SIDC Module 7 flashcards

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

CMSA regulated activities

The Capital Markets and Services Act 2007 lists regulated activities including dealing in securities, derivatives dealing, fund management, corporate finance advice, investment advice, financial planning, and clearing and settlement.

Capital Markets Services Licence

A licence issued by the Securities Commission under s.58 CMSA authorising the holder to carry on a specified regulated activity; one licence is required per activity.

Fit and proper criteria

SC standards covering honesty and integrity, solvency, competence and capability, and absence of serious regulatory or criminal breaches, applied to licence applicants and registered representatives.

Prospectus requirement

Under s.232 CMSA, an offer of securities to the public requires a prospectus registered with the SC, unless an exemption in s.229 or s.230 applies.

Insider trading prohibition

Section 188 CMSA prohibits a person with inside information from dealing in securities, communicating the information, or procuring others to deal; penalties include fines and imprisonment.

Mandatory general offer

Under the Malaysian Code on Take-Overs and Mergers 2016, a person acquiring 33% or more of voting rights must make a mandatory general offer for remaining shares.

Lodge and Launch framework

The SC's LOLA framework permits certain wholesale capital market products, including unlisted bonds and sukuk, to be lodged and launched with the SC rather than requiring full prospectus registration.

Bond price-yield relationship

Bond prices move inversely to yields; when market yields rise, the present value of fixed cash flows falls, lowering the bond price.

Modified duration

A measure of a bond's price sensitivity to a one percentage point change in yield; calculated as Macaulay duration divided by one plus the yield per period.

Sukuk definition

Shariah-compliant certificates representing undivided ownership in an underlying tangible asset, usufruct, or project, structured to avoid riba, gharar and maysir.

NAV per unit

Calculated as total fund assets minus total liabilities divided by units in circulation; used to price unit trust subscriptions and redemptions on a forward basis.

REIT distribution rule

A listed Malaysian REIT must distribute at least 90% of its distributable income to unitholders to qualify for tax transparency treatment on distributions.

Client money segregation

Client money must be held in a segregated trust account separate from the firm's own funds, reconciled regularly and reported under SC client money rules.

Suitability assessment

Before recommending a product, a representative must assess the client's investment objectives, risk tolerance, financial situation, knowledge and experience to ensure suitability.

Record retention period

CMSL holders must retain client and transaction records for at least seven years, as required by s.118 CMSA and related SC guidelines.

Conflicts of interest management

Firms must identify, disclose and manage conflicts through policies, registers, information barriers and, where necessary, declining to act or obtaining client consent.

MCCG 2021 application

The Malaysian Code on Corporate Governance 2021 applies to listed companies on a comply-or-explain basis and sets principles on board leadership, effectiveness, remuneration and sustainability.

Independent director proportion

Bursa Listing Requirements require at least one-third of a listed issuer's board to comprise independent directors, and the audit committee to be majority independent.

Shariah Advisory Council

The SC's Shariah Advisory Council is the authoritative body for Shariah rulings on Islamic capital market matters; its rulings prevail under s.316 CMSA.

Shariah screening benchmarks

The SC screens securities using business activity filters and financial ratio thresholds, such as interest income and debt-to-asset limits, publishing a compliant list twice yearly.

Related party transactions

Transactions between a listed issuer and related parties require audit committee review and, above specified thresholds, shareholder approval under Bursa Listing Requirements.

Customer due diligence

Reporting institutions must identify and verify customers, beneficial owners and the purpose of the relationship, and monitor transactions on a risk-based basis under AMLA.

Enhanced due diligence

Additional scrutiny applied to politically exposed persons, high-risk jurisdictions and unusual transactions, including source of funds and wealth verification and senior management approval.

Suspicious Transaction Report

A report submitted to Bank Negara Malaysia's Financial Intelligence and Enforcement Department when a reporting institution suspects money laundering or terrorism financing; tipping off is prohibited.

AMLA record retention

Reporting institutions must retain customer and transaction records for at least six years after the transaction or the end of the business relationship under AMLA.

Cash threshold reporting

Reporting institutions must submit a Cash Threshold Report to Bank Negara Malaysia for cash transactions of RM25,000 or more, as set by BNM AML/CFT policy.

SRI Taxonomy

The SC's Sustainable and Responsible Investment Taxonomy classifies economic activities as green, transition or social to guide capital flows and reduce greenwashing risk.

Sustainability statement

Bursa Listing Requirements require listed issuers to include a sustainability statement in annual reports covering material economic, environmental and social risks and opportunities.

ASEAN Green Bond Standards

Regional standards developed under the ASEAN Capital Markets Forum requiring proceeds to fund eligible green projects, with periodic reporting and external review expectations.

Stewardship code

The Malaysian Code for Institutional Investors sets principles for institutional investors on monitoring investee companies, engagement, voting and managing conflicts.

Greenwashing risk

The risk that sustainability claims overstate or misrepresent environmental credentials; mitigated through substantiated, comparable and reliable disclosures aligned with recognised frameworks.

TCFD and ISSB disclosure

TCFD recommends disclosure of governance, strategy, risk management and metrics on climate; ISSB's IFRS S1 and S2 form the emerging global baseline for sustainability reporting.