Supervision of Brokers
We have a structured and systematic monitoring mechanism in place for monitoring and supervising compliance by Participating Organisations and Trading Participants.
Bursa Malaysia closely supervises the business conduct of brokers and their representatives with the aim to achieve the following objectives:-
- To ensure secure, fair and orderly trading environment through effective monitoring and supervision
- To ensure adequate protection of investors who engage the services of the brokers for trading
- To effectively monitor the activities of brokers to ensure that brokers are providing secure and trusted services to investors
We regulate and supervise two groups of brokers:-
- stock brokers (stockbroking companies) i.e. Participating Organisations
- futures brokers (futures broking companies) i.e. Trading Participants
As a frontline regulator, we monitor and supervise the stockbroking and futures broking companies in respect of the Bursa Malaysia Rules, directives and circulars.
Supervision of brokers is carried out in the following manner:
- Inspection - conduct scheduled and/or ad-hoc inspection visits to the office premises of brokers with the focus to assess their degree of compliance, level of market conduct and adequacy of clients' assets protection
- Compliance Monitoring – ensure timely reporting by brokers, conduct analytical review on their periodic submissions and raise alert when the needs arise
- Financial Monitoring - monitor the brokers' financial condition and ensure their compliance with minimum financial requirements from various aspects
- Registration – ensure all licensed brokers, their key staff and licensed personnel are duly registered with Bursa Malaysia for monitoring purpose
- Others - Evaluate and process applications received from brokers that require prior consent of Bursa Malaysia before implementation, which among others, include applications for new business activity and establishment of new office premises
We employ a risk-based approach (RBA) in conducting supervisory activities. This approach adopts a framework that assesses the risk profiles of brokers using elements associated with risk information. This in turn will be used to develop supervision plans that prioritise the scope and frequency of the assignments as well as the types of exercise to be conducted on these brokers. The assessment and risk profiles are developed and updated on a regular basis. The implementation of RBA not only enhances the effectiveness and efficiency of Bursa Malaysia's monitoring, but assists the brokers in allowing them to take the necessary rectification/improvement measures through identification of risk areas using the RBA.
As part of the continuous obligations in contributing towards a fair and orderly market, all brokers are required to report their activities and status of various areas of concern to Bursa Malaysia on a periodic basis e.g. brokers are required to declare through regular submissions on whether monies received from investors are properly safeguarded by being deposited in designated trust/segregated accounts. Verification of the same will be conducted by Bursa Malaysia either during the inspection visit or off-site compliance monitoring.
Enforcement / disciplinary actions have been taken against brokers for breaches of Bursa Malaysia Rules, directives and circular.
Further, cases of non-compliance with the Capital Markets & Services Act and the Securities Industry (Central Depositories) Act by brokers and their representatives are forwarded to the Securities Commission for further action.
We also conduct regular briefing sessions and hold conferences and dialogues with brokers to strengthen their compliance culture and enhance their business conduct in order to achieve the objective of self-regulation in the long term.
We strive to deliver a high level of service and maintain effective working relationship with brokers. In order to ensure that enquiries can be channelled promptly and to the right personnel, we have dedicated personnel for specific brokers groups to assist them in enquiries relating to the Bursa Malaysia Rules. This is essential to encourage and promote greater compliance with the Bursa Malaysia Rules.