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Our Material Factors

We strive to become the leading market for sustainability in ASEAN and an exemplary PLC that is not only benchmarked to international standards and frameworks but with peer exchanges as well.

Market Integrity and Stability

Market Integrity and Stability

Being one of the largest bourses in ASEAN and a key powerhouse of the domestic economy, Bursa Malaysia has continued to place strong emphasis on upholding the integrity and stability of the Malaysian capital market. As the Asian financial crisis took its toll on investor confidence in 1997, many reform measures have since been undertaken to rectify market order and grow our attractiveness as the preferred market for investment and fund raising in the region.

The Importance of Market Integrity [GRI103-1]

The marketplace is dynamic, and as such it is essential that we take note of trajectories and changes in the global landscape to enable effective regulation. In doing so, we are also conscious of the need to adopt a balanced approach to regulation, to ensure adequate investor protection whilst facilitating growth and development in the capital market so that it remains competitive. In this regard, the long-term integrity and sustainability of the capital market is a material matter to us across all our operations.

Our consistent engagement with regulatory bodies, investor groups, listed issuers, intermediaries and other relevant parties ensure that we take the needs of all stakeholders into account when effecting regulatory strategy.

Our Approach to Market Integrity and Stability [GRI103-2, 3]

Bursa Malaysia operates a well regulated market supported by adequate levels of investor protection. We are governed by Sections 11 and 21 of the Capital Markets and Services Act (CMSA) 2007. Our regulatory principles and policies are set out on our corporate website.

Our Regulation Division is responsible for the management of market integrity and stability. The effectiveness of our management approach is evaluated on a periodic basis through the review of our performance against scorecard measurements.

To manage our approach to market integrity and stability we have in place our internal Regulatory Plan as well as our Regulation Scorecard which contains the Key Performance Indicators (KPIs) for our Regulatory Division. This Scorecard is also cascaded down to the relevant departments within the Division through specific Regulation Departmental Scorecards. Key items in the Regulation Scorecard include:

  1. Ensure maintenance of sound prudential requirements and high standards of business conduct in order to maintain a Fair and Orderly Market to ensure there is no industry wide breach.
  2. Enhance market quality through improvement of the eco-system & governance framework.
  3. Safeguard investor protection and market confidence: Minimise incidences that significantly affect investor confidence arising from market manipulation.

Measurable targets and outcomes are monitored and determined through our Regulation Scorecard and our Regulation Departmental Scorecards. Our Key Indicators Dashboard also provides an overview of the regulatory state of the market including measurements such as the Asian Corporate Governance Association (ACGA) Ranking, the ASEAN Corporate Governance Scorecard, and the Assessment on CG Disclosures.

Robust Regulatory Framework [GRI419-1]

Our regulatory framework is assessed regularly and is benchmarked against international norms of market regulation. There is a prevalent culture of compliance amongst our listed issuers and intermediaries, with high level of adherence to our rules. Self-regulation and implementation of quality practices have also continued to strengthen over the years, as discussed in ‘Governance of Markets’. All these efforts contribute towards the maintenance of market integrity and stability.

Our comprehensive regulatory framework was put to test during the period of significant volatility in 2015 and in the first half of 2016. Our regulatory framework held up well during this period, as evidenced by the fair and orderly manner in which the market operated. This was a result of the strong investor protection safeguards, high standard of business conduct and CG demonstrated by our listed issuers and intermediaries.

During 2016 there were no instances identified of any noncompliance with laws and/or regulations in the social and economic area.

Governance of Markets

For the past decade, rankings such as the ACGA CG Watch Surveys have shown consistent improvement for Bursa Malaysia. 2016 was an exception to this trend, however, where there was a minor decline in the overall score due to public governance matters.

Asian Corporate Governance Association (ACGA)Corporate Governance Watch: ranking
2016: 6th place / Score 56
2014: 4th place / Score 58
2012: 4th place / Score 55

Minority Shareholder Watchdog Group (MSWG) ASEAN CG Scorecard for Top 100 Listed issuers of Malaysia
2016: Score 88.49
2015: Score 80.41
2014: Score 76.82

Our efforts have resulted in overall success, as demonstrated by the high standards of CG, and compliance amongst our listed issuers and intermediaries, as well as our approach to enforcement and incentivising selfregulation combined with our framework of no more rules than necessary. We will continue to monitor shifts in the global and regional landscape to ensure a contemporary and balanced approach to regulation, to maintain the attractiveness of the Malaysian capital market as a stable and competitive domain.

Strong CG of Listed Issuers

Our annual CG Analysis Report for 2016 showed marked improvement in the CG disclosure of our listed issuers since 2014.

Market Capitalisation 2014 2015 2016 Change
Large (>RM1 billion) 64.3% 72% 72% +7.7%
Medium (RM500 million to RM1 billion) 60.1% 66.18% 66.6% +6.5%
Small (< RM500 million) 59.7% 62.18% 67.7% +8%

Strong Levels of Compliance by Listed Issuers

Indicators of strong levels of compliance to our Listing Requirements and of quality disclosures by our capital market include the growing adherence to timelines for submission of periodic financial information, combined with the low level of queries issued in response by Bursa Malaysia regarding these announcements.

Incentivising Compliance and Self-Regulation

To facilitate the ease of doing business we have taken dedicated steps in incentivising compliance and selfregulation in both our listed issuers and intermediaries. Our ‘Green Lane Policy’ (GLP) facilitates the conduct of business activities by allowing those who have met the pre-approved criteria of high standard of disclosure and self-regulation to commence activities with only a notification to Bursa Malaysia. Activities covered by the GLP include opening a new branch, commencement of proprietary trading, or changing business address amongst others.

We first rolled out our GLP to Equity brokers in May 2013, followed by listed issuers in relation to certain types of applications in September 2015, and Derivative brokers in June 2016.

The GLP has significantly shortened the time-to-market for the brokers:

This increased efficiency linked to the GLP encourages both listed issuers and intermediaries to enhance their self-regulation and compliance in order to meet the high standards of the GLP criteria and benefit from this incentive.

Strong Enforcement

To ensure the stability and integrity of our markets, enforcement action is taken against breaches of both our Listing Rules and Business Rules. During 2016 the following actions were taken:

As a result of our enforcement actions we have noted a declining trend in some of the breaches of our rules, in particular relating to the financial reporting obligations by ourlisted issuers. This is also reflected in the ACGA CG Watch 2016 report which shows improvement in enforcement actions taken in Malaysian markets from a score of 47% in 2014 to a score of 54% in 2016.