SIDC Module 10 flashcards

32 cards. Read the term and the definition here. The deck at the top of this page is optional.

Securities Commission Malaysia

The statutory regulator established under the Securities Commission Malaysia Act 1993, responsible for licensing capital market intermediaries, supervising market conduct and enforcing the Capital Markets and Services Act 2007.

Capital Markets and Services Act 2007

The principal Malaysian statute governing capital market activity, covering licensing of capital market services, conduct obligations, market misconduct offences and the investigative and enforcement powers of the regulator.

Capital market services licence

A licence granted by the Securities Commission Malaysia authorising a person to carry on a specified regulated activity, such as dealing in securities, fund management, investment advice or corporate finance advice.

Registered representative

An individual registered with the Securities Commission Malaysia to act on behalf of a licence holder in carrying out regulated activities, subject to sponsorship by the principal and fit-and-proper assessment.

Regulated activity test

The threshold question of whether a person is carrying on a business of a regulated capital market activity in Malaysia, which triggers the licensing requirement unless a statutory exclusion applies.

Fit and proper criteria

Assessment standards covering honesty, integrity, reputation, financial soundness, competence and absence of disqualification, applied to licence applicants, representatives and substantial shareholders on a continuing basis.

SCLE purpose

The Securities Industry Development Corporation's licensing examinations test the minimum technical and regulatory competence of candidates before they are registered to act as representatives of licence holders.

Licence conditions

Restrictions or requirements attached to a capital market services licence by the regulator, which may limit the scope of activities, impose reporting duties or require remedial action within a stated period.

Client suitability assessment

The process of matching a recommended product to a client's investment objectives, risk tolerance, financial situation, knowledge and needs, documented before or at the point of recommendation.

Know-your-client principle

The obligation to collect and verify information about a client's identity, background, financial position and objectives so that advice and product recommendations are appropriate and money-laundering risk is managed.

Client money segregation

The requirement to hold client money and assets separately from the firm's own funds in designated trust or client accounts, with reconciliation controls, so client property is protected on insolvency.

Priority of client orders

The conduct rule that client orders must be executed ahead of the firm's proprietary orders in the same security on comparable terms, preventing the firm from trading on the back of client flow.

Conflicts of interest management

The process of identifying conflicts between the firm, its staff and clients, then avoiding, controlling or disclosing them so that client interests are not improperly disadvantaged.

Personal account dealing

Staff trading in securities for their own account, controlled through pre-clearance, restricted lists, blackout periods and holding-period rules to prevent misuse of confidential or client information.

Fair and balanced marketing

The standard that client communications must be accurate, not misleading, present risks alongside benefits, and support performance or projection claims with stated assumptions and adequate warnings.

Suspicious transaction report

A report filed with the financial intelligence authority when a firm suspects funds are linked to money laundering or terrorism financing, made without tipping off the client concerned.

Best execution duty

The obligation to take reasonable steps to obtain the best possible result for clients when executing orders, considering price, cost, speed, likelihood of execution and settlement.

Bond price-yield relationship

Bond prices move inversely to yields because the fixed cash flows are discounted at the prevailing required yield; a higher yield reduces the present value of those cash flows.

Duration

A measure of a bond's price sensitivity to yield changes, approximately the percentage change in price for a one percentage point move in yield, rising with maturity and falling with coupon.

Ordinary shares

Equity securities representing residual ownership, carrying voting rights and dividend entitlements that rank after creditors and preference shareholders if the company is wound up.

Net asset value per unit

For a unit trust scheme, the value of the fund's assets less liabilities divided by the number of units in issue, used as the basis for creating and cancelling units.

Futures versus forwards

Futures are standardised, exchange-traded and margin-settled through a clearing house; forwards are privately negotiated over-the-counter contracts carrying counterparty credit exposure.

Option contract

A contract giving the buyer the right, but not the obligation, to buy or sell an underlying at a set strike price before or at expiry, in return for a premium paid to the seller.

T+2 settlement

The standard settlement cycle in which a securities trade is settled, with cash and securities exchanged, two business days after the trade date.

Systematic versus unsystematic risk

Systematic risk is market-wide and cannot be diversified away; unsystematic risk is issuer-specific and can be reduced by holding a diversified portfolio of securities.

Index weighting method

The rule determining each constituent's influence on an index, such as market-capitalisation weighting, price weighting or equal weighting, which changes the index's risk and sector profile.

Compliance function independence

The structural arrangement whereby compliance reports to senior management and the board, has unrestricted access to records and is not subordinated to revenue-generating business units.

Record retention obligation

The duty to keep client, transaction and communication records for the prescribed period in a retrievable form and to produce them to the regulator on request during supervision or investigation.

Insider trading

Dealing in securities while in possession of material non-public information, or communicating that information, in breach of a duty of confidence owed to the issuer or another person.

Market manipulation

Conduct intended to create a false or misleading appearance of active trading or price movement in a security, including wash trades, matched orders and ramping.

Regulatory sanction

A measure imposed by the regulator for a breach, ranging from a reprimand or directive to fines, conditions on licence, restriction or revocation of licence and referral for prosecution.

Complaint handling procedure

A documented process for receiving, acknowledging, investigating and resolving client complaints fairly and promptly, with written outcomes and root-cause remediation reported to senior management.