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Securities Commission

An Int roduct ion



The Securities Commission (SC) wasestablished on 1 March 1993 under the

Securities Commission Act 1993. Itspurpose is spelt out in its Mission

Statement:

‘To promote and maintain fair



Prior to 1993, no single authority in Malaysiathat was entrusted with the responsibility ofregulating and systematically developing thecapital market. Supervisory powers wereshared between industry organisations like thestock exchange and government institutions.

To streamline the regulatory structure of the

capital markets, the Securities Commission(SC) was established under the SecuritiesCommission Act 1993, as a self-fundingstatutory body with investigative and

enforcement powers. It reports to the Ministerof Finance and its accounts are tabled inParliament annually. The SC’s many regulatoryfunctions include:

THE SECURITIES COM MISSION



• supervising exchanges, clearing housesand central depositories;

• encouraging self-regulation; and

• ensuring proper conduct of marketinstitutions and licensed persons.

Underpinning all these functions is the SC’sultimate responsibility of protecting theinvestor. Apart from discharging its regulatoryfunctions, the SC is also obliged by statute toencourage and promote the development ofthe securities and futures markets in Malaysia.

There are nine Members of the SC appointed

by the Minister of Finance, including anexecutive chairman, deputy chief executiveand seven private and governmentrepresentatives. Divisions, departments, and



MARKET SUPERVISIONDIVISION

This division carries out SC’s oversightfunctions of the market and intermediarieslicensed by the SC, reviews primary marketregulations and listing requirements of

exchanges, as well as compliance withaccounting standards by public-listedcorporations. There are five departmentswithin this division.

1. Intermediary Supervision

Undertakes supervisory functions and

examinations on market institutions,brokers, dealers and other licensedintermediaries.



guidelines and rules on the issuance ofsecurities and corporate exercises; reviewsproposals by the stock exchanges in

relation to their listing rules; and tracksthe SC’s DBR programme.

5. Financial Report ing Surveillance and

Compliance

Facilitates the financial reportingsurveillance and enforcementprogrammes of the SC; examines annualaudited accounts and interim reports oflisted corporations for compliancewith approved account ing standardsand financial reporting requirements;

attends to queries pertaining to financialreporting and accounting treatments andmonitors submission of audited annualaccounts of listed corporations.



3. Prosecut ion

Conducts prosecution of securities

offences upon obtaining consent fromthe Public Prosecutor, and institutes civilenforcement actions against breaches oftrading offences which include insider

trading, market manipulation andoffences relating to fund-raising exercises.

MARKET POLICY ANDDEVELOPMENT DIVISION

This division is entrusted with a broad range

of responsibilities in relation to regulatorypolicy and capital market development. Theseresponsibilities range from legal andregulatory reform to development of



especially among listed companies,enhancing the legal and regulatoryframework for the clearing and

settlement of securities and providingsupport to other departments within theSC on a broad range of issues involvingboth the primary and secondary market.

The department additionally providesinput to the government on wider issuesaffecting the capital market; involves itselfin broader national policy formulation, forexample, in relation to Malaysia’s marketaccess commitments under the GeneralAgreement on Trade in Services (GATS)and the ASEAN Framework Agreement onServices (AFAS); represents the SC at

international forums such as the WorldTrade Organisation (WTO), Asia PacificEconomic Co-operation (APEC) andAssociation of South East Asian Nations



Securities Dealing and AutomatedQuotation (MESDAQ). The departmentalso oversees the introduction of new

instruments such as call warrants andstructured derivatives; initiates andfacilitates development of new forms ofcollective investment schemes as well as

makes policy recommendations topromote the growth of the fundmanagement industry; facilitatesdevelopment and promotion of thefinancial planning industry and theventure capital industry, includingcertifying venture capital companies orfunds applying for tax incentives.

4. Islamic Capital Market Unit

Initiates and facilitates the developmentof the Islamic capital market by



for trading, clearance and settlement, andinformation dissemination are fit andproper and meet industry standards of

security and reliability. It also plans,develops, implements and maintainsbusiness application systems andcomputer facilities to support SC’sstrategic objectives and operations, andprovides support services to the users ofSC’s IT systems.

6. Securit ies Indust ry DevelopmentCent re (SIDC)

Established in July 1994, the SIDCpromotes training, education andresearch in the development of the capitalmarket. The SIDC achieves its objectivesand functions through six units, namelythe Training and Education Unit



the technical competencies and enhancethe level of awareness of industrychanges among Bumiputera employees of

stockbroking firms.

Licensing Examinations – The SIDCconducts examinations for those seekingto be licensed under the SecuritiesIndustry Act 1983 and Futures IndustryAct 1993. It also develops licensingexamination study guides and CD-ROMsto assist candidates in their preparations.

Investor Education and InformationResource – The SIDC publisheseducational material and provides general

information on the capital market. Aquarterly bulletin informs marketintermediaries and institutions aboutcurrent developments and activities of the



2. Take-overs and Mergers

Regulates take-over and merger

transactions under the Malaysian Code onTake-overs and Mergers 1998.

3. Trusts and Investment Management

Oversees and facilitates the developmentof unit trusts and other collectiveinvestment schemes in an orderly manner;reviews application and proposalssubmitted by the industry; compilesstatistics pertaining to the industry;conducts review, registration andlodgement of prospectuses and deeds

pertaining to unit trusts; and regulatesthe unit trusts and other collectiveinvestment schemes to ensure compliancewith the guidelines and securities laws.



involvement with international organisations,as well as major projects related tointernational financial regulation. This division

also handles corporate relations matters,including interfaces with the public and mediaand upholding the SC’s image.

1. Research and St rategy

Conducts research and provides strategicand policy advice on regulatory anddevelopmental issues relating to theMalaysian capital market; conductsresearch and analysis of developments ininternational capital markets that have abearing on the Malaysian capital market;

responsible for the co-ordination of workon the Capital Market Masterplan;provides timely and analytical input andreports on various issues that require



economic conditions, with a view toassessing their implications for theMalaysian capital market; this involves,

among other things, analysing past andfuture trends in financial market activityand monitoring developments in theglobal economy; where relevant, thedepartment makes use of a range ofquantitative techniques to support andenhance its analytical and researchfunctions.

3. Corporate Affairs

Provides responses to the public andmedia queries on SC related matters;

plans and manages corporate events, forexample, dialogue sessions, exhibitions,dinners and lunches; handles visitarrangements for visiting foreign guests;



5. Internat ional Affairs

Represents the SC’s interests in

international organisations and forums byparticipating in international committeesor working groups; provides technicalassistance in relation to the SC’sinternational work; encourages theadoption of high regulatory standards;promotes international co-operation bynegotiating information-sharingarrangements and co-operativeframeworks for enforcement, technicaland developmental matters; servesas the central liaison and co-ordinationpoint for all international regulatory

matters.

CORPORATE RESOURCES



2. Human Resources

Supports overall employee activities of the

SC through the implementation ofpolicies and procedures on humanresources planning, organisationdevelopment, recruitment andselection, performance management,employee relations, compensation andrewards, career planning and successionmanagement, and implementation ofactivities in facilitating the development

of corporate values.

3. Propert y and Facilit ies Management

Provides facilities management servicesfor the maintenance and efficientoperations of the office building, rentedpremises, all other properties and assets.



OFFICE OF THE CHAIRMAN

1. Internal Audit Department

Placed under the office of the Chairman,this department is responsible forinspecting systems and activities in all

divisions, departments and units of the SCto ensure reliability and integrity ofinformation, compliance with laws,regulations, plans, policies and

procedures; and ensures assets aresafeguarded. It also functions to ensurethe economy and efficiency of SCoperations and systems; and

accomplishment of established activities.



Equit y Futures

Market Instit utions

Kuala

LumpurStock Exchange

(KLSE)

Securities ClearingAutomated Network

Services Sdn Bhd(SCANS)

MalaysianCentral

Depository Sdn Bhd(MCD)

Malaysian Exchange ofSecurities Dealing &

Automated QuotationBhd (M ESDAQ)

MalaysiaDerivatives

Clearing House Berhad(MDCH)

SC

Dealer (Share Broker) Investment Adviser

Market Int ermediaries

Fund M anager/ Unit Trust * Futures Broker Futures Trading Adviser Futu res Fund Manager/ Unit Trust *

Dealer’s Representative Investmen t Representat ive Fund M anager’sRepresentative/ Unit Trust *

Futures Broker’sRepresentative

Futures TradingAdviser’s Representative

REGULATORY JURISDICTION OF THE SECURITIES COM MISSION

* Unit trust management companies and representatives are exempted f rom the licensing requirements under the

Securities Industry Act 1983 and Futures Industry Act 1983 and Futures Industry Act 1993.

Malaysia Deri vativesExchange Bhd

(MDEX)

Futu res Fund Manager’sRepresentative/ Unit Trust *



MEMBERS OF THESECURITIES COM MISSION

CHAIRMANINTERNAL AUDIT

DEPARTMENT

DEPUTY

CHIEF EXECUTIVE

MARKETSUPERVISION

DIVISION

ENFORCEMENTDIVISION

CORPORATERESOURCES

DIVISION

ISSUES &INVESTMENT

DIVISION

MARKET POLICY &DEVELOPMENT

DIVISION

STRATEGY,

RESEARCH &CORPORATE AFFAIRS

DIVISION

Market

SurveillanceDepartment

IntermediarySupervisionDepartment

LicensingDepartment

ProsecutionDepartment

ComplaintsUnit

Primary MarketRegulationDepartment

Financial ReportingSurvei llance &

ComplianceDepartment

Securities IssuesDepartment

Take-Overs &Mergers

Department

Tru sts &Investment

ManagementDepartment

Asset Valuat ionAudit

Department

Law Reform &

Regulatory PolicyDepartment

ProductDevelopmentDepartment

InformationTechnologyDepartment

Securit ies IndustryDevelopment

Centre

Research &

StrategyDepartment

EconomicAnalysis

Department

CorporateAffairs

Department

InternationalAffairs

Department

ORGANISATION STRUCTURE

Investigation

Department

Finance &

AdministrationDepartment

HumanResources

Department

Propert y & Facilit iesManagementDepartment

SecurityDepartment

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