Page 30 - SC Annual Report 2018 (ENG)

Securities
Commission
Malaysia
ANNUAL
REPORT
2018

Guidelines were also enhanced to allow issuers who Apart from the potential growth in market
meet specific criteria to issue a product highlight capitalisation due to the expansion on the types of
sheet instead of a full prospectus. The range of permissible ETFs, the introduction of L&I ETFs can
corporate bonds and sukuk that may be offered to stimulate an increase in ETF turnover due to their
retail investors has also been expanded beyond plain short investment holding period by active-trading
vanilla bonds to include subordinated debt as well as oriented investors.
perpetual bonds and sukuk issued by licensed banks.
Due to the complexity of the L&I ETFs, prospective
retail investors must meet certain pre-qualification
Enhancing disclosure requirements on criteria before they can invest in these products.
listed corporations Retail investors who do not meet the pre-qualification
criteria must undergo an e-learning module developed
Disclosure requirements were also revised for by Bursa Malaysia as well as a performance simulator
abridged prospectuses and the relevant circulars. provided by management companies of L&I ETFs
The Prospectus Guidelines and Equity Guidelines before they can invest in L&I ETFs.
amended in December 2018 serve to guide listed
corporations in making such documents more
reader-friendly. It also requires disclosures to focus Launch of new ETF
on meaningful information to help shareholders
make informed investment decisions. 2018 also saw the first foreign denominated ETF listed
on Bursa Malaysia which tracks the Dow Jones
Islamic Market US Titans 50 Index. This brings the
Allowing for specialised exchange total number of ETFs listed to 10. The Malaysian ETF
traded funds market continues to chart a positive trajectory with
market capitalisation reaching RM1.98 billion as at
On 26 November 2018, the Guidelines on Exchange- end 2018.
Traded Funds was enhanced to allow the issuance of
specialised Exchange Traded Funds (ETFs) such as
futures-based ETFs, leveraged and inverse (L&I) ETFs, Private retirement scheme as an avenue
synthetic ETFs, conventional physically-backed to meet retirement needs
commodity ETFs and smart beta ETFs.
As a vehicle to strengthen the country’s retirement
Physically-backed commodity ETFs typically track the pillars, the private retirement scheme (PRS) enables
price of a certain commodity such as gold and silver. members to better plan their well-being after
Smart beta ETFs track the performance of alternative retirement using PRS funds that best match their
rule-based indices – which are constructed differently needs. While there has been continued growth in
from typical market cap-weighted indices – taking the industry with total assets under management
into account various factors such as volatility and (AUM) reaching RM2.7 billion and 416,000 members,
dividends, with the aim of enhancing returns. there is still a need to raise the level of awareness
among Malaysians on their retirement needs. This
Leveraged ETFs aim to provide a multiple of the underscores the crucial role played by the Private
underlying index’s daily returns. Inverse ETFs, on the Pension Administrator Malaysia (PPA) in driving
other hand, are constructed with the aim of awareness and participation.
benefitting from a downward market. The revisions
allow up to a maximum factor of two times (2x) for To increase the reach and provide better services for
Leveraged ETFs, while Inverse ETFs are restricted to a investors, enhancements were made to the
maximum factor of one time (-1x). ecosystem with the digitisation of PRS by PPA,

20 | PART 1 »» ENABLING SHARED VALUE GROWTH

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