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Bursa Malaysia Revamps And Liberalises Its Derivatives Market Rules And Directives To Enhance Business Efficiency And Flexibility Of Doing Business Among Trading And Clearing Participants

Date 14/08/2019

In an effort to enhance business efficiency and flexibility of doing business in the Malaysian derivatives market, Bursa Malaysia Berhad (“Bursa Malaysia”) has revamped the Rules and Directives of Bursa Malaysia Derivatives Berhad (“BMD”) and Bursa Malaysia Derivatives Clearing Berhad (“BMDC”).

With the revamped rules coming into effect on 15 August 2019, Trading Participants and Clearing Participants (collectively, “the Participants”) would be able to reduce their cost of doing business and provide better services to their clients, whilst strengthening their governance framework and providing better investor protection.

To achieve these objectives, the revamped Rules and Directives of BMD and BMDC foster the following improvements:

  • 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. For example:
    • liberalising 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.
    • removing the requirement for Trading Participants to maintain a voice logger for client orders which will ease their operational and administrative burden, apart from reducing costs of doing business and facilitating the mobility of Registered Representatives. 
    • allowing full mobility for Registered Representatives to advise their clients and conduct dealing outside of the business premises. With such mobility, Trading Participants and Registered Representatives may now manage and operate their business more effectively and provide better services to clients.
  • removing 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.
  • Strengthened governance framework for the Participants, which in turn promotes better conduct and self-regulation. For example:
    • introducing new requirements for the Participants’ risk management and internal audit functions, including a requirement to have the relevant committees overseeing these functions.
    • requiring the registration of a Head of Dealing for greater accountability in a Trading Participant’s front office.
  • Clearer, more straightforward and streamlined rules to ease compliance. The rules are now updated and directives are consolidated to facilitate easy reading and understanding.
  • The overall rules have also been reviewed, clarified and enhanced for greater transparency. Additionally, enhancements have been made to improve efficiency in processes, application and reporting requirements as well as towards better management by BMDC of systemic risks and addressing instances of defaults and emergency situations, thus promoting investor protection and enhancing market confidence as a whole.

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 flexibility and liberalisations put in place under the revamp will enhance the attractiveness and competitiveness of the Malaysian derivatives market. At the same time, it is Bursa Malaysia’s hope that through this revamp, the standards for conduct and governance of the Participants will be elevated and consistent with the equities market, where appropriate. This would in turn  provide better investor protection.

The revamped Rules and Directives of the BMD and BMDC were issued on 28 June 2019. For further information, please visit Bursa Malaysia’s website at