Bursa Malaysia Revamps Rules for Derivatives Market Participants

The updated rules allow non-face-to-face onboarding, remove voice logging for client orders, and introduce higher governance standards, among others.

Bursa Malaysia has revamped its rules to reduce the regulatory burden and costs for derivatives market participants, while increasing the flexibility they have in operating their businesses.

“The revamped rules are in tandem with Bursa Malaysia’s balanced and facilitative approach to promote market development whilst ensuring its regulatory objectives in maintaining market integrity and investor protection are not compromised,” the exchange operator said. “The flexibility and liberalisations put in place under the revamp will enhance the attractiveness and competitiveness of the Malaysian derivatives market.”

Effective today (15 August), the revamp liberalises client onboarding requirements by introducing non-face-to-face methods for participants to verify individual client identities for account opening.

“This would allow Participants the flexibility to adopt various methods of opening accounts for purposes of the clients’ convenience and for greater business efficiency,” Bursa Malaysia said.

It also removes a requirement for trading participants to maintain a voice logger for client orders, in a bid to ease the operational and administrative burden, reduce the cost of doing business and facilitate representative mobility.

Full mobility for registered representatives to advise their clients and conduct dealings outside of the business premises is also allowed, which Bursa says will enable trading members to “manage and operate their business more effectively and provide better services to clients.”

Also removed is an existing prohibition against a dual licensee (securities and derivatives) from becoming a proprietary day trader, which will allow “greater flexibility … to manage and operate their business based on their business model, activities and risks.”

With regard to governance, the framework for participants has been strengthened to promote better conduct and self-regulation. This includes new requirements for risk management and internal audit functions, and mandatory registration of accountable individuals with Bursa Malaysia Derivatives.

The rules have also been streamlined and consolidated to facilitate easier compliance and improved transparency. Additionally, enhancements have been made to increase efficiency in process, application and reporting requirements.

In the interest of promoting investor protection and enhancing market confidence, the revamp also improves Bursa Malaysia Derivatives Clearing’s risk management and addresses how it handles clearing member defaults and other emergency situations.

The Bursa Malaysia Derivatives rules are detailed in a 29 July circular. (see also rules amendments, trading participant guidance, updated trading manual)

Bursa Malaysia Derivatives Clearing has likewise published its revamped rules and directives.

 

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