trust Consultant (individual selling unit trusts)

UTF

Unit Trust Fund (CIS)

UTMC

Unit Trust Management Company (operator of a CIS)

  • Collapse
  • Expand
Malaysia: Publication of Financial Sector Assessment Program Documentation—Detailed Assessment of Implementation of IOSCO Objectives and Principles of Securities Regulation
Author:
International Monetary Fund. Monetary and Capital Markets Department