The Securities Commission Malaysia (‘SC’) and Bursa Malaysia Berhad (‘Bursa Malaysia’) issued a joint announcement on 25 February 2020 that Bursa Malaysia will establish a wholly-owned subsidiary (‘Bursa RegSub’) to assume the regulatory functions currently undertaken by Bursa Malaysia.
According to the SC and Bursa Malaysia, the segregation of Bursa Malaysia’s regulatory functions from its commercial objectives will enhance the governance structure of the exchange to address the perception of potential conflicts of interest between these two functions.
According to the SC Chairman, Bursa RegSub will be governed by a board of directors, a majority of whom will be independent of Bursa Malaysia, and its Chairman will be appointed from amongst the independent board members.
The SC Chairman further stated that Bursa Malaysia will be accountable to the SC to ensure that Bursa RegSub is allocated sufficient financial and human resources to enable it to discharge its regulatory functions effectively and that the SC will continue to regulate Bursa Malaysia as a listed company as well as a market operator. The SC will also exercise oversight of the regulatory functions to be performed by Bursa RegSub.
The establishment of Bursa RegSub will align Malaysia’s stock market regulatory framework with those in Singapore, Japan and Brazil. The revised structure is expected to be operational by the end of 2020.
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