Bursa Malaysia

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Supervision of Brokers

We have a structured and systematic monitoring mechanism in place for monitoring and supervising compliance by Participating Organisations and Trading Participants.

Supervision of Brokers

Bursa Malaysia closely supervises the business conduct of brokers and their representatives with the aim to achieve the following objectives:-

We regulate and supervise two groups of brokers:-

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:

One of the regulatory roles undertaken by Bursa Malaysia is to conduct inspections on the Participants that it regulates with a focus on financial and systemic risk to supervise and monitor the business conduct and compliance by the Participants with the provisions of relevant rules as well as internal policies and procedures of the intermediaries prescribed under the relevant rules in relation to their activities in the securities/derivatives markets operated by Bursa Malaysia, the depository activities relating to Bursa Depository and clearing and settlement activities of Bursa Securities and Derivatives Clearing .

The Intermediaries Supervision Department of the Participants Supervision Division is in turn charged with the responsibility to regulate, supervise and monitor the conduct of Participants in a balanced manner to ensure compliance with the Rules and Regulations of the Exchange, Clearing House, the Depository & other regulatory requirements and to safeguard and to ensure a fair and orderly market place through the conduct of on-site inspections. The on-site monitoring involves conducting inspections, which presently is carried out using a risk based approach (RBA). This approach adopts a framework that assesses the risk profiles of brokers using elements associated with risk information. This is further assisted by feedback received from Participants through the Self Examination Assessment (SEA) questionnaire. Collectively they will be used to develop the 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 and SEA not only enhances the effectiveness and efficiency of our monitoring, but assists the brokers in allowing them to take the necessary rectification/improvement measures through identification of risk areas using the RBA and SEA.

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 carry out customised advocay and engagement programs 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.