KLSE And SGX Agree On A Comprehensive CLOB Solution

The Kuala Lumpur Stock Exchange (KLSE) and the Singapore Exchange Limited (SGX) have reached a comprehensive solution to the CLOB issue. Two agreements were signed on 25 February 2000. KLSE and SGX signed an agreement to provide for the migration of the CLOB securities - currently held in The Central Depository (Pte) Limited (CDP) authorised nominee account with Malaysian Central Depository Sdn Bhd (MCD) into individual investors' securities accounts for trading on the KLSE in accordance with the terms set out in the two agreements. Under the KLSE-SGX agreement, the two exchanges will facilitate the implementation of two schemes: Scheme A: An amended proposal by Effective Capital Sdn Bhd (ECSB) for the staggered release of CLOB securities, which KLSE has confirmed to be the only proposal that has complied with all the rules and procedures of KLSE and MCD when the authorised nominee status of CDP was extended on 31 December 1999. The amended proposal involves: (I) An initial set up period of three months commencing 31 March 2000 (for verification of information and opening of individual securities accounts with MCD by CLOB investors through their chosen Authorised Depository Agent); (ii)Thereafter a 13-month staggered release of CLOB securities; and (iii) A transfer fee of 1.5% based on 15 February 2000 closing securities prices, to be paid by accepting investors to ECSB which will administer the proposal. Scheme B: An agreement between CDP and Securities Clearing Automated Network Services Sdn Bhd (SCANS) has also been signed involving: (i) CLOB securities to be released for trading on KLSE after thirty-three (33) months from the close of ECSB's offer on 31 March 2000; (ii) Staggered release over 9 months from the end of the thirty-three (33) month period; and (iii) An administrative fee of 1% based on the average securities prices over the last five trading days of the 31st month, to be paid by investors to SCANS through CDP. ECSB has informed the KLSE and SGX of its amended proposal, the terms of which have been accepted by the two exchanges. The closing date for the amended offer will be extended to 31 March 2000. CDP will disseminate the documents for the offer together with the amendments by 6 March 2000. It is up to CLOB investors to decide which of the two schemes to accept. CLOB investors accepting Scheme A must submit their written acceptances to CDP by 27 March 2000 in the requisite manner. CLOB investors accepting Scheme B can submit their acceptances anytime within thirty-two (32) months from 31 March 2000 with the remaining one month set aside for administrative purposes. The KLSE and SGX agreement confirms that the two schemes meet the KLSE's duty to maintain an orderly and fair market for securities trading in Malaysia. They also meet SGX and CLOB investors' concerns that CLOB investors who do not accept ECSB's proposal be offered an alternative which provides for a comprehensive solution, and that the arrangements be legally binding on all parties involved. KLSE and SGX are pleased that they have been able to reach a comprehensive and amicable solution to the CLOB issue.