Bursa revamps derivatives market rules, directives

PETALING JAYA: Bursa Malaysia Bhd has revamped rules and directives of Bursa Malaysia Derivatives Bhd (BMD) and Bursa Malaysia Derivatives Clearing Bhd (BMDC) to enhance business efficiency and flexibility of doing business in Malaysia’s derivatives market.

The revamped rules which will come into effect on August will allow trading and clearing participants to reduce their cost of doing business and provide better services to their clients whilst strengthening their governance framework and providing better investor protection.

Under the revamped rules for the derivatives market, Bursa has reduced regulatory burden and liberalised regulatory framework that accords greater flexibilities towards the participants’ dealings to manage and operate their business whilst ensuring adequate investor safeguards in place.

An example would be the liberalisation of client onboarding requirements by introducing various non face-to-face methods for participants to verify individual clients’ identity 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,” said Bursa in a press statement today.

In addition, it has removed the requirement for trading participants to maintain a voice logger for client orders which will ease their operational and administrative burden.

The regulator has also removed the prohibition against a dual licensee from becoming a proprietary day trader, thus allowing greater flexibility for dual licensee holders dealing in both securities and derivatives to manage and operate their business based on their business model, activities and risks.

On the other hand, Bursa has also strengthened its governance framework to provide better investor protection.

To this end, it has introduced new requirements for the participants’ risk management and internal audit functions, including a requirement to have the relevant committees overseeing these functions.

It will also require the registration of a head of dealing for greater accountability in a trading participant’s front office.

The revamped rules and directives for the BMD and BMDC were issued on June 28, 2019.

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