Page 39 - SC SCAR 2023 ENGLISH Flipbook

Maintaining Fair and Orderly Markets through Proactive Surveillance
A central pillar of the SC’s approach to market surveillance involves heightened monitoring of trading activities surrounding material corporate developments. This is essential for the detection of potential insider trading activities which undermines market integrity and equal access to information by the investing public. To achieve this, the SC actively stayed attuned to corporate developments from a broad spectrum of sources. The monitoring and assessment of company disclosures, complaints received and referrals from Bursa Malaysia as well as other information sources such as the media remained key surveillance priorities in 2023.
Additionally, the SC leveraged its automated trade surveillance system, complemented by in-house advanced analytics, to identify and analyse suspicious trading activities. This effectively facilitated timely detection of trading irregularities, including those surrounding periods of increased price and volume volatility which, in turn, enabled objective identification of potential market abuse matters and informed decision on appropriate follow-up regulatory actions.
Addressing Trading Anomalies at an Early Stage and Detecting Market Abuses for Further Investigation
The SC remained vigilant in addressing trading anomalies that could pose potential risks to the integrity of the market and collaborated closely with stakeholders, utilising a variety of enforcement tools to deter illegal and unethical activities in the capital market.
The SC’s market surveillance activities in 2023 involved 1,405 assessments (2022: 1,333 assessments) on trading anomalies detected and in-depth analyses of market abuse cases including possible insider trading and market manipulation. Alongside such market surveillance assessments, regular engagements were conducted with Bursa Malaysia to ensure that co-ordinated regulatory responses by the frontline regulator are proportional to the risks and gravity of surveillance issues detected. Through such collaboration, swift regulatory actions were undertaken to curb abusive trading behaviour at an early stage. Such pre-emptive interventions include the issuance of Surveillance Notices by Bursa Malaysia requiring market intermediaries to promptly address irregularities and take immediate remedial actions.
The SC is committed to striking a healthy balance between the need to ensure orderly trading conduct and facilitating a vibrant marketplace, in line with the SC’s dual mandates to develop and regulate the Malaysian capital market. To this end, the SC took into consideration diversity in trading strategies by market participants when reviewing trading activities.
The SC analysed trading patterns and behaviours to distinguish between speculative trading, which is an inherent element of market dynamics, and abusive conduct that would tantamount to market manipulation. Matters pertaining to prevailing areas of concern were prioritised and subjected to expedited review. Where elements of possible market abuse were substantiated, such cases were escalated for further investigation to be conducted.
Leveraging Technology and Advanced Analytics for Greater Efficiency
The SC continued to place strong emphasis on the adoption of Supervisory Technology (SupTech) and data analytics to enhance the efficiency of the SC’s regulatory functions.
The SC embarked on initiatives to enhance the quality of trading data feed from Bursa Malaysia as well as the functionality of the SC’s surveillance system and analytical tools to facilitate more granular analysis of trading activities. The enhancement is expected to enable the SC to gain greater insights and efficiency in the detection, analysis and decision making on market surveillance matters.
In addition to system-based detection of trading irregularities in the equities market, the SC has deployed SupTech capabilities to enhance its surveillance on unlicensed activities and monitoring of PLCs. A web surveillance tool is now being utilised to conduct ongoing and in-depth monitoring of unlicensed activities to ensure the SC remains vigilant, well-informed and equipped to respond effectively to issues arising from such activities. The SC has also built a platform with a holistic view of PLCs’ key financial indicators and integrated SupTech tools to enable automated detection of PLCs’ financial health and supervisory concerns. These insights aim to empower data-driven decisions as well as more targeted surveillance and supervisory reviews, to proactively address any concerns.
PART 2 REGULATORY PERFORMANCE AND OUTCOMES
SECURITIES COMMISSION MALAYSIA ANNUAL REPORT 2023 37