Kuala Lumpur Stock Exchange Update On Central Limit Order Book International

The Kuala Lumpur Stock Exchange (KLSE) has to date received enquiries on various aspects of the Central Limit Order Book International (CLOB) issue. The following is an update of the issues forwarded to the KLSE and our clarification. As announced in the KLSE Press Release dated 31 December 1999, the Central Depository Pte Ltd. (CDP) authorised nominee status was extended to 30 June 2000. The extension is to provide a final opportunity for CDP to resolve the CLOB issue and to facilitate the completion of proposals already put forward to Singapore Exchange Ltd (SGX) and CDP. There is much concern, on the delay by the Singapore authorities, in the distribution of private sector offers to CLOB investors. This includes the delay in the registration of various documents that would enable CLOB investors to consider proposals to resolve the issue. These delays will seriously disadvantage CLOB investors in seeking a timely resolution to their problem. CLOB investors should immediately follow-up with the Singapore authorities to ensure they are not deprived of any information or documents that would assist them to make a decision to accept the private sector offers. KLSE has been informed that Effective Capital Sdn Bhd (ECSB) has submitted all relevant documentation on its Irrevocable Request & Authority (IRA) proposal to the Singapore authorities in December 1999. The ECSB's IRA proposal has been perused by KLSE and Malaysian Central Depository Sdn. Bhd. (MCD) and is found to comply with the relevant rules and procedures. As stated by the Finance Minister, in the interest of time, it is best for CLOB investors to focus on existing proposals. Existing proposals mean those proposals which have been confirmed to have complied with the KLSE and MCD rules and procedures and are ready to be implemented. To date, only ECSB's proposal has fully complied. KLSE extended CDP's authorised nominee status on 31 December 1999 to facilitate completed proposals already put forward to SGX/CDP. As at 31 December 1999, only ECSB has submitted a complete proposal which has fully complied with the relevant rules and procedures. Other proposals including - Bintang Melewar Sdn Bhd, Collective Custodial Services Asia Ptd Ltd and Continental Edge Sdn Bhd - have not submitted sufficient details for KLSE to study, evaluate nor confirm compliance with the rules and procedures. Some of the private sector parties, having announced their proposals, did not submit any further information at all. As KLSE has stated, it is not for KLSE to decide on the merits of any private sector proposal. Its role is to ensure that any proposal is in full compliance with the laws, rules and procedures. KLSE believes that CLOB investors should be allowed to decide or at least be given the opportunity to decide, as in the case of the ECSB's cash offer that was implemented in June 1999. By having private sector involvement, this would preserve the impartiality of both Exchanges as market regulators. However, KLSE and SGX will continue to hold discussions to discuss the matter. It is premature to speculate whether the government will step in or not. The KLSE has given sufficient time and opportunity for the SGX and CDP to resolve the matter. There have been private sector proposals put forward to them, and KLSE has extended the authorised nominee status to facilitate the completion of these proposals. In the interest of a timely settlement of this matter, in an acceptable manner, CLOB investors should focus on these proposals, without delay. After the expiry of the authorised nominee status on 30 June 2000, the course of action as determined by the law will take effect. KLSE has always maintained that the CDP/SCANS agreement outlines the procedures for the migration. It is not intended that SCANS would assume CDP's responsibility towards the CLOB investors. In effecting the migration, KLSE has to ensure that it fully complies with the laws including the provisions of the Securities Industry Act, 1993 which clearly spells out the duty to ensure an orderly and fair market. Additionally, the KLSE shall always act in the interest of the public. In any event, the agreement is subject to Malaysian laws. KLSE's position is clear. It is up to the SGX and CDP to resolve the matter. KLSE has given them sufficient time and opportunity to do so, and has even extended the authorised nominee status of CDP. With the final extension given to 30 June 2000, CDP would have been given a total of 19 months to resolve the CLOB issue. Again, KLSE is of the view that CLOB investors should immediately follow-up with the Singapore authorities to ensure they are not deprived of any information or documents that would assist them to make a decision to accept the private sector offer. These delays will seriously disadvantage CLOB investors in seeking a timely resolution to their problem. KLSE and SGX will meet to discuss the CLOB issue as soon as possible, next week. KLSE and SGX will continue to hold discussions but as time is of the essence, KLSE believes CLOB investors should concentrate on those proposals that have fully complied with the relevant rules and procedures.