Page 99 - CMP3

In the case of banking and securities regulation, there are currently three archetypes of entities within the capital market:
Standalone entities that perform capital market activities and are regulated by the SC, such as boutique corporate finance firms and RMOs.
Entities performing capital market activities as subsidiaries of a larger banking group. These entities are regulated jointly by the SC as well as BNM, and in some ways may face higher compliance cost.
Entities, such as commercial banks, whose primary regulator is not the SC but conduct capital market activities such as fund distribution. Regulatory arbitrage is a concern as regulatory and supervisory requirements imposed on such entities may differ from those under the direct oversight of the SC.
As the SC moves towards refining the regulatory architecture for the capital market, the SC and BNM will conduct a joint study to enhance the regulatory structure for the financial market, which will promote effectiveness of micro prudential supervision, macro prudential policies and supervision of conduct of business. The joint study will explore the feasibility of rationalising regulations on advisory services for banking, insurance and capital market products which will include the consolidation of licensing regime between FPs and FAs.
Irrespective of the archetype adopted in the future, continuous collaboration between the SC and BNM will be essential to ensure a holistic approach in managing systemic and financial stability in the financial market.
4.2.3 ENHANCING SUPERVISORY EFFICIENCY AND EFFICACY
Besides the abovementioned review of regulatory architecture to enhance supervisory effectiveness across the various business models and entities in the market, there is also a need for the SC to strengthen its supervisory function across intermediaries, institutions, markets and auditors and become more efficient as the capital market develops in scale, scope and sophistication.
Diagram 22
SUPERVISORY FOCUS TOWARDS GREATER EFFICIENCY AND OUTCOMES
Archetype 1
Archetype 2 Archetype 3
Broaden supervisory coverage
Enhance supervisory efficiency with technology
Adopt principles- based approach for conduct and culture of firms
Strengthen investor protection against vulnerabilities
Source: SC.
CAPITAL MARKET MASTERPLAN 3
97