Profils du marché

 Bursa Malaysia Bhd (Bursa Malaysia) 
Bursa Malaysia Bhd (formerly known as the Kuala Lumpur Stock Exchange, KLSE) was formed on December 27, 1976 in conjunction with the Securities Industry Act, 1973. At that time the KLSE was a company limited by guarantee without share capital and incorporated under the Companies Act, 1965.

With the demutualisation of the KLSE on January 5, 2004, KLSE became a public company limited by shares. Effectively, the KLSE has vested and transferred its stock exchange business to its wholly-owned subsidiary Bursa Malaysia Securities Bhd (Bursa Securities), while the demutualised KLSE has been approved as an exchange holding company known as Bursa Malaysia Bhd (Bursa Malaysia). 

Bursa Malaysia Securities Bhd (Bursa Securities) 
Bursa Malaysia Securities Bhd (Bursa Securities), a subsidiary of Bursa Malaysia Bhd (Bursa Malaysia), facilitates trading in securities of companies listed on the bourse. It is also responsible for market surveillance and enforcement of trading rules and listing requirements. 

Securities dealing is carried out by stock broking companies (SBCs), which are referred to as member companies of the Bursa Securities. The terms 'member company' and 'SBCs' are interchangeable. 

Bursa Securities has two boards, the Main Board and ACE Board. On August 3, 2009, under the new structure, the Main and Second Boards were merged into a single unified board for established companies and called the Main Market. The MESDAQ Market, which was for technology-based and high growth companies, was transformed into an alternative market for emerging companies of all sizes and sectors and called the ACE Market.

A public company that has its shares listed on the Main and Second Board must comply with the listing requirements of Bursa Securities while the ACE counters must comply with the listing requirements of MESDAQ.

LFX (Labuan International Financial Exchange)
The LFX was launched on November 23, 2000. Wholly owned by Bursa Malaysia, the LFX is a virtual global exchange that provides various financial instruments and securities which are based on both conventional and Islamic principles, including mutual funds, bonds, derivatives and insurance-linked products. Said to be the first of its kind in Asia, LFX is expected to boost Labuan's position as an international offshore financial centre. 

LFX is limited by shares and its' authorised and paid up capital stands at USD5 million and USD100, 000 respectively. It is governed by the Offshore Companies Act 1990 and Labuan Offshore Securities Industry Act 1998. It is a self-regulated organisation that will operate, manage, monitor and supervise its own market participants by way of its licences, rules and regulations. 

Being a web-based Exchange, participants in the LFX can access the trading system 24 hours and seven days a week. It also works as a one-stop financial exchange centre where applications, approvals, listing, trading, clearing and settlements can be done efficiently. Trading of LFX securities do not attract any capital gains tax, contract note duties and exit levies

Trading on LFX is carried out via LFX's Electronic Bulletin Board. All financial instruments available for trading are posted on the board and trading agents, who are the only people who can deal on the exchange, post their indication of interest to buy or sell on the board. Any interested trading agents will conduct their own negotiations. The trade will only be considered complete when the report of the trade by both buyer and seller is received by LFX. 

The LFX caters the need of global market investors due to its capabilities in dealing with multi-currency financial instruments, its duty-free transactions, accessibility, flexibility and much more. 

Bursa Malaysia Derivatives Bhd (Bursa Derivatives) 
Bursa Malaysia Derivatives Bhd (Bursa Derivatives), formerly known as MDEX, was formed when the Commodity and Monetary Exchange and Kuala Lumpur Options and Financial Futures Exchange (KLOFFE) merged. It was launched on June 11, 2001. Bursa Derivatives is a futures and options exchange. 

With effect from November 20, 2006, Bursa Malaysia migrated its derivatives products onto its new common trading system, Bursa Trade. The new system caters for faster processing and execution of more orders. It also enhances capabilities for the exchange to improve market liquidity and velocity as well as increase trading efficiency and quality of market surveillance.

Trading on Bursa Malaysia Securities Berhad (Bursa Securities) is executed through stock broking companies (SBCs). The automated trading system of the Bursa Securities comprise two major computer systems which are as follows:

• The SCORE (System on Computerised Order Routing and Execution) which is the central computer engine responsible for the matching of all trades.
• The WinSCORE system (broker front end trading system) which is responsible for credit control management, order and trade routing as well as confirmation.

All SBC's are equipped with the WinSCORE system. The WinSCORE terminals are linked with the SCORE system to enable dealers to key in orders themselves and not through a central buyer. This allows a more timely execution of clients' orders and a reduction of risk exposure for the dealers and the broking firms.

Bursa Malaysia launched a new trading platform – the Bursa Trade Securities (BTS) platform for securities market on December 1, 2008. It integrated with the existing trading system and it's function is to provide greater accessibility for investors and market participants, and enhance trading efficiency and transparency at Bursa Malaysia.

Some of the new platform's key features include:

• The introduction of the Theoretical Opening Price (TOP), particularly useful during Initial Public Offers (IPOs).
• Continuous trade matching (currently transactions are matched every ten seconds).
• The new trading platform includes ARAMIS, a new system that is designed to improve the market surveillance capabilities.
• Introducing a circuit-breaker. (The Bursa is studying the possibility of introducing a circuit-breaker mechanism in the equities market in addition to the current static limits of 30%. Dynamic limits change continuously smoothing volatility and reducing possible manipulation.)
• Dissemination of trading information (the dissemination of trading information will be enhanced).
• Introduction of "Trading at last" functionality, where traders are allowed to trade within ten minutes before market closure.

A subsidiary company of the Exchange, Bursa Malaysia, (previously Securities Clearing Automated Network Services Sdn Bhd, SCANS), effects the clearing and settlement of all business done through SCORE. This provides for efficiency in terms of delivery of stocks and shares and settlement of accounts for the investing public and members of the Exchange.

Bursa Securities

Monday to Friday:	08:30 - 09:00 (pre-opening session)
	09:00 - 12:30
	14:00 - 14:30 (pre-opening session)
	14:30 - 17:00

OTC Market (not available for on-exchange listed securities)

ISIN: ISIN is the standard securities identifier for all Bursa Securities listed securities and SSTS eligible instruments For all other unlisted and delisted securities, only the subcustodian's internally assigned security code is available as the securities identifier.

Other: None

Companies Commission of Malaysia (CCM) - The Companies Commission of Malaysia (CCM) was launched on April 16, 2002 arising from the merger of the Registry of Companies (ROC) and Registry of Business (ROB). CCM assumes the roles and responsibilities of the ROC and ROB but has autonomy in the administration of its finances and in human resource planning. CCM has powers of administration and enforcement over the Companies Act 1965, Trust Companies Act 1949, Kootu Funds (Prohibition) Act 1971, Business Registration Act 1965 and all subsidiary legislationenacted under these Acts.

The FIC guideline on the acquisition of interests, mergers and takeovers was repealed onJune 30, 2009

The Securities Commission (SC) - The SC was set up under the Securities Commission Act 1993 and began operations on March 1, 1993. The SC has a very wide scope, encompassing all aspects of the securities industry, including advising the Minister of Finance (MoF) on all matters relating to securities and futures contracts industries.

The Licensing Officer/The MoF- The licensing officer is appointed by the MoF and is responsible for the issue of the relevant licenses under the Securities Industry Act 1983 and the Futures Industry Act 1993.

Bank Negara Malaysia (BNM) (the central bank) - In addition to conventional Central Bank functions, BNM is also entrusted with the role of administering and implementing the Financial Services Act 2013 and Islamic Financial Services Act 2013 (FSA) . FSA is the primary legislation governing all commercial banks including those providing custodial services.

BNM owns and operates the Scripless Securities Trading System (SSTS) which effects and records movement and settlement of all Malaysian government securities and scripless private debt securities between participating institutions of the SSTS, or between the members and BNM. Securities eligible through the SSTS, collectively known as SSTS Securities, include Malaysian Government Securities, Cagamas bonds, MTBs, BNM Bills, Government Investment Certificates and BNM Certificates. 

The securities industry in Malaysia is governed by:

• Securities Industry Act 1983
• Securities Industry (Central Depository) Act 1991
• Securities Commission Act 1993
• Companies Act 1965
• Securities Industry (Central Depositories) (Foreign Ownership) Regulations 1996
• Securities Industry (Reporting of Substantial Shareholding) Regulations 1998
• Financial Services Act and Islamic Financial Services Act 2013
• The Capital Markets and Services Act 2007 (CMSA)

These laws seek to develop and manage a healthy capital market and economy, as well as protect investors' interests.

All equities, warrants and loan stocks listed on the Bursa Malaysia Securities are traded and safe-kept in scripless form via the Central Depository System. No registration is required for immobilised securities.

However, unlisted securities can be held in physical form. Physical certificates can be registered into the client's own name, in the beneficial owner name or into the name of our nominee's company, Cartaban Nominee (Asing) Sdn Bhd. Unless specific instruction is given by clients to register shares into their own name or beneficial owner name, all registration will be defaulted into the name of our nominee's company for monitoring.

Tick sizes for securities traded and quoted on Bursa:

Tick sizes for ETFs:

For bonds, debentures, loan securities, warrants and call warrants, the minimum bid structure will have the same minimum trading spreads as for shares.

Trading of unlisted securities, be it in scrip-form or scripless, are primarily traded over-the-counter (OTC). Trade confirmations between direct participants can be in multiple forms ranging from fax, telephone call, swift, etc. Unlisted securities include unlisted shares, fixed income instruments and private debts securities.

Government bonds, Cagamas, Treasury bills are usually settled via the Scripless Securities Trading and Settlement (SSTS). SSTS is a sub-system within the interbank payment system, RENTAS, managed by the central bank. It provides the gateway to an efficient settlement system for trading of scripless fixed income instruments such as treasury bills, government loan stocks, cagamas notes and bonds, private debt securities, etc. This system allows participating members to effect funds and securities transfers on a true DVP basis.

Bursa Malaysia Securities: Immobilised, Electronic Settlement
Settlement for stocks traded on the Bursa Malaysia Securities Bhd (Bursa Securities) is fully scripless. Under the rules of the T+2 RSS (rolling settlement system), sellers have to deliver their securities on T+2 via Bursa Malaysia Depository (Bursa Depository) transfer mechanism and obtain payment on T+2. 

The other mode of settlement, Institutional Settlement Service (ISS) is a service offered by Bursa Malaysia to facilitate settlement of institutional market trades so that settlement between trading clearing members, i.e. stock broking member companies of Bursa Securities and its institutional clients, settled through custodian banks who are non-trading clearing members (NTCM) can be done on a delivery vs. payment (DVP) basis on settlement day. 

In the case of settlement via ISS, once affirmation of the trade is carried out on the system on T+2, the shares will be automatically debited/ credited from the contracting parties' accounts on the morning of T+2. The cash is settled on a net basis with the clearing house, Bursa Malaysia Clearing also on the morning of T+2. If the subcustodian/ counterparty is unable to effect payment to Bursa Malaysia Clearing by this deadline, the subcustodian/ counterparty would be in a default situation and may risk being removed from Bursa Malaysia Clearing's membership. Even though this is not a true DVP system, settlement mode is mitigated with Bursa Malaysia Clearing acting as the central counterparty.

Methods of settlement: 

Custodian bank/local broker
There are two basic modes of settlement, using the Bursa Depository transfers under the Central Depository System (CDS) and ISS:

Unlisted securities 
Unlisted or delisted securities immobilised at the central depository, may be freely transferred between two CDS accounts as they are not subject to the requirements of Bursa Depository's 'Approved Reasons for Transfer of Securities'. For scrip based securities, physical delivery of the certificates will be arranged with the counter party. 

Fixed Income Settlement
Settlement of fixed income securities listed on Bursa Securities 
The settlement of fixed income securities listed on Bursa Malaysia follows the T+3 rolling settlement in place at the moment. The movement of shares to facilitate its settlement can either be effected via depository transfer or via the Institutional Settlement Service (ISS).

Settlement of fixed income securities traded on the SSTS
There is no standard market settlement cycle or market cut-off time for fixed income instruments. Settlement date is negotiable between buyer and seller, generally on T+2. Trades can be settled throughout the day up to close of business at 17:00. Unless otherwise mutually agreed between the buyer and the seller, settlement is on the basis of payment against delivery of the security transacted. The settlement of the transaction shall be effected on the value date of the transaction. 

The seller initiates the confirmation process in all cases where there are two parties involved. The transaction flow is described below:

Cycle 1

• Outside the SSTS, the seller and the buyer agree on a deal by telephone with respect to the security traded, amount, price, value date, etc.
• The seller constructs and sends appropriate details of the deal through his own member computer to the BNM central computer, which validates the transaction and then stores the data. The central computer acknowledges receipt of the message to the seller.
• The central computer will then transmit an unconfirmed sale advice of the transaction to the buyer's Member computer, where it will be printed.

Cycle 2

• On receipt of the unconfirmed sale advice from the seller, the buyer will check details of the deal and should confirm or reject the advice as appropriate. Unconfirmed advices rejected by the buyer are notified automatically to the seller. If the buyer wishes to confirm a deal, he will send a confirmation advice to the BNM central computer. The deal becomes a matched transaction at this stage.
• Upon receipt of this confirmation advice, the BNM central computer will immediately pass the necessary book entries to adjust the securities and cash settlement accounts of both the buyer and seller if the deal is for same-day value. The central computer then acknowledges receipt to the buyer's member computer. At this stage, the buyer regards the deal as completed down to the settlement.
• For 'tom' and other transactions not for value on the same day, the necessary book entries to adjust the securities and cash settlement accounts are passed only on the value date. Acknowledgement of receipt of the buyer's confirmation and transmission of the confirmation advice to the seller will be the same as for a same-day deal.
• The BNM central computer will then transmit a confirmation advice of the deal to the seller's member computer, where it will be printed.
• The deal is completed in all respects.

If the buyer rejects the unconfirmed advice, the seller will be notified automatically. The deal becomes an unmatched transaction. The BNM central computer will not do anything further to adjust the securities or cash settlement account of either the seller or buyer.

Regulated Short Selling (RSS) and SBL on equities were reintroduced into the Malaysian market on January 3, 2007. Previously, short selling had only been permitted for Malaysian Government Securities (MGS).

All transactions concluded by brokers on the Bursa Securities are netted- off via Bursa Clearing.  Payments arising will be made through PayNet.  Together with the Bursa Malaysia Depository, Bursa Clearing arranges the book-entry clearing, settlement and custody of transactions concluded on the Bursa Securities.

For equities and fixed income instruments listed on the Bursa Securities, the central depository is the Bursa Malaysia Depository Sdn Bhd. (Bursa Depository) For fixed income instruments traded and settled via the SSTS system, the depository is Bank Negara Malaysia (BNM).

Bursa Malaysia Depository Sdn Bhd (BMD)
BMD was established in 1992 under the Securities Industry (Central Depositories) Act, 1991 and operates under the purview of the Bursa Malaysia Berhad (previously known as Kuala Lumpur Stock Exchange). The BMD acts as the central depository for equities and corporate bonds. All shares listed on the Bursa Securities must be deposited with the BMD except for securities listed on stock exchanges recognised by Bursa Securities i.e.London Stock Exchange, Tokyo Stock Exchange and Copenhagen Stock Exchange.

All physical withdrawals of securities from the BMD are prohibited, except in cases allowed in the notices issued by the BMD (e.g. to facilitate - share buy back; conversion of debt securities; the process of company restructuring; rectification or errors, and also delisted securities).

The BMD operates the clearing and settlement book-entry system, Central Depository System (CDS). Securities are immobilised and registered in the name of the Bursa Malaysia Depository Nominees Sdn Bhd. Accounts may be maintained on a segregated basis according to beneficial owner or via omnibus accounts maintained on behalf of the instructing clients, through an Authorised Depository Agent (ADA) or an Authorised Direct Member (ADM). ADAs are member companies of the Bursa Securities and are allowed to maintain accounts on behalf of third parties. ADMs are banks, finance companies, insurance companies or other corporations as prescribed by the Ministry of Finance.

The main objectives of BMD are to:

• Establish and operate a system for the central handling of securities.
• Increase the capacity of clearing and settlement of securities.
• Reduce the costs and risks of settlement of securities.
• Enhance the liquidity and efficiency of the Malaysian capital market.
• Promote Malaysia's competitiveness, by complying with the latest international standards for settlement and clearing of securities.

Bank Negara Malaysia in its capacity as the Depository for Scripless Securities Trading System (SSTS) eligible securities
Bank Negara Malaysia (BNM) is the depository for Scripless Securities Trading System (SSTS) eligible instruments e.g. Malaysian Government Securities (MGS), Malaysian Treasury Bills (MTB), Commercial Papers (CPs), Private Debt Securities (PDS), etc. The central bank of Malaysia, Bank Negara Malaysia (BNM) officially started operations on January 24, 1959 based on the Central Bank of Malaya Ordinance, 1958.

BIS is an international organisation which fosters cooperation among central banks and other agencies in pursuit of monetary and financial stability. The Committee on Payments and Market Infrastructures (CPMI) uses three common structural approaches, or models, to categorise the links between delivery and payment in a securities settlement system.

BIS Model One for Unlisted Fixed Income and BIS Model Two for listed securities in Bursa Malaysia

Book-Entry: Scripless securities held with Bursa Malaysia Depository are registered in the name of Cartaban Nominees (Asing) Sdn Bhd. Government bonds are recorded in the subcustodian's name at the Bank Negara Malaysia. Transfer of ownership occurs automatically upon settlement.

Physical: Negligible - only for unlisted securities. Transferor will need to execute Form 32A (Form of transfer). Stamp duty and scrip fee of MYR3-MYR5 will be levied. Physical unlisted securities are registered in the name of "Cartaban Nominees (Asing) Sdn Bhd".

Each issuer registers its own securities or appoints a third party as its registrar.

Unlisted securities: the Registration process will take approximately two to eight weeks.
Fixed income instruments and all Non-bearer Physical Securities: will take up to a week.

Shareholdings may be required to be disclosed by the beneficial owner, particularly when holdings reach or exceed prescribed disclosure limits. Investors must ensure that they comply in full by reporting such holdings to the appropriate organisations for this market, within the timeframe required. If you have any questions regarding this issue we encourage you to consult your legal counsel.

Failure to comply with reporting requirements may lead to penalties and/or other sanctions.

Shareholdings of 5% and above
A person (including a corporate) is a substantial shareholder if that person holds no less than 5% of the aggregate of the nominal amounts of all the voting shares of the company. A person who has substantial shareholding in a company must give notice to the company, using Forms 29A-C (under Section 137 Companies Act 2016) within three days of becoming a substantial shareholder. A copy of the notice shall be served to the Registrar (Section 141 Companies Act 2016)

Section 141 of Companies Act states the general penalty for failure to comply with this requirement is , upon conviction, a fine not exceeding RM 1,000,000 and in the case of a continuing offence, to a further fine not exceeding one thousand ringgit for each day which the offence continues after conviction.

The FIC guideline on the acquisition of interests, mergers and takeovers was repealed with effect from June 30, 2009. Following this deregulation, FIC will no longer process such share transactions, nor impose equity conditions on such transactions. The equity conditions imposed by the respective sector regulators will continue to apply. For strategic sectors, sector regulators are best placed to oversee their respective sectors and to tailor equity conditions according to the requirements and strategic nature of each sector. There will no longer be any equity conditions imposed on sectors not deemed strategic.

Shareholdings of 33% and above
A mandatory offer shall be extended to shareholders with voting rights by:
any person or persons acting in concert with that person who acquire(s) shares which carry more than 33% of the voting rights of a company or who hold(s) between 33% and 50% of the voting rights or any person acting in concert with that person, acquires in any 12-month period additional shares with 2% voting rights; failing which the SC's approval is required. (Rule 34.1 of the Malaysian Code on Take-Overs and Mergers.)

Buy-ins are automatically initiated by Bursa Malaysia on T+2 with the price of 10 bids higher than previous day closing. If the buy-in is not successful on T+2, the contract will then be settled by payment of cash for the quantity not done through the buying-in, in accordance with the Clearing House Rules

The defaulting (selling) broker must cover the entire cost which includes the additional bids above the last traded price of the previous day, as well as covering the Bursa Malaysia commission charge, brokerage fees and stamp duties.

For SSTS instruments, if the delivery of securities is not made within one business day following the value date, the buyer has the right to execute a buy-in. The buyer advises the seller of the buy-in price via telephone with confirmation sent in writing. Nevertheless, buy-ins are usually not initiated. Counterparties tend to settle the difference through an interest claim process or enter into a new contract.

Bursa Malaysia Berhad (Bursa) has announced the re-introduction of Regulated Short Selling (RSS), and Securities Borrowing and Lending (SBL). Both RSS and SBL transactions can be conducted from January 3, 2007. 

RSS is defined as the selling of stocks which the person does not presently own but for which such person has made arrangements to borrow. Any individual can engage in RSS. The settlement of the short sales will be with the borrowed stocks. The borrowing must be made within the approved SBL framework established by Bursa. 

Under the SBL CLA framework, the securities clearing house, Bursa Malaysia Clearing will act as a Central Lending Agency (CLA). As the CLA, Bursa Malaysia Clearing will borrow from lenders and onward lend to borrowers. Any person who has the requisite number of stocks may lend stocks to the CLA. On the other hand, only approved local stockbrokers may borrow stocks from the CLA. Any other investors who wish to borrow stocks must go through the approved local stockbrokers. 

Bursa had in August 2009 introduced the SBL NT (Negotiated Transaction) model where it provides both Approved Lenders and Approved Borrowers the avenue to agree SBL transactions an over-the-counter basis (OTC) and report such transactions to Bursa Malaysia via on-shore lending representatives or borrowing representatives.

Details on how SBL is handled can be found here Bursa Malaysia.

Automatic buy-in is triggered 4:30 PM on T+1. When the sale and recall occur same day, Withdraw from buy-in process expected to avoid buy-in by 1 day.

Lenders that control 33% or more of the voting shares should review the Disclosure Requirements section of this guide to determine applicability under the mandatory offer.

• Bursa Securities Compensation Fund
• Bursa Depository Compensation Fund
• Bursa Malaysia's Clearing Guarantee Fund

Bursa Securities Compensation Fund
Bursa Securities maintains a compensation fund, as required by Section 61 (1) of the Securities Industry Act 1983, which replaced the previously known fidelity fund.

The purpose of the fund is to compensate persons who suffer monetary loss due to defalcation or fraudulent misuse of monies or other property by a director, officer, employee or representative of a stock broking firm.

Claims can also be made due to the insolvency of a Bursa Securities member-company and loss suffered in respect of monies or other properties that was, in connection with the company's dealing in securities, entrusted to or received by the company or by a director, officer, employee or representative of the company for or on behalf of the persons suffering the loss or another person or because the company was trustee of the monies of the property.

Bursa Depository Compensation Fund
The Bursa Malaysia Depository Sdn Bhd (Bursa Depository) has its own compensation fund to meet claims from investors who suffer losses arising out of its own staff's infidelity, professional negligence, and computer crimes, which is limited to MYR100,000 per claim. All authorised depository agents and authorised direct members are required to have sufficient insurance covers and indemnify Bursa Depository against any losses as a result of negligence at their end.

This compensation fund is separate from the compensation fund operated by the Bursa Securities.

Clearing Guarantee Fund (CGF)
The Clearing Guarantee Fund (CGF) provides guaranteed support for settlement of trades when there is a payment or delivery default by local stockbrokers, it was established on July 1, 2006.

The fund, which consists of a pool of assets such as cash, bank guarantees and other financial resources, enables the Clearing House to deal with potentially large credit and/or liquidity risks that may arise when a local stockbroker defaults on its payment or delivery obligation on any settlement day.
Based on a risk-based model that has been benchmarked against its peers, the quantum of the CGF is set at MYR100 million.

Implementation of Automatic Closure of Dormant Accounts
Bursa Depository has implemented automatic closure of dormant securities accounts ("dormant CDS accounts") after the expiry of the 4th year of such accounts being designated as dormant ("closure exercise"). These closures will be done on a yearly basis.

Bursa Depository will automatically close dormant CDS accounts which fulfill the following criteria ("affected dormant accounts"):

1. there are no securities in such accounts; and
2. there have not been any debit or credit entries in such accounts for at least 7 consecutive years prior to the date of closure.

The first closure exercise happened in August 2014 and will involve affected dormant accounts that were designated as dormant on or before 2010.

Before undertaking the first closure exercise, Bursa Depository will publish an advertisement in Berita Harian, The STAR and Sin Chew Jit Poh at least 1 month before the closure to notify the relevant depositors of the closure exercise.

For subsequent closure exercises, i.e. from 2015 and onwards, a notice will be sent directly to the affected depositors (other than the ADMs in respect of their principal or wholly owned nominee accounts) 1 month before the closure of their affected dormant CDS accounts.

The above is governed under the Malaysian Anti-Money Laundering Act 2001.

The major provisions in the Act covers criminalising money laundering, imposing obligations of customer identification, record-keeping and reporting of suspicious transactions by reporting institutions, allowing for the seizing, freezing and forfeiture of properties that are proceeds of money laundering activities.

The Financial Intelligence Unit in Bank Negara Malaysia (the central bank), is empowered to collect, analyse and disseminate information on suspicious, large and unusual transactions.

For clients serviced out of certain locations this is an FII market. Please refer to the Terms & Conditions for Global Custody or contact your RBC Investor & Treasury Services' Client Manager before making portfolio investments.

No prior regulatory approval is required for entrance into the market. Under Malaysian Exchange Control Laws accounts cannot be opened for Israeli nationals without prior approval from the Central Bank.

Foreign ownership of companies is generally restricted to 30%. There are exceptions whereby the 30% limit can be exceeded, particularly for companies that mainly produce goods for export.

The aggregate foreign ownership limit in Telecommunications companies is 61%. However, a government restriction requires foreign companies to reduce their stake back to 49% after five years.

The foreign shareholding limit for new entries in investment and Islamic banks and insurance and Takaful firms was increased from 49% to 70% with effect from April 27, 2009, to harness the potential for financially strong and internationally known foreign players.

With immediate effect, foreign corporations will be allowed to own 100 per cent of shares in unit trust management companies, and there will be no barrier to entry for new foreign unit trust management companies coming into Malaysia

Flexibilities would be accorded with regards to credit ratings and the tradability of unrated bonds and sukuk from Jan 1, 2015. The equity holdings for credit rating agencies will also be liberalized, and international credit rating agencies with full foreign ownership will be allowed in the Malaysian market from January 1, 2017.

For company shares listed on Bursa Malaysia, substantial shareholders are required to give notice to the company and the registrar in writing within 3 working days in case a shareholder:

• becomes a substantial shareholder,
• has a change in the interest in substantial shareholding. OR
• ceases to be a substantial shareholder.

Clients are required to monitor your shareholding levels and submit the notice when required, directly to the company and the registrar.

Shareholding in Banking stocks
The prior written approval from the Minister of Finance is required where a person or persons acting in concert with a person, who acquires or disposes of any shares of a licensed institution, equal to 5% or more of the shares of that institution to any single person or persons acting in concert.

Except where the Minister of Finance otherwise approves, no person shall hold more than the following percentages of interest in shares of a licensed institution:

• In the case of an individual, 10%; and
• In the case of a person other than an individual, 20%

As of April 2009, the banking sector has been liberalised to allow foreigners to acquire up to 70% stake in Islamic bank subsidiaries of local banking groups. Commercial banks can now sell up to 70% of their Islamic banking units, subject to the condition that the Islamic bank remains a subsidiary of the commercial banking institutions.

Shareholding of exchange holding company
Under Section 110 of the Security Industry Act 1983, no person or persons acting in concert shall enter into an agreement or arrangement to acquire any voting shares of an exchange holding company where by such agreement or arrangement acquire an aggregate equals to 5% or more of the aggregate of the nominal amount of all the voting shares in the exchange holding company, without first obtaining the prior written approval of the Minister of Finance.

An application for approval shall be made by the person intending to acquire voting shares of 5% or more in an exchange holding company and sent to the Securities Commission, whereupon the Securities Commission shall submit such application, with its recommendation to the Minister of Finance. The MOF may grant his approval subject to such terms and conditions, as he deems fit to impose.

In this context, the exchange holding company referred to is Bursa Malaysia Berhad (ISIN MYL1818OO003).

Once the limit on foreign-owned shares is reached, the companies concerned can ask for a separate listing of their foreign and local contents, although this is not mandatory. Shares that have reached their foreign ownership limits (FOLs) may therefore either be traded singly or separately.

Additionally, foreigners can still continue to buy, hold or trade in shares that have reached their foreign holding limit and which have not been quoted separately, or in shares that are about to reach their limit. However, there could be ramifications on the treatment of corporate action entitlements for such shares.

Under the Securities Industry (Central Depositories) (Foreign Ownership) Regulations 1996, shares held by foreign investors in companies with foreign ownership limitations, and which are not separately quoted, are known as restricted shares. The rights and obligations of these restricted shares may be determined by the issuer or their registrar. General market practice is that holders of these 'restricted' shares that have exceeded the prescribed FOLs will not have voting rights, but will rank pari passu with other ordinary shares in all aspects of entitlements declared by the issuer, except the lack of voting rights as mentioned earlier.

The following transactions are subject to approval by the Foreign Investment Committee:

• Single investment in a company of 15% or more
• Aggregate investment of 30% or more
• Any acquisition by foreign interests having a market value in excess of MYR 10 million.

Accounts maintained on behalf of Malaysian residents
The following is a key factor when a foreign agent e.g. Custodian, is acting on behalf of a Malaysian resident. Malaysian residents are allowed to appoint foreign brokers and custodians as their agent. With the recent liberalisation
(26th November 2012) by Bank Negara Malaysia (Central Bank), client is now allowed to hold the MYR in the cash account indefinitely. The ringgit account opened by the non-resident intermediaries on behalf of the resident clients shall be designated as a resident account.

A Malaysian citizen is classified as a resident if:

A Malaysian citizen with a permanent resident (PR) status in another country and who resides in another country is considered to be a non-resident. For this, the foreign agent is permitted to operate funds of the Malaysian citizen in the same manner as a non-resident.

The local currency (MYR) is freely convertible for non-residents through licensed onshore financial institutions

The transfer of funds between non-resident cash accounts, called External Accounts (EAs), of different account holders is permitted only for the purchase or sale of MYR assets. The client's confirmation or evidence of movement of MYR assets is required before the transfer is permitted.

Pursuant to the liberalisation of Foreign Exchange Administration, any transaction involving funds held in accounts designated as Resident Accounts will be subject to Bank Negara's exchange control regulations applicable to residents.

Investment in foreign currency asset onshore
A resident is allowed to undertake any amount of investment in foreign currency asset onshore for its own account or on behalf of clients.

Investment abroad for own account
A resident individual, sole proprietor or general partnership –
(a) without domestic ringgit borrowing is allowed to undertake an investment abroad of any amount; or
(b) with domestic ringgit borrowing is allowed to undertake an investment abroad of

•  (aa) from abroad;
  (bb) from a non-resident, other than foreign currency borrowing; or
  (cc) sourced from foreign currency account II; (aa) using foreign currency funds sourced from foreign currency account
  (bb) using foreign currency funds sourced from conversion of ringgit; or
  (cc) through the swapping of financial assets.

(i) any amount using foreign currency funds(ii) up to RM10 million equivalent in aggregate of foreign currency borrowing obtained by the resident from a licensed onshore bank or a non-resident; or
(iii) up to RM1 million equivalent in aggregate per calendar year

Same day, next day and spot transactions are allowed for foreign exchange deals.

The position on the procurement of documentary evidence/proof of underlying is as follows until otherwise informed:

	BUY MYR	SELL MYR
Value Today	No	No*
Value Tomorrow	No	No*
Spot	No	No
Forward	Yes	Yes

* Forward deals are only allowed based on firm commitments to buy/sell 'Ringgit Assets', with exception of:

• Existing funds in External Account including fixed deposits.
• Negotiable instruments of deposits in ringgit.
• Over-the-counter derivatives or structured products which are tantamount to lending or borrowing of ringgit between residents and non-residents.

FX swap contracts are only allowed on new transactions.

To complement the non-residents' investment strategy, non-residents may obtain financing from licensed onshore banks both in Ringgit and foreign currency and enter into foreign exchange contracts with licensed onshore banks to actively manage currency risks arising from investments in Ringgit assets. Non-residents are also free to convert foreign currency into Ringgit and vice versa.

Payments in Malaysia occur by cheque, cashier's order or inter-bank electronic transfer.

Inter-bank payment system: RENTAS (Real Time Gross Settlement) SWIFT platform
In July 1999, Bank Negara Malaysia (BNM) implemented the Real-time Electronic Transfer of Funds and Securities system (RENTAS). RENTAS is a real-time gross settlement (RTGS) system in which both processing and settlement of funds transfer instruction take place continuously i.e. in real-time. All transfers are settled immediately, without netting debits against credit. Primarily an online real-time system designed to facilitate interbank transfers; the main feature of RENTAS is the instantaneous and irrevocable transfer of funds if sufficient balances are available in the respective bank's settlement account with Bank Negara Malaysia (BNM). RENTAS (Real-Time Gross Settlement - RTGS) clearing system mirgrated to a new RENTAS SWIFT platform in July 2016.

The BNM-run RENTAS SWIFT system operates from 09:00 to 18:00 Monday to Friday.

For amounts in excess of MYR 10,000, payment is usually made electronically through RENTAS SWIFT. Payments through RENTAS SWIFT are final and cleared with immediate value and availability.

Payments of less than MYR 10,000 are usually made by cheque, cashier's order or via interbank GIRO payment. Cheques and cashier's orders deposited before 16:00 take two business days to clear. Whilst GIRO payment instructions received by 11:00 will be transferred to client accounts by the following day.

However, specifically for trade settlement purposes, arrangements have been made by a number of counterparties primarily between custodian banks, for trade related payments, to be effected via RENTAS SWIFT, even though the amount is less than MYR 10,000.

Effective August 1, 2017, Bank Negara Malaysia’s (BNM) wholly-owned subsidiary, Malaysian Electronic Clearing Corp Sdn Bhd (MyClear), has merged with Malaysian Electronic Payment System (MEPS) to form Payments Network Malaysia Sdn Bhd (PayNet).

Cheque clearing system: SPICK (National Automated Cheque Clearing System) 
SPICK structures the entire country's cheque clearing into six regions and requires Banks to set up automated systems, using imaging technology to process Clearing items.

IBG (Interbank GIRO)
Malaysian Electronic Payment Systems (MEPS) is the provider of the national switching system for the banking industry. The IBG is an Automated Clearing House (ACH) batched based payment, designed to handle a high volume of low value inter-bank payments involving less than MYR 500,000 per transaction.

Overdraft facilities are permitted following further liberalisation on the Exchange Control Regulation. However, it is only to facilitate the settlement of ringgit instruments to avoid settlement failure due to inadvertent delay. At present, this is up to 2 working days with no roll-over option.

Dividends are generally paid in June and December. Entitlements are based on the traded position at ex-date. Bursa Malaysia Depository Sdn Bhd (BMDSB) sends a Record of Depositors (RoD) to the appropriate registrar on book-close date.

Record date is two days after ex-date, and pay date is usually two to four weeks after record date.

Registrars pay dividends to custodian banks by way of cheque, which takes from two to eight days to clear. The custodians may then need to split the dividend among the underlying beneficial owners.

Dividends and other corporate events payments for listed instruments are paid by cheque, while interest on Government bonds are paid via RENTAS SWIFT. For unlisted fixed income securities, income can be credited using RENTAS SWIFT, with funds immediately available.

E-Dividend - a new service which allows an issuer to electronically pay cash dividend entitlements directly into the bank account instead of making payment via bank cheques.

Typically semi-annual or annual. However, there are some companies that pays quarterly dividends.

Quarterly, semi-annual, annual for interest bearing instruments. Under the rules and regulations of the Association of Banks in Malaysia (ABM), the payment of credit interest on idle account balances is prohibited.

Not applicable.

Rights issues and bonus shares are common. Issuers notify the registered shareholders and nominees via direct contact, mass media, the BMB's website or a stock exchange information system. Rights (for renounceable issues only) are normally tradable from the day after issuance until approximately two weeks before expiration date. Rights issues with abridged prospectuses are managed electronically and settled in accordance with the settlement procedures for equities.

Payment to take up new shares is due on debit date, i.e., two days before the last acceptance date. The BMD credits shares from rights, as well as bonus shares, into the beneficial owner's BMD account. Previously there was no fixed payment date for bonus shares and payment will occur within four to six weeks after record date. However since the implementation of the amendments to the listing requirements effective March 30, 2007 the paydate for stand-alone bonus issue is book close date +1. New shares from bonus issues rank pari passu for dividends at the option of the issuer.

For equities, rights and entitlements are protected based on the traded position on Ex-date at Bursa Malaysia Depository. Entitlements for shares purchased on ex-date can be recouped by a market claim.

For fixed income, rights and entitlements are protected on settled positions.

Voting rights are generally available to foreign investors who hold shares at least three business days prior to voting or the specific record date set by the issuer, except where it has exceeded the company's Foreign Ownership Limit.

In general, foreign ownership of Malaysian companies is restricted to 30% as listed in their M & A or governed by Ministry guidelines. There are exceptions where the 30% limit can be exceeded, in particular for companies, which mainly produce goods for export.

Once the limit on foreign-owned shares is reached, the companies concerned can ask for a separate listing of their foreign and local contents. However, this is not mandatory. Note that there is no restriction on foreigners who wish to buy, hold or trade in shares which have reached their foreign holding limit or local shares where such shares are quoted separately. Such shares would be classified as "restricted shares" and the general practice with regard to the treatment on corporate action entitlements is that holders of these 'restricted' shares which have exceeded the prescribed foreign ownership limits will not have voting rights, but will rank pari passu with other ordinary shares in all aspects of entitlements declared by the issuer.

No. However, shares must be held in the account at least three business days prior to voting day to be eligible or the specific record date set by the issuer.

Provided in English. Annual general meetings and extraordinary general meetings are announced two to four weeks in advance.

Usually announced by the company in local newspapers and on the Bursa Malaysia website one to two days after the meeting.

On request. All company reports are available on the Bursa Malaysia website.

Not required.

None

Corporate taxes are at 24% since 2016. This amount is deducted at source and is not reclaimable by foreign investors. Certain payments may be exempted from corporate tax, primarily for industries where the government is encouraging development and growth.

With the announcement of tax exemptions in January 2005 practically all fixed income instruments are now free of withholding tax, with the exception of convertible loan stocks held by individuals and corporates.

Withholding tax on income earned from Real Estate Investment Trusts (REITs)
With effect from January 1, 2009, income from REITs will be subject to WHT based on the following rates:

*Under the Malaysian tax legislation, "Institutional Investor" is defined as a pension fund, collective investment scheme or such other persons approved by the Minister.

** "All Other Investors" include resident individuals, non-resident individuals and resident institutional investors. For local resident companies, they are not subject to any deduction of WHT but will be taxed based on corporate tax rate upon filing their annual tax return.

None

All instruments relating to the issue of, offer for subscription or purchase of, or invitation to subscribe or purchase debentures, approved by the Securities Commission under Section 32 of the Securities Commission Act 1993, and the transfer of such debentures, are exempted from stamp duty. However, this exemption does not apply to contract notes issued in relation to the sale or purchase of debentures listed on Bursa Malaysia. In this respect, stamp duty charges will be 0.1% of the contract value capped at MYR 1,000.
For a rights issue, MYR 10 for any Rights Subscription Form or Rights Renunciation Form for nil paid rights.

Effective April 1, 2015, investors are subject to 6% Goods & Services Tax (GST) on financial services. GST replaced sales tax and service tax in Malaysia. GST is applicable to fees and commissions on financial services provided in Malaysia.

Goods and Services Tax (“GST”) Act 2014 has been repealed, and the Sales and Services Tax (“SST”) legislation came into effect on 1 Sept 2018.

The implementation of the SST has no impact on the financial transaction charges.

Malaysia Calendrier des fêtes

• Bursa Malaysia www.bursamalaysia.com
• Ministry of Finance www.treasury.gov.my
• Securities Commission www.sc.com.my
• Bank Negara Malaysia (Central Bank of Malaysia) www.bnm.gov.my
• Labuan International Financial Exchange (LFX) www.lfx.com.my
• Bursa Malaysia Derivatives Exchange www.mdex.com.my/statistics/statsmth.htm