Page 7 - SC Annual Report 2018 (ENG)

Securities
Commission
Malaysia
ANNUAL
REPORT
2018

In 2018, the SC focused on building an enabling Raising standards of governance and
ecosystem which provides accessibility while ensuring conduct
investor protection and intermediation efficiency. Our
priorities therefore centred on facilitating inclusive Efforts to promote growth were complemented by
and sustainable growth, raising standards of measures to strengthen discipline among market
governance and conduct, as well as safeguarding participants. In particular, cultivating a strong and
integrity and resilience. internally-driven culture of corporate governance
remained an important pursuit.

Facilitating inclusive and sustainable The SC’s efforts culminated in an overall
growth improvement in our corporate governance ranking,
with Malaysia rising from sixth to fourth out of 12
The SC broadened retail access to the bond and Asia Pacific countries in the 2018 CG Watch Report
sukuk market by liberalising regulatory requirements published by the Asian Corporate Governance
for primary issuances and introducing a seasoning Association (ACGA) and CLSA. As the top mover in
framework to allow access to existing corporate the survey, Malaysia was commended for the launch
bonds and sukuk. Disclosure requirements were of the new Malaysian Code on Corporate
revised to allow issuers who meet specific criteria to Governance (MCCG) as well as market fairness and
issue a product highlight sheet instead of a full transparency.
prospectus, thus reducing cost to issuer.
Underpinned by the belief that investors themselves
Following the entry of a digital equity broker in the have an important role to play in exerting market
preceding year, in 2018 the SC continued to discipline, the SC also organised programmes to
facilitate digitisation of capital market services by empower investors with the ability to make informed
granting a licence to Malaysia’s first digital decisions. Our investor outreach initiatives throughout
investment manager – a new class of intermediaries the year engaged over 280,000 participants, while
which aim to offer an accessible and cost-effective the InvestSmart Fest 2018 alone received 14,000
®
channel for investors to manage and grow their wealth. visitors.

Building on our strength in the Islamic capital
market, we pursued initiatives to establish Malaysia Safeguarding market integrity and
as a regional centre for sustainable finance. resilience
Following the internationally recognised issuance of
the world’s first green sukuk in Malaysia in 2017, the Supervisory efforts focused on intermediary conduct,
SC established a RM6 million Green SRI Sukuk Grant prudential soundness as well as effectiveness of
Scheme in 2018 to incentivise issuances of green SRI control functions and governance, with entity-based
sukuk by defraying up to 90% of external review audits complemented by thematic reviews on
costs in relation to obtaining green certification. Four industry-wide issues identified through a forward-
applications have since been approved, supporting looking risk assessment. In 2018, thematic reviews
RM2.2 billion in funds raised. Attesting to growing were conducted on liquidity risk management,
demand for SRI assets, the world’s first ESG sukuk effectiveness of broker supervision over remisiers,
fund was also launched in Malaysia in 2018 under suspicious transaction reporting and structured
the SC’s Guidelines on SRI Funds. warrants. Observations indicated that firms generally
meet expected standards of business conduct and
Recognising the need to stimulate equity market controls, with some areas for improvement identified
vibrancy – an issue which requires co-ordination and communicated.
across multiple factors and stakeholders – measures
were rolled-out to encourage trading, which includes We also enhanced surveillance efforts in line with
liberalising rules on margin financing and intraday short developments in the market, including increasingly
selling while also introducing new categories of traders. sophisticated trading strategies, introduction of new

CHAIRMAN’S MESSAGE | v

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