Executive Chairman Dato' Mohd Azlan Hashim said what is available on KLSE has many similarities with other developed exchanges such as fully immobilised securities, T+3 settlement system, delivery versus payment, quarterly reporting and international accounting standards.
"Notwithstanding the KLSE's relatively young age, KLSE has a vision to develop itself into a world class stock exchange.
"We are certainly not behind in infrastructure development.
"However, the exchange intends to keep abreast of international developments to ensure its continued relevance and wide acceptance, domestically and internationally," he said.
Mohd Azlan said to be internationally competitive, lower transaction costs will make KLSE and Malaysia a more attractive destination for investors.
"The initiative to reduce transaction costs is already under way. The framework, in two stages, will streamline, reduce and liberalise brokerage rates. The flexibility of the new structure will significantly enhance the cost effectiveness and competitiveness of the Malaysian market.
"This liberalisation is expected to have a positive impact on the market as a whole.
"Of course, one should not expect immediate results upon reduction of the transaction costs, which is a structural improvement. Results to be achieved through such initiatives can only be realised over time," he said.
Mohd Azlan was delivering his keynote address Capital Market Masterplan - What it means to the Securities Market at the Malaysia Finance & Capital Markets Conference in Kuala Lumpur today.
On the Capital Market Masterplan (CMP), Mohd Azlan said the ultimate objective of the CMP is to forge and develop a market that meets the needs and expectations of all participants.
"Ultimately, what we need is a reliable, efficient and cost effective market to meet investors' needs and demands. We must remember, that the investor is paramount, without them, there is no market. We therefore have to keep pace with their needs, " Mohd Azlan said.
In his address, Mohd Azlan outlined key directions undertaken by KLSE to meet the recommendations of the CMP, including:
- Consolidation into a single exchange
- Demutualisation and listing of single exchange
- Strategic alliances as a long term objective
- Reduction of transaction costs
- Move to disclosure based regime
On consolidation into a single exchange, Mohd Azlan said the CMP also recommends the establishment of a common trading platform and a common clearing and settlement platform across all exchange-traded products.
"This will benefit not only market institutions, but all market participants, with greater efficiency and cost effectiveness.
"Ultimately, there will essentially be a single integrated access for investors to a market that is able to offer a wide range of products," Mohd Azlan said.
Demutualisation and Listing of Single Exchange
Mohd Azlan said the demutualisation and listing of the KLSE addresses the need to have a commercially focussed and professionally managed market institution that represents all the stakeholders.
"The exchange will increasingly have to attune to the needs of investors who have become more global, more demanding. They will seek the market that gives the best returns, using intermediation that offers the fastest, reliable and efficient access, at the lowest cost.
"The demutualisation and listing of the Exchange will enable greater flexibility to further enhance efficiency and adaptability in the fast changing environment," he said.
Mohd Azlan added whilst KLSE becomes commercially driven, it will remain an institution committed to the nation's economic objectives and aspirations, and will not compromise its role as a front-line regulator. Without fair and orderly markets and market integrity, he said, there would not be investor confidence.
Strategic Alliances as a Long-term Objective
The recommendation for exchanges forging international alliances, Mohd Azlan said, reflects the current trend of exchanges worldwide.
"Exchanges no longer hold an exclusive franchise for listing and trading of instruments within borders and are now being challenged by alternative trading systems such as electronic communication networks (ECNs). In ensuring our continued relevance and competitiveness, we cannot afford to be too far behind, lest we lose out.
"However, in pursuing these alliances, it is critical that KLSE does not lose sight of its principal objectives - to continue to offer a secure, efficient and cost effective platform for Malaysian corporations to raise capital and to facilitate investments," he said.
Reduction of Transaction Costs
On the reduction of transaction costs, Mohd Azlan said the cost of investing is also influenced by the level of transaction costs.
"The lower transaction costs will make KLSE and Malaysia a more attractive and competitive destination for investors; trading activity would increase and consequently liquidity will be enhanced. And liquidity, of course is the life blood of any market," he said.
Move to Disclosure Based Regime
The move to disclosure based regime (DBR), Mohd Azlan said, is to provide a more efficient framework for corporations to raise capital, in the shortest possible time, without compromise to investor protection.
"The recently launched new Listing Requirements of KLSE, to an extent, reflects on the future direction of KLSE towards DBR.
"This marks a significant milestone in the regulation of listed companies, by emphasising on high standards of corporate governance that must be adopted and practised by Malaysian listed companies. This is further supplemented by higher enforcement standards," he said.
In closing his keynote address, Mohd Azlan said the significance of the CMP is to develop the capital market on a more strategic, proactive and clearer approach.
"In respect of the securities market, KLSE is ready to significantly contribute to its growth and development.
"An efficient securities market is essential and instrumental to further growth and development of the economy. In essence, a more efficient market translates into a more efficient economy," he said.
