This article first appeared in The Edge Financial Daily on February 26, 2020 - March 3, 2020

KUALA LUMPUR: Bursa Malaysia Bhd is going to establish a wholly-owned subsidiary, named Bursa RegSub, which will assume the regulatory functions currently undertaken by Bursa Malaysia.

The subsidiary is espected to be oprational by year-end, announced the Securities Commission Malaysia (SC) and Bursa Malaysia in a joint statement yesterday. The two are now going to review and finalise the implementation details to ensure a seamless transition of the exchange’s regulatory functions to the subsidiary.

“The SC and Bursa Malaysia have been working closely to further enhance the governance structure of the exchange by segregating its regulatory functions from its commercial objectives to address the perception of potential conflicts of interest between these two roles.

“Bursa RegSub will be governed by a board of directors, a majority of whom will be independent of Bursa Malaysia, and the chairman of Bursa RegSub will be appointed from among the independent board members,” said SC chairman Datuk Syed Zaid Albar.

Bursa Malaysia, he said, remains accountable to the SC to ensure that Bursa RegSub is given sufficient financial and human resources to carry out its regulatory functions effectively.

“The SC will continue to regulate Bursa Malaysia directly as a listed company as well as a market operator while maintaining oversight of the regulatory functions performed by Bursa RegSub,” said Syed Zaid.

The establishment of the subsidiary will put Malaysia’s stock market regulatory framework in line with jurisdictions like Singapore, Japan and Brazil, the statement read.

Malaysia’s capital market is globally recognised as forward-looking, well regulated and ranks highly in investor protection, said Bursa Malaysia chairman Datuk Shireen Ann Zaharah Muhiudeen.

“The exchange will continue to work with all stakeholders in our efforts towards building a vibrant and competitive marketplace,” she added.

SC closely monitoring capital market developments

Meanwhile, the SC said it is closely monitoring ongoing developments in the capital market “given the current domestic and global situations”.

“Well-capitalised market intermediaries, healthy levels of liquidity in the fund management industry and robust market infrastructure will continue to drive resilience and cushion the capital market from external shocks. The SC will remain vigilant and continue to monitor the market to ensure that it operates in a fair and orderly manner,” it said in another statement.