Page 84 - CMP3

4.1 EMBEDDING SHARED ACCOUNTABILITY WITHIN THE CAPITAL MARKET
The integrity of the capital market is the shared responsibility and accountability of the SC and all participants of the capital market ecosystem. This includes, among others, intermediaries, institutions, RMOs, corporates, auditors, SROs and investors. As the capital market continues to mature and adapt to the emerging trends outlined in Chapters 2 and 3, these participants will need to assess and reflect on how they interact with the market as well as cater to stakeholders’ expectations and needs. To facilitate such developments, the SC will refine its regulatory framework to further promote agility, growth and innovation. At the same time, market participants need to be vigilant and prepared to embrace new standards of responsibility and accountability to maintain market integrity. The SC’s move towards a regulatory approach that is more principles-based and outcomes-focused will enable market participants to realign their compliance framework according to the nature of their businesses and risk parameters. This section outlines the SC’s regulatory framework and design to promote market growth and integrity in a rapidly evolving environment that embraces sustainability, competition and innovation.
THE STATE OF PLAY
The SC’s regulatory approach serves to protect investors by shaping market behaviour while at the same time promoting development and innovation. In the last decade, the SC has embraced the regulatory philosophy of ‘no more regulations than necessary’. This is reflected in the liberalisation of regulations that had become outdated due to the maturity of the capital market and its participants or had out-lived their purpose.
Amid growth and innovation, all market participants need to play their part as gatekeepers in their respective business segment. Institutions, including Bursa Malaysia and RMOs, are accountable to maintain fair and orderly markets as well as ensure efficient dissemination of relevant disclosures and information. Licensed intermediaries are accountable for the fair treatment of investors and to manage risks to market integrity, including those associated with anti-money laundering (AML) / combatting the financing of terrorism (CFT). Licensed capital market individuals also play a role – for example, PAs are gatekeepers of the IPO due diligence to facilitate greater efficiency in the approval process. Frontline regulators such as Bursa Malaysia and SROs such as the FIMM are accountable to regulate the conduct of their members in order to protect investors.
Corporates are accountable to their shareholders and wider stakeholders for the viability, integrity and sustainability of their business. The MCCG acts as a compass to guide companies and boards in navigating the rapid evolution of markets and business structures. The SC has also put in place guidelines to provide clarity on its expectation of the directors’ discharge of fiduciary duties. Investors or shareholders with voting rights can play a bigger role in shaping responsible corporate behaviour by engaging boards and senior management of investee companies, as well as exercising their voting rights to promote board accountability and transparency. External auditors also play an important role in promoting the reliability and integrity of a company’s financial statements to enable shareholders and investors to rely on the financial reports when making investment decisions.
The SC’s core functions of rule-making, authorisation, supervision and enforcement provide a robust framework which promotes market integrity and investor protection. To manage both conduct and systemic risks, the SC adopts a risk-focused supervisory approach over intermediaries and institutions, with emphasis on governance, compliance and senior management culture. In this regard, the SC’s enforcement parameter applies an outcomes-focused approach and utilises a broad set of tools, ranging from administrative to civil and criminal actions.
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