SIDC Module 9 flashcards
SIDC Module 9 · Build recall with a focused review session.
32 cards. Read the term and the definition here. The deck at the top of this page is optional.
- CMSA 2007
- The Capital Markets and Services Act 2007 is Malaysia's principal statute governing securities and derivatives markets, licensing of intermediaries, market conduct, and enforcement by the Securities Commission.
- Securities Commission Malaysia
- The statutory regulator of Malaysia's capital markets, responsible for licensing intermediaries, approving prospectuses, supervising market conduct, and enforcing the CMSA and related guidelines.
- Bursa Malaysia
- The Malaysian exchange operator, running the equities and derivatives exchanges plus their clearing houses, and setting listing requirements and trading rules for participants.
- T+2 settlement
- Equities trades on Bursa Malaysia settle two business days after the trade date, meaning cash and securities exchange hands on the second business day following execution.
- Market order
- An order to buy or sell immediately at the best available price in the market, prioritising execution certainty over price certainty.
- Limit order
- An order to buy at or below a specified price, or sell at or above a specified price, prioritising price certainty over execution certainty.
- Stop order
- An order that stays dormant until a trigger price is reached, at which point it becomes a market order and executes at the best available price.
- FBM KLCI
- The FTSE Bursa Malaysia KLCI, the headline benchmark index of 30 large-capitalisation companies listed on the Main Market of Bursa Malaysia.
- Insider trading
- Dealing in securities while possessing material non-public information obtained through a connected relationship, or communicating that information to others who trade on it.
- Market manipulation
- Conduct such as false trading, wash sales, or price rigging intended to create a misleading appearance of active trading or an artificial price for a security.
- Customer due diligence
- The AML/CFT process of identifying clients, verifying identity using reliable documents, understanding their business, and monitoring transactions for suspicious activity.
- Inverse price-yield relationship
- Bond prices fall when market yields rise and rise when yields fall; a bond priced below par yields more than its coupon rate.
- CAPM formula
- Expected return equals the risk-free rate plus beta multiplied by the market risk premium (market return minus risk-free rate); it prices systematic risk only.
- Beta
- A measure of a security's sensitivity to market movements; beta above one means more volatile than the market, below one means less volatile.
- Standard deviation
- A statistical measure of the dispersion of returns around their mean, used as the standard proxy for total investment risk.
- Sharpe ratio
- Excess return over the risk-free rate divided by the standard deviation of returns; a higher ratio indicates better risk-adjusted performance.
- Gordon growth model
- A dividend discount model valuing a stock as next year's dividend divided by the difference between required return and constant dividend growth rate.
- Future value formula
- Future value equals present value multiplied by one plus the interest rate raised to the number of compounding periods.
- Net asset value
- For a fund, total assets minus total liabilities divided by units outstanding; unit trusts are typically priced forward at the next valuation point.
- Futures versus forwards
- Futures are exchange-traded, standardised, and marked to market daily; forwards are over-the-counter, customised, and settled at maturity with counterparty risk.
- Call option intrinsic value
- The amount by which the underlying spot price exceeds the strike price, floored at zero; it is the exercise value ignoring time premium.
- Put option intrinsic value
- The amount by which the strike price exceeds the underlying spot price, floored at zero; it represents the value of the right to sell.
- Diversification benefit
- Combining assets with low or negative correlation reduces portfolio variance without proportionally reducing expected return, eliminating unsystematic risk.
- Systematic versus unsystematic risk
- Systematic risk is market-wide and undiversifiable, measured by beta; unsystematic risk is company-specific and can be reduced through diversification.
- Know-your-client
- The process of collecting a client's investment objectives, risk tolerance, financial situation, and time horizon before making any recommendation.
- Suitability assessment
- Matching recommended products to the client's documented profile, including risk tolerance and horizon, and documenting the rationale for the recommendation.
- Suspicious transaction report
- A report filed with Bank Negara Malaysia's Financial Intelligence and Enforcement Department when a transaction is suspected of involving proceeds of unlawful activity.
- Tipping off
- Disclosing to a client or third party that a suspicious transaction report has been or will be filed, which is prohibited under AML/CFT rules.
- Client asset segregation
- Holding client monies and securities in designated trust accounts separate from firm assets, with regular reconciliation to prevent misuse.
- Conflicts of interest
- Situations where personal or firm interests could compromise duties to clients; they must be identified, disclosed, and managed or avoided.
- Record retention
- Client orders, communications, and transaction records must be kept for the regulatory minimum period, commonly at least seven years, and produced to regulators on request.
- Continuing professional education
- Mandatory ongoing training for licensed representatives to maintain competence; shortfalls can affect licence renewal and fitness to practise.