8 comparative analysis of asian securities … · 1 the asia securities forum (asf), established in...
TRANSCRIPT
1
(Compiled as of May 8, 2018)
8th COMPARATIVE ANALYSIS OF ASIAN SECURITIES REGULATORS & SROs
AND
MARKET CHARACTERISTICS
(Data and information provided by participating organizations in the 13th ASF Tokyo Round Table)
This report compiles the regulations, systems, market conditions and current trends of the securities market in the
Asian jursidictions participating in the Asia Securities Forum (ASF)1 Tokyo Round Table2. Started in 2010 after the 6th ASF
Tokyo Round Table, this annual comparative analysis aims to provide an axis through which these different Asian markets can
better understand one another and facilitate mutual cooperation.
The content herein is based on the feedback from each delegate of the participating organizations in the 13th ASF Tokyo
Round Table. Japan Securities Dealers Association (JSDA) makes no representations as to, nor guarantees, its accuracy or
completeness.
CONTENTS
I. Basic Organizational Features
I – 1. Organization Type, Statutory Basis
I – 2. Number of Staff, Funding Source and Number of Member Firms
II. Regulatory Framework of the Securities Markets of Each Country
III. Regulation & Self Regulation
III – 1. Major Rule Making Functions of each Organization
III – 2. Qualification System for Market Professionals
III – 3. Training System for Employees/Sales Representatives of Securities Companies
III – 4. Securities Firms Inspection or Audit
III – 5. Disciplinary Action and Measures Against Misconducts
III – 6. Dispute Resolution System between Securities Firms and Customers
III – 7. Investor Education Activities
IV. Market Structures
IV – 1. Breakdown of Financial Assets held by Household Account
IV – 2. Share of Foreign Investors in the Stock Trading on the Exchange
IV – 3. Share of Foreign Investors in the Bond Trading on Exchange/OTC Market
IV – 4. Settlement and Clearing Systems for Securities Transaction
IV – 5. Current Status of Off-Exchange Transaction (including PTS, ATS, MTF, etc.)
IV – 6. Share of On-line Trading
V. Safety Net for Investors Protection
VI. Challenges of Securities and Capital Market
V – 1. Major Recent Incidents and/or Challenges in Securities and Capital Markets as a Whole
V – 2. Specific Challenges in Equity Market
V – 3. Specific Challenges in Bond Market
V – 4. Specific Measures introduced / Implemented for the Securities Market
V – 5. Measures to Invite Foreign Investment (De-regulation, Promotion Activities, etc.)
1 The Asia Securities Forum (ASF), established in 1995, is an international forum that brings together key organizations in the securities industry of the Asia-
Pacific region to exchange information, foster cross-border cooperation, and ultimately promote economic growth and the development of securities markets. 2 The ASF Tokyo Round Table was started in 2006 as a platform on which to hold seminars, training sessions, etc. for the delegates of various organizations
in the Asia-Pacific region.
2
I. Basic Organizational Features
I – 1. Organization Type, Statutory Basis
No. Market Name of Organization Organization Type Statutory Basis
1 Asian Region Asia Securities Industry and Financial
Markets Association
ASIFMA Industry Association Spontaneously established
2 Bangladesh Bangladesh Securities and Exchange
Commission
BSEC
3 Cambodia Securities and Exchange Comission of
Cambodia
SECC Government
Regulator
Established by Law on Issuance and Trading of
Non-Government Securities (2007)
4 Hong Kong Hong Kong Securities Association HKSA Industry Association Established spontaneously in 1978, HKSA is the first
securities industry association in Hong Kong.
5 India 1 Association of National Exchanges
Members of India
ANMI Industry Association Established by the Companies Act (1956)
6 India 2 BSE Brokers’ Forum BBF Industry Association Incorporated under the Societies Act (1861)
7 Indonesia Indonesia Securities Companies
Association
APEI Industry Association Spontaneously established
8 Japan Japan Securities Dealers Association JSDA SRO & Industry
Association
Established pursuant to Financial Instruments and
Exchange Act
9 Korea Korea Financial Investment Association KOFIA SRO & Industry
Association
Established pursuant to Financial Investment
Services and Capital Markets Act
10 Laos Lao Securities Commission Office LSCO Government
Regulator
Established by Securities Law on Securities
No.21/NA (10 December 2012)
11 Malaysia Association of Stockbroking Companies
Malaysia
ASCM Industry Association Established by The Societies Act in Malaysia
12 Mongolia Mongolian Association of Securities
Dealers
MASD SRO & Industry
Association
Established by Securities Market Law of Mongolia
13 Myanmar Securities and Exchange Commission of
Myanmar
SECM Government
Regulator
Established by Securities Exchange Law
14 Nepal Securities Board of Nepal SEBON Government
Regulator
Established by Securities Act (2006)
15 Singapore Securities Association of Singapore SAS Industry Association
Spontaneously established
16 Sri Lanka Securities and Exchange Commission of
Sri Lanka
SECSL Government
Regulator
Established by The Securities and Exchange
Commission of Sri Lanka ACT No.36 (1987) as
Amended by Act No. 26 (1991), No. 18 (2003) and
No. 47 (2009)
17 Taiwan Taiwan Securities Association TSA SRO & Industry
Association
Established by Commercial Group Act; Securities
and Exchange Act
18 Thailand 1 Association of Thai Securities Companies ASCO Industry Association Established by Securities and Exchange Act (1992)
section 230-237
19 Thailand 2 Thai Bond Market Association ThaiBMA SRO & Industry
Association
Established by Securities and Exchange Act
B.E.2535
20 Turkey Turkish Capital Markets Association TCMA SRO Established in accordance with Article 75 of the
Capital Market Law no. 6362
21 Uzbekistan Center for Coordination and Development
of Securities Market
CSM Government
Regulator
Established in accordance with:
Law
“On securities market”
Decree of the President of Uzbekistan (March 26,
1996) #PD-1414.
Regulation
“On the Centre for coordination and development
of the securities market under the State Committee
on Competition of Uzbekistan”
22 Vietnam1 Vietnam Association of Securities Business VASB Industry Association Established in accordance with Decree
No.45/2010/ND-CP (April 21, 2010) of the
Government on the establishment, operation and
supervision of associations which is amended and
supplemented by Decree No.33/2012/ND-CP (April
13, 2012)
23 Vietnam2 Vietnam Bond Market Association VBMA Industry Association Established according to Decree No. 45/2010/ND-
CP (21 April 2010) of the Government
3
I –2. Number of Staff, Funding Source and Number of Member Firms
No. Market Name of
Organization
No. of Full Time
Staff
Funding Source Number of Member Firms (by Business Category)
1 Asian Region ASIFMA 21 Membership fee (As of 20 October 2017)
- 38 Banks
- 45 Non-Banks
- 23 Asset Management (buy-side)
2 Bangladesh BSEC
3 Cambodia SECC 145 Government’s Budget - 6 Security underwriters
- 3 Security brokers
- 1 Security dealers
- 2 Investment advisors
- 4 Central counter parties
- 10 Derivative broker
4 Hong Kong HKSA 3 Membership Fee and
Other Resources
(courses & events
organized by HKSA)
Approximately 1,200 individual members who come from firms
carrying Securities Brokerage, Asset Management, Futures Contracts,
Corporate Finance, and so on.
5 India 1 ANMI 16 Membership Fee and
Other Resouces
(advertisement &
sponsorship income)
834 Stock Brokers Members (Regular)
6 India 2 BBF 6 Membership Fee and
Other Resources
(advertisements and
sponsorships)
Total – 900
Stock Brokers - 750
Commodity Brokers - 150
7 Indonesia APEI 5 Membership Fee and
Other Resources
(Sponsorship from
SRO, Training/Courses
Fee)
121 (108 Stock Exchange Member; 9 Investment Manager; 4 Non Stock
Exchange Member)
8 Japan JSDA 366 (as of April 30,
2017)
Membership Fee,
Fees for Examination
and Training Course
(As of March 31, 2017)
259 Regular Members consisting of securities companies including 13
foreign securities companies
210 Special Members consisting of 187 banks, 14 insurance
companies and 11 other financial institutions
4 Specified Business Members
9 Korea KOFIA (As of Sep. 30th,
2017)
Approximately
around 230
Membership Fee and
Other Resources
(Examination fees for
financial certifications
and revenues from
textbook sales)
(As of Sep. 30th, 2017)
238 Regular members which include securities firms, asset
management firms and futures firms etc.
109 Associate members which include investment advisory business
entities, banks, insurance companies etc.
23 Special members which include general administration companies,
fund assessment companies, Korea Securities Depository etc.
10 Laos LSCO 55
(As of September 25,
2017)
Government’s Budget (As of September 25, 2017)
Securities Exchange (Lao Securities Exchange LSX) 1
Securities Firms 4
Listed Companies 5
Audit Firms 4
Custodian Bank 1
Credit Rating Agencies 1
Asset Valuation Company 1
11 Malaysia ASCM 4 Membership Fee and
Other Resources
(Income from fixed
deposits and training)
(As of October 2017)
10 local securities firms (non-investment bank)
7 foreign ownership securities firms
10 investment banks
12 Mongolia MASD 3 Membership Fee and
Other Resources
(Training activities)
As of September 1, 2017
44 firms including one asset management company and 43 securities
firms of which 17 have investment advisory licenses and 25 have
underwriting licenses in addition to securities brokerage and dealing
licenses.
13 Myanmar SECM 54 Government’s Budget N/A
14 Nepal SEBON 52 Membership Fee and
Other Resources
(Registration fees,
License fees, Securities
transaction fees)
(As of August 22, 2017)
1 Stock Exchange, 1 CDS Company, 50 Broker companies, 24
Merchant Banker, 66 Depository Participants, 7 Fund manager, 1
Credit Rating Agency.
4
No. Market Name of
Organization
No. of Full Time
Staff
Funding Source Number of Member Firms (by Business Category)
15 Singapore SAS 2 Membership Fee and
Other Resources
(Training Fees)
15 Member Firms – 9 Local stockbroking firms & 6 OTC/exchange-
traded product providers
16 Sri Lanka SECSL 80 (permanent)
2 (contract-basis)
Membership Fee
Other Resources
(Broker license fees,
administration levy,
sale of publications,
seminar income for
educational
programmes)
33 Licensed Stock Broking Companies (27 for Equity/Debt, 6 Debt
Trading only)
28 Registered Investment Managers
9 Registered Underwriters
1 Registered Central Depository System
2 Registered Credit Rating Agencies
14 Managing Companies of Unit Trusts
28 Margin Providers
17 Taiwan TSA 46 Membership Fee and
Other Resources
TSA has 134 members consisting of securities firms and other financial
institutions operating securities businesses in Taiwan.
18 Thailand 1 ASCO 38
(As of September 29,
2017)
Membership Fee and
Other Resources
(Examination and
Training Fees, Club
membership fee)
42 Regular Members consisting of securities companies., of which 16
are foreign securities companies.
19 Thailand 2 ThaiBMA 55
(as of September 29,
2017)
Membership Fee and
Other Resources (Bond
Registration Fee,
Information Service
Fee, Training Cource
Fee)
48 Ordinary Members consisting of 14 Thai commercial banks, 6
foreign commercial banks and 28 securities companies which have
debt trading licenses (Dealer).
4 Extraordinary Members are all securities companies which have
inter-dealer broker licenses (IDB).
1 Associate Member is a securities company, which has a monthly
average trading value in the past one year of less than 100 million
baht.
20 Turkey TCMA 28 Membership Fee 82 brokerage firms, 45 banks, 50 portfolio management companies, 9
securities investment trusts, 31 real estate investment trusts and 8
venture capital investment trusts - a total of 225. (as of August 2017)
21 Uzbekstan CSM 93 (as of September
2017)
Government’s Budget 14 regional divisions (as of September 2017)
22 Vietnam 1 VASB 5 (as of September
30, 2017)
Membership Fee, Other
Resources (Supportive
funds, Operating
revenues from services)
32 members:
- 28 security firms
- 2 fund management companies
- 2 banks
23 Vietnam 2 VBMA 3 Membership Fee, Other
Resources (Training
Course Fees, Data
Selling to Vendors)
63 members (consisting of 38 banks, 10 securities firms, 5 fund
management companies, 8 other financial insurance companies, 1 law
firm and 1 audit company (as of 21 August 2017)
5
II. Regulatory Framework of the Securities Markets of Each Jurisdiction
No. Market Name of
Organization
Major Laws, Rules or Practice in the Securities Markets of Each Jurisdiction
1 Asian Region ASIFMA N/A
2 Bangladesh BSEC
3 Cambodia SECC - Law on Government Securities
- Law on the Issuance and Trading of Non-Government Securities, 2007
- Sub-decree on The Implementation of the Law on Issuance and Trading of Non-Government Securities
- Regulations and guidelines of the Securities and Exchange Commission of Cambodia (SECC’s regulations)
- Rule of the Cambodia Securities Exchange
Listing Rule
Membership Rule
Market Operation Rule
Clearing and Settlement Rule
Depository Rule
4 Hong Kong HKSA SFO (Securities and Futures Ordinance) with sub-sections;
Codes, regulations, guidelines by SFC (Securities & Futures Commission);
Listing Rules by Stock Exchange of Hong Kong.
5 India 1 ANMI Securities and Exchange Board of India (SEBI)
http://www.sebi.gov.in/legal/acts/feb-1957/the-securities-contracts-regulation-act-1956-as-amended-by-finance-act-2017-
_4.html
National Stock Exchange(NSE)
https://www.nseindia.com/membership/content/complinc_trading_mem.htm
Bombay Stock Exchange (BSE)
http://www.bseindia.com/members/compliancecalendar.aspx?expandable=3
6 India 2 BBF - The Regulator of the Securities Market is the Securities and Exchange Board of India (SEBI) formed under an Act
of Parliament in the year 1992. SEBI issues Regulations and circulars from time to time.
- Certain sections of the markets (e.g. currency trading, Sovereign Gold bonds) are jointly regulated with Reserve
Bank of India, which is the Central Bank of the country
- The Stock/ Commodity Exchanges work as the front line Regulators to ensure compliance with the listing
requirements on the Corporates and trading/ settlement requirements and related compliance requirements on the
Stock Brokers
- The general oversight on companies is under the Companies Act 2013, for direct taxes is under the Income Tax
Act 1961 and indirect taxes under the various Goods and Service Tax Acts at State and Central level
7 Indonesia APEI - Capital Market Law Number 8 (1995) (UUPM)
- Financial Services Authority Law Number 21 (2011) (UUOJK)
Indonesia Capital Market is regulated by Otoritas Jasa Keuangan - OJK (the Indonesian Financial Services Authority), a
body which was formed on January 1st 2013. Its operation is funded by the State Budget and fee from parties who conduct
their businesses in the financial services sector. OJK is needed for:
ensuring that the overall activities within the financial services sector are implemented in an organized, fair,
transparent and accountable manner
promoting a financial system that has sustainable and stable growth
protecting the interest of consumers in the financial market
Aside from being supervised by OJK, we have to comply with rules and regulations from the following SROs (Self
Regulating Organizations):
Indonesia Stock Exchange (IDX)
Indonesia Clearing and Guarantee Corporation (KPEI)
Indonesia Central Securities Depository (KSEI)
8 Japan JSDA Statutory Regulation: Financial Instruments and Exchange Act (hereinafter referred to as the “FIEA”)
SRO Regulation: JSDA enforced more than 50 rules. (http://www.jsda.or.jp/en/rules/index.html)
- JSDA’s rules are categorized as “rules relating to customer management and internal management by association
member”, “rules relating to employees and sales representatives of association members”, “rules relating to
advertising”, “rules relating to personal information protection”, “code of ethics”, or “rules relating to
stocks/bonds/foreign products/ securitized products/derivatives.
9 Korea KOFIA Financial Investment Services and Capital Markets Act (Hereinafter referred to as the “FSCMA”)
10 Laos LSCO 1. Law on Securities;
2. Law on Enterprises;
3. Strategy Plan on Lao Capital Market Development 2016-2025;
4. Decree on Organization and Operation of Lao Securities Commission (LSC);
5. Decision on Organization and Operation of Lao Securities Commission Office (LSCO);
6. Decision on Transfer of Listed Shares;
7. Decision on Board of Directors of Listed Companies;
8. Decision on Issuance of Coprater Bonds Abroad;
9. Decision on Fees for Cross-Border Offer for Sale of Corporate Bond;
10. Decision on Information Disclosure Regulation;
11. Decision on Information and Technology System of Securities Companies;
12. Decision on Related Parties Transaction;
6
No. Market Name of
Organization
Major Laws, Rules or Practice in the Securities Markets of Each Jurisdiction
13. Decision on Non-Prefunded;
14. Decision on Securities Investment of Commercial Banks and Financial Institutions;
15. Decision on Accounting and Auditing of Securities Activities;
16. Regulation on Corporate Bonds Issuance;
17. Regulation on Provision of Additional Information relating to Sources of Registerd Capital. Shareholder Structure and
Beneficiaries of Securities Companies;
18. Regulation on Surpervision of Securities Professionals;
19. Regulation on Approval of Asset Valuation Companies;
20. Regulation on Incorporation and Operation of Securities companies:
21. Regulation on Custodian Banks;
22. Regulation on Registration of Foreign Credit Rating Agencies;
23. Regulation on Share Issuance;
24. Regulation on Inspection of Securities Activities;
25. Regulation on Net Capital Ratio of Securities Companies;
26. Regulation on Supervision of Share Trading on Internet;
27. Regulation on Representative Trading Account in Securities Exchange in Lao PDR;
28. Regulation on Supervision of Securities Exchange;
29. Regulation on Reporting;
30. Regulation on Reporting and disclosure;
31. Regulation on Reporting and Disclosure for Securities Exchange;
32. Notification on Fund Mobilization by Issuance of Securities and Listing Abroad;
33. Notification on Implementation of International Financial Reporting System (IFRS);
34. Instruction on Accounting for Commercial Banks and Financial Institutions relating to Securities Transaction;
35. Guideline on the Licensing Structure of Securities Companies;
36. Guideline on Implementation of Shareholder’s Meeting of Listed Companies;
37. Guideline on Securities Code;
38. Manual on the Request for the Grant to Establish Securities Companies.
11 Malaysia ASCM Institutional structure
The Malaysian financial system comprises conventional and Islamic financial markets which operate parallel to each
other. The sector is regulated by two main authorities: Securities Commission Malaysia (SC) and Bank Negara Malaysia
(BNM), both of which have clearly delineated areas of oversight and accountability.
Powers are vested in SC and BNM via statutory law. Financial system regulation takes place at the Federal level, ensuring
uniform applicability across all states in Malaysia. Other Federal legislation, such as company and competition laws, also
affects the overall regulatory environment.
SECURITIES COMMISSION MALAYSIA (SC)
As the capital market regulator, SC exercises oversight over the equity, debt securities and derivatives markets as well as
other capital market segments such as fund management. BNM, in addition to being the banking sector supervisor, has
oversight over the foreign exchange and money markets. There is a clear separation of oversight of institutions operating
in these markets. However, there are formal arrangements in place to govern areas of joint responsibility, such as
investment banks. This includes recognition of SC approval of securities products designed, operated and offered by
institutions licensed by BNM.
Determination of regulatory perimeters is a dynamic process, with SC and BNM instituting appropriate changes where
necessary. For example, BNM initially retained oversight over wholesale over-the-counter (OTC) secondary markets
while the predominantly retail, exchange-traded market was placed under SC’s purview. However, in 2000, this
arrangement was deemed to have outlived its adequacy. Legislative amendments were hence enacted to appoint SC as the
sole regulatory authority over the corporate debt market.
SC draws its powers from several pieces of legislation, namely: the Securities Commission Act of 1993 (SCA), Capital
Markets & Services Act of 2007 (CMSA), Securities Industry (Central Depositories) Act of 1991, Securities Industry Act
of 1983 and Futures Industry Act of 1993. Sections 377 and 378 of CMSA vest in SC authority to make regulations, as
well as issue guidelines and practice notes on both conventional and Islamic capital market (ICM) products and services.
SC’s functions are defined by statute and are as follows:
a) to advise the Minister on all matters relating to securities and derivatives industries;
b) to regulate all matters relating to securities and derivatives;
c) to ensure that the provisions of the securities laws are complied with;
d) to regulate the take-overs and mergers of companies;
e) to promote and regulate all matters relating to fund management, including unit trust schemes;
f) to be responsible for supervising and monitoring the activities of any exchange holding company, exchange,
clearing house and central depository;
g) to take all reasonable measures to maintain the confidence of investors in the securities and derivatives markets by
ensuring adequate protection for such investors;
h) to promote and encourage proper conduct amongst participating organisations, participants, affiliates, depository
participants and all licensed or registered persons of an exchange, clearing house and central depository, as the
case may be;
i) to suppress illegal, dishonourable and improper practices in dealings in securities and dealing in derivatives, and
the provision of investment advice or other services relating to securities or derivatives;
j) to consider and make recommendations for the reform of the law relating to securities and derivatives;
7
No. Market Name of
Organization
Major Laws, Rules or Practice in the Securities Markets of Each Jurisdiction
k) to encourage and promote the development of securities and derivatives markets in Malaysia including research
and training in connection thereto;
l) to encourage and promote self-regulation by professional associations or market bodies in the securities and
derivatives industries;
m) to license, register, authorise and supervise all persons engaging in regulated activities or providing capital market
services as may be provided for under any securities law;
n) to promote and maintain the integrity of all licensed persons in the securities and derivatives industries;
o) to register or recognise all auditors of public interest entities for the purposes of this Act, and to promote and
develop an effective audit oversight framework in Malaysia;
p) to take all reasonable measures to monitor, mitigate and manage systemic risks arising from the securities and
derivatives markets;
q) to promote and regulate corporate governance and approved accounting standards of listed corporations, and;
r) to set and approve standards for professional qualification for the securities and derivatives markets.
Bursa Malaysia
Bursa Malaysia is an exchange holding company incorporated following the demutualisation of the Kuala Lumpur Stock
Exchange (KLSE) in 2004. Its subsidiaries provide services related to the trading, clearing and settlement, and depositing
of securities and derivatives.
Bursa is regulated by the SC and is subject to the provisions of CMSA, SCA, Securities Industry (Central Depositories)
Act 1991, Companies Act 1965, Offshore Companies Act 1990 and Labuan Financial Services and Securities Act 2010.
In particular, Section 11 of CMSA imposes upon Bursa the duty to ensure an orderly and fair market in the securities or
futures contracts traded through its facilities. It is also statutorily bound to act in the public interest, with particular regard
to investor protection.
In addition to operating trading infrastructure, Bursa also assumes frontline regulatory responsibility over companies
listed on its exchanges. This includes supervision of issuers and brokers as well as market surveillance over trading
activities. Bursa’s regulatory functions are performed and managed by the Regulation Functional Group, which is helmed
by the Chief Regulatory Officer. To ensure independence of the regulatory function, the Chief Regulatory Officer directly
reports to the Board. The Group’s regulatory plan, which includes the regulatory budget, is also approved by the Board.
Bursa have clear, comprehensive and accessible rules which govern, among others, the listing of issuers and products on
our markets, and the obligations of the issuers post-listing, the trading, clearing and settlement of our products, the
admission and post admission obligations of our participants.
Bursa has issued and regular & updated clear rules, directives and guidance notes to help Participating Organisations meet
their regulatory obligations.
12 Mongolia MASD Main laws:
- Securities Market Law
- Company Law
- Law on Legal Status of Financial Regulatory Committee
- Investment Fund Law
- Law on Asset-backed Securities
- Income Tax Law
- Law to Combat Money Laundering and Terrorism
- Law on Investment
Main regulations and rules:
- Financial Regulatory Committee regulations and guidelines regarding securities market (Regulation on operations of
regulated participants of the securities market, Regulation on issuance and registration of special licenses for conducting
some regulated operations in the securities market, Regulation on calculating and monitoring solvency of securities
underwriter, broker and dealer firms, Listing rule, Regulation on prevention of securities market’s manipulation,
Regulation about integrated database on securities, General rule on securities clearing operation, etc.);
- SRO regulations (SRO Article, Membership rule, Code of Ethics, Rules for monitoring member operations and
resolving complaints and disputes, Rule for organizing professional trainings and providing accreditation, etc.);
- Mongolian Stock Exchange regulations (Listing rule, Membership rule, Monitoring rule, MSE trading rule, IPO trading
rule, etc.);
- Securities Clearing House and Central Depositary Regulations (Temporary rule on T+1 securities settlement, Rule on
cash transactions, Rule on bestowing on and demising ownership rights for securities, etc. PS: the Securities Clearing
House and Central Depository was divided into different entities (Securities Central Depository and Trades Clearing in
April 2016. Therefore, the Trades Clearing has developed 2 new rules on membership and management of members’
risk of solvency in November for discussion and approval);
- Settlement bank rules (trade settlement related regulations of 4 settlement banks such as opening settlement accounts
and withdrawal, etc.).
13 Myanmar SECM Securities Exchange Law
Securities Exchange Rules, notification and instructions
14 Nepal SEBON LAW:
Securities Act, 2006
REGULATIONS:
Securities Board of Nepal Regulation, 2007
Stock Exchange Regulation, 2007
Securities Businesspersons (Broker, Dealer, Market Maker) Regulation, 2007
Securities Businesspersons (Merchant Banker) Regulation, 2008
Securities Registration and Issue Regulation, 2017
8
No. Market Name of
Organization
Major Laws, Rules or Practice in the Securities Markets of Each Jurisdiction
Mutual Fund Regulation, 2010
Central Depository Service Regulation, 2010
Credit Rating Regulation, 2011
GUIDELINES AND POLICIES
Securities Allotment Guidelines, 1994
Issue Management Guidelines, 1997
Securities Issues and Allotment Guidelines, 2017
Rights Issue Disclosures Policy, 2005
Debenture Trust Deed Disclosure Policy, 2006
Mutual Fund Guidelines, 2011
15 Singapore SAS Member Companies are governed by the following legislations in Singapore:
- Monetary Authority of Singapore (MAS)
o Securities and Futures Act (Chapter 289)
o Securities and Futures (Licensing and Conduct of Business) Regulations
o Financial Advisers Act
- Singapore Exchange (SGX)
o SGX Rulebooks – Covering listing, trading, clearing/settlement, custodian/depository aspects
o Singapore Exchange Regulation (SGX RegCo)
o Discipline Committee
- Monetary Authority of Singapore (MAS) and Singapore Exchange (SGX)
o Singapore Code of Corporate Governance
The RegCo was set up and finally began operations on 15 September 2017 after receiving public feedback that the
Singapore Exchange wore 2 hats: a regulatory role and as a market operator, potentially posing a conflict of interest.
RegCo will be governed by a board of directors separate from that of SGX. All directors of RegCo will also be
independent of any other corporation listed on SGX. RegCo will be responsible for discharging all of SGX's market
regulatory and supervisory functions and will report to its own board. The chief regulatory officer of SGX will be the
CEO of RegCo and report directly to RegCo's Board.
16 Sri Lanka SECSL Securities and Exchange Commission of Sri Lanka Act no. 36 of 1987 as Amended by act no. 26 of 1991, act no.
18 of 2003 and act No. 47 of 2009
Takeovers And Mergers Code
Unit Trust Code and Unit Trust Regulation
Rules applicable for Market Intermediaries (Clearing House, Investment Managers, Margin Providers, Credit
Rating Agencies and Underwriters)
Code of Best Practice on Corporate Governance
17 Taiwan TSA 1. Securities and Exchange Act;
2. Securities and Exchange Act Enforcement Rules.
18 Thailand 1 ASCO - Securities and Exchange Act of 1992 (SEA)
- Regulations and Notifications of the Securities and Exchange Commission (SEC’s regulations)
- Regulations and Notifications of Stock Exchange of Thailand (SET’s regulations)
- Regulations and Notifications of Anti Money Laundering Office (AMLO’s regulations)
- Notifications, Procedures and Guidelines of Association of Thai Securities Companies (ASCO’s regulations)
19 Thailand 2 ThaiBMA - Securities and Exchange Act B.E. 2535
- Regulation and Notifications of the Securities and Exchange Commission (SEC’s regulation)
- Regulation and Notifications of the Thai Bond Market Association (ThaiBMA’s regulation)
20 Turkey TCMA Capital Market Law (CML) no. 6362
21 Uzbekistan CSM Law “On securities market”, Law “On joint-stock companies and protection of shareholder’s rights”, Law “On investment
funds and unit trusts”, Regulation "On the Centre for coordination and development of the securities market under the State
Committee on Competition of Uzbekistan”
9
No. Market Name of
Organization
Major Laws, Rules or Practice in the Securities Markets of Each Jurisdiction
22 Vietnam 1 VASB - The Law on Securities (No. 70/2006/QH11 dated June 29, 2006); amended in 2010 (No. 62/2010/QH12 dated Nov
24, 2010)
- Decree providing detailed regulations for implementation of a number of Articles of the Law on Securities
(No.58/2012/ND-CP dated Jul 20, 2012), amended in 2015 (No.60/2015/ND-CP dated Jun 26, 2015)
- Decree on administrative penalties for violations in securities and securities market (No.108/2013/ND-CP dated
Sep 23, 2013), amended in 2016 (No. 145/2016/ND-CP dated Nov 1, 2016)
- Decree on derivatives and derivatives market (No.42/2015/ND-CP dated May 5, 2015)
23 Vietnam 2 VBMA - Law on Securities No.70-2006-QH11 of 29 June 2006, as amended by Law 62/2010/QH12 of 24 November 2010
- The 2010 Law on Credit Institutions
- Decree No.01/2011/ND-CP dated 05/01/2011 on government bond issuance and its guidance circular 111/2015/TT-
BTC
- Decree No. 90/2011/ND-CP dated 14/10/2011 on corporate bond issuance
- Decree No. 58/2012/ND-CP dated 20 July 2012 of the Government providing guidelines for the implementation of
the Securities Law
- Circular No. 234 providing guidelines for management of government bond, government guaranteed bond and local
authority bond transactions of 28 December 2012
- Decree No.42-2015-ND-CP on Derivative securities and the Derivative securities market of 5 May 2015
- Decree No. 108/2013/ND-CP on administrative penalties for violations insecurities and securities market of 23
September 2013
- Decree No.58-2012-ND-CP providing detailed regulations for implementation of a number of articles of the Law on
Securities (amended) of 20 July 2012 as amended by Decree 60 of 26 June 2015
- Circular 155/2015/TT-BTC guiding the disclosure of information on securities market of 6/10/2016
- Circular 10/2017/TT-BTC dated February 06, 2017, amendments to the Circular No. 234/2012/TT-BTC on
management of transactions in government
- Circular No. 46/2017/TT-BTC guiding the payment for transactions of government bonds, .
- The roadmap for bond development until 2020 was issued on August 2017
10
III. Regulation & Self Regulation
III –1. Major Rule Making Functions of Each Organization
No. Market Name of
Organization
Major Rule Making Functions
1 Asian Region ASIFMA N/A
2 Bangladesh BSEC
3 Cambodia SECC 1. Law on Issuance and Trading of Non-Government Securities
2. Sub-decree on Conduct and Organization of the Securities and Exchange Commission of Cambodia
3. The responsibility of Securities and Exchange Commission of Cambodia includes the following :
- To regulate and supervise securities market in the Kingdom of Cambodia
- To enforce policy with respect to securities markets
- To formulate conditions for granting approval to the operators of a securities market, clearance and settlement
facility, and securities depository
- To formulate conditions for granting license to securities companies and securities company representatives
- To promote and encourage compliance with requirements of this law
- To act as an appeal body with respect to decisions made by approved entities affecting members, participants or
investors
- To consult with any qualified person for the purpose of formulating policies for the development of a securities
market in the Kingdom of Cambodia
- To fulfill other duties prescribed by the Royal Decree and sub-decree
4 Hong Kong HKSA As far as securities and futures regulation is concerned, SFC is the only statutory organization making rules, regulations,
codes and guidelines in Hong Kong.
Since the establishment of HKSA in 1978, the Association started to function as a bridge among the securities industry,
regulatory authorities and public investors. HKSA participates in the consulting period when SFC has new rules or codes
to launch, as a representative of the industry. When the new rules or codes become effective, HKSA launches meetings,
seminars, and sharing sessions to explain the new rules and their implications to our members or market participants.
Meanwhile, all directors of HKSA are in the management levels from various sectors of financial industry in Hong Kong,
so we are in a good position to maintain periodical meetings with the Government, Hong Kong Stock Exchange and SFC
to update and share the market environment, views and all relevant aspects.
5 India 1 ANMI ANMI CODE: Enhancing ethics, values, transparencies in the business activities of its Office Bearers and Members over
and above the applicable procedural and regulatory requirements governing the Stock Market and Stock Broking activities
being undertaken by its Members.
6 India 2 BFF Our Association is a Trade body whose membership is voluntary. The activities of the Association is looked after by
professionals reporting to the office bearers who in turn report to the Governing Board
7 Indonesia APEI APEI is not a Self-Regulatory Organization (SRO). We are the partners of the Regulators – OJK and the other SROs: IDX,
KPEI & KSEI in the rule-making-rule process. This process includes Focused Group Discussions and review of regulations.
8 Japan JSDA Make and enforce a wide range of self-regulatory rules covering the securities business in Japan that control the conduct of
our member firms.
9 Korea KOFIA KOFIA make and enforce self-regulations to perform the business based on FSCMA, which is to maintain sound trade
practice among the members and to protect the interest of investors.
10 Laos LSCO The Lao Securities Commission Office (LSCO) is a national securities supervisory authority, and is mandated as the
machinery assisting the Lao Securities Commission in the implementation (LSC) of securities supervision to ensure the
efficiency, fairness, and transparency of the Lao capital market.
1. Research, draft and amend strategy, policy, laws and regulations related to securities, to propose to LSC for
consideration;
2. Research, develop programs, projects, work plan and budget plan of LSCO, and implement effectively after
approval by LSC;
3. Research, develop and amend regulations on securities operations supervision, to propose to LSC for consideration;
4. Consider the requests to establish securities exchange, to propose to the relevant authorities for consideration and
approval, and also monitor and supervise the operations of Securities Exchange;
5. Consider the requests to establish institutions of securities intermediaries, to propose to LSC for consideration and
approval, and also monitor and supervise the operations of those institutions;
6. Supervise the securities professionals;
7. Research and consider the requests to issue securities and monitor the operations of issuance companies and listed
companies within its rights;
8. Research and consider the requests to establish trust funds, and monitor and supervise the operations of those funds;
9. Disseminate and educate in response to securities to public as instructed by LSC;
10. Resolve the securities disputes;
11. Conduct investigation of securities cases;
12. Take administrative measures against persons and legal entities who violates securities laws and regulations;
13. File the cases to the Prosecutor to initiate legal proceedings according to the justice process;
14. Cooperate with other countries and international organizations regarding supervision and development of securities
as assigned by LSC;
15. Collect and compile statistics, monitor, supervise, summarize and report on securities supervision and operations to
LSC on a regular basis;
11
No. Market Name of
Organization
Major Rule Making Functions
16. Fulfill other duties as assigned by a Chairman of LSC;
11 Malaysia ASCM ASCM is not a self-regulatory organization. The industry is regulated by the SC and Bursa Malaysia which acts as both an
exchange and frontline regulator of the Malaysian capital market.
12 Mongolia MASD The Financial Regulatory Committee (FRC) is the main regulator for financial services apart from the banking sector.
According to the Securities Market Law, the responsibilities of the MASD include formulating rules and regulations that
MASD members must abide by, supervising and examining members’ activities and taking measures against members
which do not comply with the law, regulation or MASD rules. To comply with the law MASD rules must include:
1. Membership admission criteria, membership fees, and rule on membership suspension and termination;
2. Code of professional ethics and conduct of its members and their staff;
3. Rule on monitoring of members’ operations and resolving complaints and disputes;
4. Rule on management, administration and operation of the self-regulatory organization;
5. Rule on building capacity of the members and organizing training and other activitiess to improve professional
skills of the members;
6. Rule on coordination of actions to promote fair trading practices such as preventing market manipulation and
insider trading; and
7. Other matters as stated in the legislation.
13 Myanmar SECM Securities Exchange Law
Securities Exchange Rules, notifications and instructions
14 Nepal SEBON According to the Securities Act (2006), SEBON has the following major rule-making functions:
With the approval of the Government of Nepal, SEBON makes rules for Securities registration and permission for
issuance, Issue of a license for stock exchanges, Issue of a license for securities business, Operation of collective
investment schemes, Terms and conditions of the service of the employees, of the SEBON, Maintenance of
financial operation and accounts of the SEBON, Operation of the compensation fund, Financial source required to
be maintained by securities business person in relation to the operation of securities business, Suspension of
listing, delisting or transfer of securities
In the context of approval and amendment of the bylaws of the Stock Exchange, CDS and Clearing, Credit Rating
Agency and Securities Businessperson, SEBON receives suggestions and opinions from related parties if
necessary
SEBON approves and makes necessary amendments of the bylaws of the Stock Exchange, CDS and Clearing,
Credit Rating Agency and Securities Businessperson related to securities business with a view to provide
provisions concerning the development of capital market and to protect the interest of investors in securities
To issue orders to amend bylaws for institutions concerning their securities business to protect the investor’s
interest
15 Singapore SAS The SAS does not have any rule making functions under the regulations. However, it represents the broking industry to
conduct dialogues with the regulators such as MAS in areas such as drafting an outsourcing framework which was endorsed
by MAS for industry members to rely upon.
SAS also coordinated feedback from members on regulatory and industry matters that impact them. One of the recent
changes by the MAS was the review of competency requirements for trading representatives (TRs) conducting regulated
activities under the Securities and Futures Act and Financial Advisers Act. Some of the changes proposed by the MAS
include the introduction of Ethics and Skills in the Rules and Regulations Modules and increasing the number of Continuing
Professional Development (CPD) hours to 30 hours annually.
While supporting the proposed change, the SAS gave feedback that the proposed increase in CPD hours should be gradually
increased. MAS accepted the feedback and shall introduce a total of 9 hours of CPD training requirements for SFA-
appointed TRs with effect from 1 January 2019. For FAA-appointed TRs, the number of CPD hours would be 6 hours
annually.
16 Sri Lanka SECSL The SEC is the statutory body entrusted with the task of regulating the Securities Market in Sri Lanka. The SEC was
established pursuant to the Securities and Exchange Commission of Sri Lanka Act. No. 36 of 1987 as amended by Act No.
26 of 1991, Act No. 18 of 2003 and Act. No.47 of 2009. The SEC Act spells out the regulatory framework for the capital
market and is the cornerstone of Sri Lanka’s capital market.
Under Section 53 of the SEC Act the SEC is empowered by law to issue rules which should be published in the gazette.
They are enforceable in a court of law. The Minister is empowered to make regulations under s.52 of the Act. This has to
be gazetted and placed before Parliament. The enforceability is covered in Section 51 of the Act which underlines the
procedures in the case of a violation of rules and regulations under the Act.
The Objectives of the SEC are follows;
The creation and maintenance of a market in which securities can be issued and traded in an orderly and fair
manner;
The protection of the interest of investors;
The operation of a Compensation Fund to protect investors from financial loss arising as a result of any licensed
stock broker or licensed stock dealer being found incapable of meeting his contractual obligations; and
The regulation of the securities market and to ensure that professional standards are maintained in such a market.
The SEC grants licenses to the following entities:
Stock Exchanges
Stock Brokers
12
No. Market Name of
Organization
Major Rule Making Functions
Stock Dealers
Managing Companies of Unit Trusts
The SEC grants Certificates of Registration to the following Market Intermediaries:
Underwriters
Margin Providers
Credit Rating Agencies
Investment Managers
Clearing Houses
17 Taiwan TSA TSA establishes and enforces self-regulatory rules for the engagement by the members in the underwriting, dealing, and
brokerage of securities, and any other business approved for operation in Taiwan.
18 Thailand 1 ASCO ASCO creates rules under the approval of SEC or SET or ASCO’s Board Of Executive Directors (BOED) to control
brokerage business conduct and encourage the effectiveness of its member firms.
During preparation to become a SRO, The ASCO’s Member Supervision functions will be responsible for ASCO’s rule
formation, qualification setting and coordinating with other regulators such as SET and SEC in supervision and monitoring
business conduct of members.
19 Thailand 2 ThaiBMA ThaiBMA plays key functional roles in four main areas;
1. Self-Regulatory Organization (SRO)
ThaiBMA oversees and monitors the conduct of its members in order to ensure fairness and efficiency in debt securities
trading. It is committed to retaining the confidence of its membership, regulators and investors. Parts of SRO functions
include the following:
- Perform market monitoring and surveillance to ensure that all trading activities complied with relevant laws and
regulation and act as the front line to detect any unfair trading practices.
- Establish Ethics and Code of Conduct for members and traders.
- Issue rules and guidelines regarding debt securities trading and good market practice.
- Be responsible for bond trader examination and registration and provide them with ongoing education to enhance
their professionalism.
- Determine enforcement procedure to penalize those who did not comply with the regulation.
2. Bond Information Center and Pricing agency
Mandated as the sole information center and pricing agency for the bond market, ThaiBMA is an authorized source for Thai
bond market data. It disseminates information in both the primary and secondary market through its website
www.thaibma.or.th and www.thaibond.com. Both websites consist of trading information, bond features, reference yield
and relevant market news and regulatory updates. ThaiBMA constantly attempts to improve efficient information service
provided to its members and customers.
As a “Bond Pricing Agency”, ThaiBMA also provides model yield and pricing data for mark-to-market purpose of investors
such as mutual funds. This is deemed very useful in the case of illiquid debts securities.
3. Market Convention and Standard
As trading in the bond market is mainly over-the-counter rather than on an exchange, ThaiBMA serves to enhance standards
within the marketplace through extensive consultation with market participants. Example of convention and standards
issued by ThaiBMA are as follows:
- Establishment of symbols for bond and short-term debt securities. The ThaiBMA symbols have been widely
recognized in the market.
- Standard formula for price / yield calculation for various types of bonds. This helps eliminate discrepancies arising
from using different practices.
- Bond registration standards that meet international practices.
4. Market Development and Education
As part of ThaiBMA’s commitment to enhancing market development and professional practice, ThaiBMA has developed
and implemented several key data essential for market development as follows:
- Yield Curve and Benchmark Bonds: ThaiBMA provides information to the public on the government bond yield
curve and benchmark bonds on a daily basis through website and newspaper.
- Market Education and Promotion: To expand investor understanding of the bond market, ThaiBMA provides
extensive seminars and training programs for market participants and the general public. It also produces a
comprehensive range of publications for the benefits of those involved in the bond market.
- Financial data innovation: ThaiBMA has initiated financial data innovation such as Zero coupon, Credit spread,
Bond Portfolio Analysis, Value-at-risk (VaR) as additional tools for bond investment and portfolio management.
20 Turkey TCMA - Establish code of ethics for the profession
- Establish professional rules and regulations
- Conduct research
- Offer educational programs
- Assist in the resolution of disputes
- Set safety measures aimed at preventing unfair competition
- Determine the principles on commissions and fees charged by its members and propose these to the Capital Market
Board
- Evaluate complaints against its members and inform the Board on the results
13
No. Market Name of
Organization
Major Rule Making Functions
- Engage in financial literacy activities
21 Uzbekistan CSM According to Art. 55 of Law “On securities market”, CSM carries out following tasks:
implements the state policy in the field of formation, development, control and regulation of securities market;
licenses professional activity in securities market; protects rights and interests of investors and security holders; develops
regulations in the field of formation and regulation of securities market and activities of its participants; sets requirements
for execution of professional activities in securities market, qualification requirements for specialists of professional
participants, conducts their examination and issues qualification certificates; approves rules for issuance of emissive
securities, rules for registering transactions with securities, standards for accounting and reporting of transactions with
securities, procedures for keeping registers of security holders and register books for transactions with securities; controls
implementation of legislation on securities market, on joint-stock companies and protection of shareholders' rights by
government bodies, securities market participants and, in cases where violations of legislation are found, issues inferences
and orders obligatory to execute, applies sanctions against violators in accordance with law; sets mandatory standards for
adequacy of own capital and other indicators that limit risks associated with security transactions and fixes dates for keeping
documents on transactions with securities other than government securities.
22 Vietnam1 VASB - To protect legal rights and interests of members in accordance to goals and objectives of Association and existing
law.
- To collect opinions from members on related matters of securities law, policies and give opinion to regulators and
other related organizations as member’s representative.
- To create the code of conduct in accordance with the existing laws, to supervise the compliance and handle the
violation of members to these rules.
- To conciliate the conflicts between members, to support members to resolve the conflicts on securities and
securities market related issues with other organizations/individuals in accordance with existing laws.
- To provide training sessions and advice on the securities market based on requests from State authorities,
organizations and citizens in accordance with the existing laws.
- To unite and coordinate among members for general benefits of the Association, determine on the Association’s
objectives to participate and contribute to the development of securities market as well as the country.
- To train and provide with guidance on Government regulations as well as policies regulated by the Association.
- To represent members to contribute on draft of new regulations and policies on securities and securities market.
- To reconcile and settle internal disputation among Association members in compliance with laws.
23 Vietnam2 VBMA VBMA’s charter and code of conduct regulate corporate governance of our association and conduct of the member firms.
VBMA performs the following function as an association of debt market professionals in Vietnam
- A high-standard debt market professionals community in Vietnam
- A market modernization champion and driver
- A collective market information source
- A policy dialogue interlocutor for policymakers and regulators
- A training center for the market players
VBMA has introduced a code of conduct applicable to VBMA members and their employees when engaging in debt market
transactions.
A set of market conventions applicable to debt securities transactions is also produced and intended to be applied in the
near future.
A model back-office manual for debt market transactions that is designed with a view to assisting VBMA members in
standardizing and improving their back-office operations relating to debt market transactions
14
III –2. Qualification System for Market Professionals
No. Market Name of
Organization
Qualification Systems for Market Professionals
1 Asian Region ASIFMA N/A
2 Bangladesh BSEC
3 Cambodia SECC According to the Prakas (Regulation) on Licensing of Securities Firms and Securities Representative, the Chef Executive
Officer (CEO), Head of Securities Representative, Head of Operation, Compliance Officer and Other Senior Officers of
securities firms shall participate in the training program and/or pass a qualified examination set by the SECC to engage in
the securities business activities in the Kingdom of Cambodia. The training and examination are mainly focused on legal
aspect of the securities business (SECC’s regulation, CSX’s rules, Law on Commercial Enterprise, Law on Investment,
etc.). The examination is conducted as paper based and includes a series of multiple choice questions (MCQ).
4 Hong Kong HKSA SFC oversees 10 kinds of Regulated Activities (due to increase to 12 in coming 2 years) for all regulated bodies, namely:
1. Dealing in securities
2. Dealing in futures contracts
3. Leveraged foreign exchange trading
4. Advising on securities
5. Advising on futures contracts
6. Advising on corporate finance
7. Providing automated trading services
8. Securities margin financing
9. Asset management
10. Providing credit rating services
The market participants are regulated by SFC through the Registration/Licensing system, i.e., each market practitioner has
to be licensed by SFC as either a Responsible officer (RO) or Representative (Rep). Each regulated entity must have 2 ROs
for each Regulated Activity and every licensed person or firm must fulfill certain requirements set by SFC. These persons
or firms cannot be in business before being licensed by or successfully registered with SFC.
RO is the person responsible for the company’s operation, he/she has to possess proven managerial and market skills. If
misconduct is detected in the company, the RO holds full responsibility.
5 India 1 ANMI Eligibility Criteria:
Any person carrying on the business of buying, selling or otherwise dealing in securities AND who satisfies the following
requirements shall be eligible to become a Member if it:
(a). is a member/trading member of any Stock Exchange having a nationwide presence and recognized as a Stock
Exchange by SEBI and who is granted a certificate of registration by the SEBI as a stockbroker;
(b). satisfies such other qualifications and criteria as may be prescribed by the National Council from time to time, and
(c). is a person whose membership has not been terminated under Article 17 – 18 of the Articles of Association.
6 India BBF SEBI has set up an body called National Institute of Securities Markets (NISM), which is entrusted with issuing various
certifications for the Capital Markets.
7 Indonesia APEI There are four types of professional licenses:
1. Broker Dealer
2. Underwriter
3. Investment/Fund Manager
4. Mutual Fund Sales Agent
The licenses 1, 2 and 3 can be obtained by passing the professional exams organized by the Capital Market Professional
Standard Committee (PSP). After getting the certificate from PSP and TICMI, hopefuls must go through an interview
conducted by the OJK.
Aside from the exam conducted by PSP, hopefuls for Brokers/Dealers license can also choose to attend a course –
followed by an exam held by The Indonesia Capital Market Institute (TICMI) – a joint cooperative between The
Indonesia Stock Exchange and University of Indonesia.
Under new regulation POJK No. 27/POJK.04/2014, those licenses (No. 1, 2 & 3) have expiry period of 2 years. Extension
can be proposed to OJK after attending specific training organized by the industry association, as regulated by OJK.
Hopefuls for license number 4 – Mutual Fund Sales Agent—must take an exam conducted by APRDI, The Association of
Investment Management Companies.
8 Japan JSDA Under the FIEA, Japan has adopted a registration system for sales representatives, and unqualified people are excluded
from the sales activities of securities companies, etc. For this reason, and being delegated by the FIEA, JSDA requires
member firms’ officers and employees to obtain qualification as a Sales Representative, which is a prerequisite for being
engaged in the securities business in Japan. This rule ensures that market professionals have adequate skills and knowledge.
For this purpose, JSDA holds the qualification examinations for Class-1 Sales Representative and Class-2 Sales
Representative for employees of Regular Members involved in securities business operations. The Class-1 Sales
Representative Examination became open to the public starting from January 2012, in addition to the Class-2 Sales
Representative Examination which has been open to the public since September 2004.
15
No. Market Name of
Organization
Qualification Systems for Market Professionals
JSDA also holds the qualification examinations for Special Member’s Class-1 Sales Representative and Special Member’s
Class-2 Sales Representative.
In addition, JSDA introduced a Sales Manager and Internal Administration system in April 1992 whereby Association
Members must appoint a “Sales Manager” and an “Internal Administrator” for each sales unit. To become a “Sales
Manager” or an “Internal Administrator”, candidates must pass the Internal Administrator examination (or Special
Member’s Internal Administrator in case of officers and employees of special members).
JSDA has been offering computerized examinations since April 2002, which enables candidates to take those
examinations on any business day. The qualification examinations for Regular Members are conducted in English as well.
The number of the examinees and successful applicants for each examination in calendar year 2016 is shown in the
following table.
Examination Examinees Successful Applicants
Class-1 Sales Representative 63,260 27,907
Class-2 Sales Representative 25,002 12,852
Internal Administrator 21,463 18,291
Special Member's Class-1 Sales Representative 9,734 2,627
Special Member's Class-2 Sales Representative 17,160 7,270
Special Member's Internal Administrator 2,713 2,583
Total 139,332 71,530
9 Korea KOFIA Under the FSCMA, KOFIA is responsible for the management and supervision of financial investment professionals,
including certified investment advisors, certified investment managers, certified financial risk managers and certified
research analysts. This rule ensures that a qualified person has professional expertise for skills and knowledge, and partially
prevents incomplete sales and conflict between sales companies and individual investors.
REGISTRATION STATUS OF FINANCIAL INVESTMENT PROFESSIONALS(As of Aug.22, 2017)
Types of certification Number of people
Certified Fund Investment Advisor 121,661
Certified Securities Investment Advisor 87,545
Certified Derivatives Investment Advisor 67,243
Certified Investment Advisory Officer 12,947
Certified Investment Manager 14,144
Certified Research Analyst 1,104
Certified Financial Risk Manager 248
Credit Rating Agent 219
Total 305,111
10 Laos LSCO LSCO shall grant a securities business professional license, such as a securities broker, securities financial advisor, and
securities analyst or fund manager, to the employee of securities firms or assset management companies who have full
criteria as prescribed in the Regulation on Supervision of Securities Professionals, i.e. the following:
1. Have a certificate verifying that they have passed securities professional exams issued by relevant parties as
determined by LSCO;
2. In the instance where a securities professional already holds a certificate of securities professionals from abroad,
such a securities professional shall pass applicable laws and regulations exam of the Lao PDR;
3. Shall not have pending litigation or be sentenced by the court of offences relating to fraud, deception, flasification
of documents, taking or giving bribe, corruption, money laundering or offences involving securities businesses.
In addition, the rules and ethics of securities professionals are created by The Securities Business Association.
11 Malaysia ASCM Market intermediaries and their representatives must be licensed in order to carry on regulated activities under the
CMSA. The SC operates a 2-tier licensing approach where companies are issued a Capital Markets Services Licence
(CMSL) while individuals are issued a Capital Markets Services Representative’s Licence (CMSRL).
Sections 58 and 59 of the CMSA specify that no person should carry on a business in any regulated activity or hold itself
out as carrying on such a business or act as a representative of a market intermediary, unless it holds a CMSL or a
CMSRL or is a Registered Person to carry out the regulated activities under the CMSA.
All CMSL and CMSRL applications must be made to the SC. The applications are assessed to ensure that the applicants
meet the relevant licensing requirements, criteria and conditions as set out in the SC’s Licensing Handbook.
In attaining their licences, the market professionals are required to pass licensing examinations set by the SC. The CMSRL
holder are required on annual basis to attend industrial related training conducted by either SIDC, a training centre
established by SC or any approved training providers and are given certain number of points (CPE points). In the absence
of the sufficient CPE points, the CMSRL holder will not be allowed to renew their CMSRL licenses. The compulsory
collection of CPE points is one way of ascertaining that all CMSRL are kept abreast of industrial related development in
terms of regulation, guidance and technical aspect of the industry standard.
12 Mongolia MASD According to the Securities Market Law and FRC’s Regulation on organizing professional assessment, issuance, suspension
and termination of special license for the market professionals, the following qualification system is implemented:
1. It is a prerequisite for all professionals to obtain special right/license in order to be able to work in FRC regulated
entities;
2. Currently, three types of licenses are issued: securities brokerage (required for brokers and dealers), investment
16
No. Market Name of
Organization
Qualification Systems for Market Professionals
(required for the CEOs, internal auditors, investment advisors, analysts, and those working in underwriting,
investment fund and investment management services) and securities trading (required for professionals engaged in
securities trading, settlement, clearing, depository and custodian operations);
3. The licenses are initially granted for the term of three years (then, the second time accreditation is for 4 years, third
time for 6 years, fourth time for an unlimited period);
4. The training courses are organized by MASD, however a Professional Board consisting of 9 individuals who have
at least 3 years working experience in finance, economic and/or legal sector, appointed by the FRC, has the right to
approve the training curriculum and conduct final examinations;
5. The Professional Board holds the right to issue, suspend and terminate professionals’ licenses. Infringement of
related laws and regulations, or the Code of Ethics of MASD, and inaction towards correcting the violation serves
as basis for suspension and termination of the rights.
6. If the professional rights/license of a professional was terminated, he/she is not able to apply for a license within a
year from the date of termination.
13 Myanmar SECM Any responsible person of the securities company shall not allow any person or organization other than its licensed
representative to operate the securities business in the name of its company.
Securities and Exchange Commission of Myanmar, SECM held examinations two times for such representatives in Feb
and May 2016. The number of the examinees and successful applicants for each examination in calendar year 2016 is shown
in the following table.
Examination Examinees Successful Applicants
Sales Representative Feb 2016 61 41
Sales Representative May 2016 45 36
14 Nepal SEBON Required qualifications for directors and the CEOs of Stock-Broker, Securities Dealer/Market Maker are as follows:
Hold a minimum Bachelor’s degree in economics, commerce, finance, accounting, or management from a
recognized educational institution or be a certified chartered accountant or equivalent or hold Bachelor’s degree in
any other areas with a minimum of two years' experience in accounting, finance or management related functions
in industry or commerce or securities market or finance sector; and
Should be a Nepali citizen.
The qualification of the directors and the CEOs of Merchant Banker are as follows:
Hold a minimum Bachelor’s degree in economics, commerce, finance, accounting, management, or commercial law
from a recognized educational institution or be a certified chartered accountant with a minimum of three years
experience in industry, commerce or securities market or accounts, finance or commercial law or in management
related functions in financial sector;
Possess Nepali Citizenship; and
A foreign citizen can also be director or chief executive with the approval of the government.
15 Singapore SAS Trading Representatives (TRs) must be licensed by the MAS, satisfy minimum educational qualifications, and comply
with professional examination requirements to be “fit and proper”. The Institute for Banking & Finance has designed a
roadmap to shore up the competency level of Trading Representatives (TRs) & remisiers.
MAS also keeps a public registry of the licensed TRs.
16 Sri Lanka SECSL Capital Market Education & Training (CMET) of SEC plays an important role by delivering licensing examinations,
financial literacy programs as well as continuous learning opportunities for professionals in the Securities Industry and SEC
has made this qualification compulsory to work as an Investment Advisor in the Stock Broking Industry.
Courses conducted by CMET
Certificate in Capital Markets (CCM) & Registered Investment Advisor (RIA)
Diploma in Capital Markets(DCM)
Continuous Professional Development (CPD) Programs
Other Market Intermediaries are required to comply to the Fit and Proper criteria, qualification and experience framework
as specified in the Rules applicable for Market Intermediaries.
CMET will soon introduce a comprehensive review and revision to the existing Qualification Framework for Capital Market
Professionals – To develop the competencies in equity securities, debt securities, mutual funds and other financial
instruments capacity building in the present context of the Sri Lanka’s capital market
Source: SEC Annual Report 2016
17 Taiwan TSA 1. According to “Regulations Governing Responsible Persons and Associated Persons of Securities Firms”, only persons
who obtain qualification as a sales agent can engage in securities business in Taiwan. A qualified associated person of
a securities firm should have passed the securities firm agent exam held by the Securities and Futures Institute (SFI)
at the request of the TSA. SFI is a center to provide various testing and qualification recognition.
2. Qualification Examination is a computer-based qualification exam which candidates can take on any business day.
Also, examinees holding a foreign securities specialist license need only pass the Securities Regulation and Market
Operations Exam to obtain a domestic license. Examinees may select to take the exam in English or Chinese.
3. An associated person of a securities firm who is assuming the job for the first time, or who has resumed the job after
an absence of three years shall participate in pre-service training within six months after reporting for work. Currently
employed personnel shall participate in in-service training once every three years.
17
18 Thailand 1 ASCO According to the SEA , SEC and SET regulations, capital market professionals must comply with the following qualification
requirements;
1. Approval Requirement
An executive officer (Director, manager or any authorized person dealing with management) must be approved by the
SEC. SEC will review the candidate’s background in terms of previous violations, personal financial problems,
minimum educational and work experience.
2. Licensing and Registration Requirement
An Investment Consultant (IC) is required to earn a license from SEC. Furthermore, for their registration requirement,
IC needs to maintain SEC’s criteria and take the license examination conducted by approved institutes. ASCO Training
Institute or “ATI” is one of the approved institutions by Thailand Securities Institute (TSI), a subsidiary of the Stock
Exchange of Thailand.
Examinations
On behalf of ASCO, ATI provides the examinations for Investment Consultants to examine their qualification, skills
and knowledge in securities business. ATI also provides computerized examinations which are conducted in English.
The examination outline of the fiscal year 2017 is as follows.
Group Examination Topics
Group 1 Investment Consultant Group
Paper 1 Paper 1(Eng): Securities Investment Consultant Examination
Paper 2 Paper 2(Eng) : Derivatives Investment Consultant Examination
Paper 3 Paper 3 (Eng) : Debt Instruments Investment Consultant Examination
Paper 4 Paper 4 (Eng) : Fund Investments Consultant Examination
Paper 5 Paper 5 (Eng) : Equity Investment Consultant Examination
Group 2 Additional Products Group
Paper 7 Paper 7 (Eng) : Examination for Additional Product : Debt Instruments
Paper 8 Paper 8 (Eng): Examination for Additional Product : Funds
Paper 9 Paper 9 (Eng) : Examination for Additional Product : Equities
Paper 10 Paper 10 (Eng) : Examination for Additional Product : Funds and Equities
Paper 11 Paper 11 (Eng) : Examination for Additional Product : Equities and Debt Instruments
Paper 12 Paper 12 (Eng) : Examination for Additional Product : Funds and Debt Instruments
Paper 13 Paper 13 (Eng) : Examination for Additional Product : Debt Instruments, Funds, and Equities
Paper 14 Paper 14 (Eng) : Examination for Additional Product : Derivatives
Group 4 Rules and Regulations Group
Paper 17 Paper 17 (Eng): Examination on Dealing Rules and Regulations : Securities (Including Derivatives)
Paper 18 Paper 18 (Eng) : Examination on Dealing Rules and Regulations : Securities (Excluding Derivatives)
Paper 19 Paper 19 (Eng): Examination on Dealing Rules and Regulations : Derivatives
Paper 22 Paper 22 (Eng): Core Rules and Regulations
Paper 23 Paper 23 (Eng): Core Rules and Investment Suitability
Paper 24 Paper 24 (Eng): Rules and Regulations for Dealing in Securities (Excluding Derivatives)
Paper 25 Paper 25 (Eng): Rules and Regulations for Dealing in Derivatives
The numbers of the examinees and successful applicants at end of August 2017 are described below;
- Applicants total 19,764 persons
- Examinees total 18,973 persons
- Successful applicants total 4,840 persons (Passing rate =25.51%)
18
3. Refresher course Requirement
Refresher course training is required to renew license for IC. The requirement for the refresher course outline is
described below;
Investment consultant type Trained (not less than 15 hours.)
Fundamental
Technical
Derivatives
Ethics, Rules
&Regulations
Asset
Allocation
1. Investment Planner (IP) non-obligatory at least 6 hrs. at least 3 hrs. at least 3 hrs.
2. Investment Consultant
(Capital market)
non-obligatory at least 6 hrs. at least 3 hrs. at least 3 hrs.
3. Investment Consultant
(Securities market)
non-obligatory non-obligatory at least 3 hrs. at least 3 hrs.
4. Investment Consultant
(Bond market)
non-obligatory non-obligatory at least 3 hrs. at least 3 hrs.
5. Investment Consultant
(Mutual Fund)
non-obligatory non-obligatory at least 3 hrs. at least 3 hrs.
6. Investment Consultant
(Equity)
non-obligatory non-obligatory at least 3 hrs. at least 3 hrs.
7. Investment Consultant
(Derivatives market)
non-obligatory at least 6 hrs. At least 3 hrs. at least 3 hrs.
8. Investment Consultant
(Precious metal)
non-obligatory at least 6 hrs. at least 3 hrs. at least 3 hrs.
4. Training Certificate Requirement
A head of Compliance is required to receive and renew their training certificate which is organized by ASCO,
Compliance Club.
5. Registration Requirement
A trader is required to register with SET. For registration, a trader has to meet SET criteria.
19 Thailand 2 ThaiBMA Bond Traders in Thailand are required to register with ThaiBMA. In order to register, traders have to meet the necessary
criteria and pass the registered trader examination administered by ThaiBMA. ThaiBMA is responsible for ensuring that
trading practices of registered traders comply with the established Ethics and Code and Conduct for the bond market.
20 Turkey TCMA Licensing requirements were introduced by the Capital Markets Board (CMB), the main regulatory authority in the
capital markets, in 2001. The licensing system aims to assess the professional qualifications and the knowledge of persons
working at capital market-related jobs. The first licensing examinations were held in September 2002.
Since 2011, exams are organized by Capital Market Licensing and Training Agency (SPL).
The CMB introduced several types of licenses for market professionals that are listed below.
1. Capital Market Activities License (Level I-II and III)
2. Derivatives License
3. Corporate Governance Rating License
4. Credit Rating License
5. Real Estate Appraisal License
6. Residential Real Estate Appraisal License
21 Uzbekistan CSM According to Clauses 2, 3, 4 and 7 of Regulation “On the licensing of professional activities in the securities market”
approved by Cabinet of Ministers dated July 9, 2003 #308, licensing of professional activity on securities market is carried
out by CSM. Professional activity in the securities market is carried out by legal entities. The license to carry out
professional activities in the securities market is issued by CSM without limitation of validity.
Licensees have to follow Uzbekistan’s legislation requirements on the securities market; to have sufficient funds and
adequate financial indicators; to possess required software, copyrights for software and hardware systems; to be ready for
electronic interaction with other professional participants on the securities market and stock exchanges; to have employees
who have relevant qualification in accordance with the relevant licensing body; and to be in possession of at least one
employee who keeps record of transactions with securities, and at least one employee who organizes and implements
internal control. Also, the head of the licensee has to be a person who holds a degree in finance, economics, law, mathematics
or information technology, has at least two years of work experience in organizations engaged in professional activities in
related spheres, has an outstanding criminal record for economic crimes, managed or was founder of legal entity, whose
fault led to termination of the license or bankruptcy.
22 Vietnam1 VASB According to Circular No. 197/2015/TT-BTC (as a replacement for Decision No.15/2008/QD-BTC and Circular
No.147/2012/TT-BTC dated Mar 27, 2008 by the Ministry of Finance), there are 2 types of certificates relating to securities
business that market professionals must have: Securities Business Practicing Certificate and Securities Professional
Certificate.
- Securities Business Practicing Certificate guarantees that the holder is eligible to hold professional positions at
securities firms, fund management companies, securities investment companies operating in Vietnam.
- Securities Professional Certificate guarantees that the holder meets necessary qualifications in the securities and
stock market.
There are 7 securities professional certificates, including:
1. Basics on securities and securities market
2. Laws on securities and securities market
3. Securities Analysis and Investment
4. Securities Brokerage and Investment Advisory
5. Analysis of Corporate Financial Statements
6. Securities Issue Advisory and Underwriting
7. Fund and Asset Management
19
A market professional must hold Securities Professional Certificate before attending the exam for the Securities Business
Practising Certificate. There are 3 types of Securities Business Practising Certificates, including:
- Securities Brokerage Certificate
- Financial Analysis Certificate
- Fund Management Certificate
1. To attend the exam for Securities Brokerage Certificate, the Securities Professional Certificate must comprise
qualifications on Basics on securities and stock market; Laws on securities and stock market; Securities Analysis
and Investment; Securities Brokerage and Investment Advisory.
2. To attend the exam for Financial Analysis Certificate, the Securities Professional Certificate must comprise
qualifications applied to brokers, together with qualifications on Financial Advisory and Issue Underwriting, and
Analysis of Corporate Financial Statement.
3. To attend the exam for Fund Management Certificate, the Securities Professional Certificate must comprise
qualifications needed for the Financial Analysis Certificate and qualification on Fund and Asset Management.
The exams are held and certificates are granted by the Securities Research and Training Center under the State Securities
Commission (SSC).
23 Vietnam2 VBMA In general, there are no mandatory qualification requirements applicable to commercial bank dealers dealing with bond
trading. For brokers and analysts working for securities companies, the qualification system is the same as the above.
VBMA also provides training courses on the Fixed Income Trading Techniques for dealers in the market. We expect that in
the time to come, all dealers must attend this training course.
20
III –3. Training System for Employees/ Sales Representatives of Securities Companies
No. Market Name of
Organization
Training System for Employees/ Sales Representatives of Securities Companies
1 Asian Region ASIFMA N/A
2 Bangladesh BSEC
3 Cambodia SECC To qualify as employees/sales representatives of any securities firm in Cambodia, the selected candidate requires going
through training program prepared and conducted by SECC and passing the exam. Every two years, the employees/sales
representatives of Securities firms need to go through training and exam again.
4 Hong Kong HKSA SFC requires that every market participant, for each regulated activity, attend at a minimum of 5 hours of continuous
professional training (CPT) per year. The CPT trainings will be provided by HKSA as well as other financial institution
recognized by SFC. Each licensing firm will also have the responsibility to provide sufficient internal training to the staff
on new rules/ guidelines.
5 India 1 ANMI n/a
6 India 2 BBF There is no centralized training. Every intermediary has its own training systems and processes.
7 Indonesia APEI APEI works with the Regulators to implement new regulations and to enhance participants' understanding of their
functions in the securities company.
OJK requires company’s directors to participate in continuing education in order to get a better understanding about the
development and implementation of existing regulations. The training program is conducted by APEI and OJK.
For holders of broker dealers, underwriting and investment manager licenses, they have to attend specific training before
becoming entitled to apply for license extension from OJK. These licenses expire after 2 years.
8 Japan JSDA Based on a training program drawn up annually, JSDA provides training seminars for executive officers and employees of
Association Members for the purpose of renewal of their qualification and enhancement of their expertise. JSDA flexibly
conducts training seminars other than those included in the program in response to amendments of laws and institutional
reform.
Total of participants attending these seminars during the fiscal year 2016 : 4,396 persons (87 sessions)
To contribute to strengthen the compliance system and to enhance internal training in member firms, JSDA edited and
distributed a collection of rulebooks on laws and regulations to be used as reference material in internal training courses.
In addition, JSDA provided summaries and training materials on compliance-related themes as part of its training for the
fiscal year.
FY 2016 Training Courses
1. Training Courses Based on Self-Regulation
a. Seminars for company representatives (held once a year)
b. Training seminars for executives (held four times a year)
c. Joint training seminars for internal administration supervisors and assistant supervisors (mandatory; held
ten times a year)
d. Training seminars for internal administrators (held six to eight times a year)
e. Training seminars for sales managers (held six to eight times a year)
f. Training for renewing the qualifications of sales representatives (computer-based training)
2. Training Courses Focusing on Ethics and Compliance
a. Basic compliance seminars (held eight to ten times a year)
b. Compliance practice seminars (held ten to twelve times a year)
c. Compliance seminars for sales staff (held four to six times a year)
d. Risk management seminars (held twice a year)
e. Corporate ethics seminars (held once a year)
3. Training Courses on Other Topics
a. Securities business basic seminars (held six times a year)
b. Securities business practice seminars (held nine to ten times a year)
9 Korea KOFIA The Korea Institute of Financial Investment(KIFIN), a subsidiary of KOFIA, offers an array of learning courses on financial
investment instruments to meet the needs of the financial investment industry. The principal objective of KIFIN is to provide
the industry with continued education and training in order to foster high-quality professionals. The courses are broadly
classified into professional education on specialty building for practitioners and mandatory education for certification of
skills maintenance purposes. As of 2017, KIFIN runs 108 classes in 9 different spheres. KIFIN also offers advanced courses,
each tailored to the needs of its member companies, and 38 online courses.
21
No. Market Name of
Organization
Training System for Employees/ Sales Representatives of Securities Companies
NUMBER OF TRAINEES ENROLLED IN KIFIN COURSES
(Unit: # of people)
Year Professional Education Mandatory Education * Total
In-class E-Learning In-class E-Learning
2011 2,823 3,655 1,398 59,100 66,976
2012 3,597 8,680 1,130 63,269 76,676
2013 3,453 11,625 544 59,145 74,767
2014 3,253 10,368 687 53,019 67,327
2015 2,710 17,422 27,245 61,363 108,740
2016 3,964 22,377 14,544 85,652 126,537
Note: * Refresher, skill-building and preliminary education courses offered to help financial investment professionals acquire and maintain
their certification and specialties.
10 Laos LSCO According to the Regulation on Supervision of Securities Professionals, a person having a securities professional license
shall participate in training as determined by LSCO from time to time for refreshing and updating purposes and shall provide
related documents to extend the securities professional license as specified in the Regulation on Supervision of Securities
Professionals.
11 Malaysia ASCM N/A
12 Mongolia MASD The training of professionals and employees of securities firms is conducted by MASD as per legislation and internal rule
on training and accreditation. The training curriculum is developed by MASD and approved by the Professional Board. The
license training (for all 3 types) is conducted at least twice a year depending on the demand. A fixed number of hours of
accreditation training is conducted yearly and a professional must attend at least 8 hours of training per year. A professional
must attend the accreditation training and pass the test for renewing his/her rights prior to the expiration of the license term
(for license terms, see point 3 of the previous section). Someone holding an internationally recognized license or
qualification to work in the securities market is allowed to enter the exam without having attended the actual training.
MASD also organizes training on other related themes such as corporate governance, ethics, internal audit and accounting
specific to some organizations’ needs. The trainings can be conducted online, but currently all training sessions are provided
in a classroom.
Examination year Examinees Successful Applicants
2011 824 698
2012 341 217
2013 156 149
2014 211 189
2015 91 75
2016 91 87
September 1st, 2017 162 145
Total 1876 1560
13 Myanmar SECM Securities Exchange Rules require securities companies to ensure that its officers or staff provide fair and good faith service.
To meet this requirement, all securities companies shall establish proper training policy. SECM checks their policy and
operation.
14 Nepal SEBON SEBON organizes regular training sessions targeted to students, investors and market participants through the Education &
Training Sub-section at various parts of the nation. Recently, SEBON held Anti-money laundering (AML) training for its
employees, market representatives, broker and Merchant-bankers to acquaint them with the changing norms of the securities
market. SEBON also provided training to its employees inside and outside of the country.
15 Singapore SAS The Institute of Banking & Finance (IBF) is the training arm of the MAS. It administers the qualifying exams and training
programmes for trading representatives to qualify for Capital Markets and Financial Advisory Services licences for the
securities and futures markets. It also conducts various continuous education training programmes for industry and finance
professionals. The IBF also seeks SAS feedback on their new/enhanced competency standards to be rolled out for trading
representatives.
Fewer are joining and in fact many are leaving this industry as the equities market has been lackluster. Many TRs are
lamenting that the commission is inadequate for survival. To encourage more to join the industry, a new Certified Securities
Professionals (CSP) Programme for professionals in the securities industry was developed, with SAS in the committee.
SAS also helped member companies train their retail customers through seminars with funding support from the Singapore
Exchange Investor Education Fund. These programmes include workshops to equip investors with investment skills and
knowledge and are very well received. In the last two years, almost 5,000 retail customers had participated in such
workshops.
16 Sri Lanka SECSL Continuous Professional Development (CPD) programs for existing investment advisors in the stock broking
industry to enable them to constantly assess and update themselves with the latest trends in the local and global
capital markets
Ethical Framework and Best Practices in Professional Conduct issued by the Commission for individuals involved
in conducting investment analysis, making investment recommendations, taking investment actions and/or
engaging in any other investment profession activities ("Practitioners")
17 Taiwan TSA 1. Qualification exams of securities:
In accordance with the regulations and under commission of TSA, the “Securities and Futures Institute (SFI)” administers
22
No. Market Name of
Organization
Training System for Employees/ Sales Representatives of Securities Companies
nine written qualification exams including the (1) Senior securities specialist exam and (2) Securities specialist exam.
2. Pre-job and on-the-job financial training for securities personnel (employees/sale representative)
(1) Pre-job Training: Provided by SFI. An associated person of a securities firm who is assuming the job for the first
time, or who has resumed the job after an absence of 3 years, shall participate in pre-job training within 6 months
after reporting for work.
(2) On-the-job Training: Provided by TSA. Currently employed personnel shall participate in in-service training once
every 3 years. On-the-job training is divided into general, advanced and senior level managerial training. Advanced
trainings are categorized by types of business – including stock brokerage, proprietary trading and underwriting,
auditing, administration of shareholder service, wealth management, foreign capital, and others.
18 Thailand 1 ASCO On behalf of SET, Capital Market Development Function (CMDF) has formulated and developed Training Courses for
securities companies. Capital Market Academy (CMA) managed by CMDF has provided synergistic knowledge, vision
and leadership for policy makers inside and outside the scope of the capital market.
ATI conducted by ASCO has been provided regarding financial and capital market mechanisms, principles of investment,
basic knowledge of securities products with their valuations, SEC regulations and ethics for Investment Consultants. It also
provides training courses for executive officers and employees of member firms to refresh their qualification and enhance
the employee’s expertise. Furthermore, ASCO also provides training courses for the members’ head of compliance in order
to enhance and strengthen compliance knowledge.
19 Thailand 2 ThaiBMA ThaiBMA are responsible for administering “Bond Trader License”. All bond traders are required to pass the examination
organized by ThaiBMA and attend a refresher course every two years to renew their license. ThaiBMA also provides several
ongoing education training courses for professionals in the bond market.
20 Turkey TCMA In order to renew their licenses, licensed personnel are required to attend a compulsory online training program every three
years.
21 Uzbekistan CSM Training of employees of professional market participants is carried out by licensed investment consultants that meet
training requirements. For instance, National Center for training of new markets specialists, which in September 2011
received a corresponding license from СSM.
22 Vietnam1 VASB Same as below.
23 Vietnam2 VBMA A securities broker or securities analyst of a securities company needs to obtain a securities trading certificate from the
State Securities Commission (SSC). In order to obtain such a certificate, brokers/analysts are required to participate in a
number oftraining courses (as listed below) and pass the final qualification examination course conducted by the SSC.
A securities broker is required to pass the following course examinations held by the SSC:
1. Course 1: Basic Issues on Securities and Securities Market
2. Course 2: the Law on Securities and Securities Market
3. Course 3: Securities and Investment Analysis
4. Course 4: Securities Brokering and Investment Advisory
A securities analyst is required to participate in the following courses held by the SSC:
1. Course 1: Basic Issues on Securities and Securities Market
2. Course 2: the Law on Securities and Securities Market
3. Course 3: Securities and Investment Analysis
4. Course 4: Securities Brokering and Investment Advisory
5. Course 5: Financial Advisory and Securities Underwriting
6. Course 6: Analysis of Financial Reports
23
III –4. Securities Firms Inspection or Audit
No. Market Name of
Organization
Securities Firms Inspection or Audit
1 Asian Region ASIFMA N/A
2 Bangladesh BSEC
3 Cambodia SECC SECC conducts on-site and off-site inspection of securities firms. The securities firms shall submit periodic financial reports
to the SECC.
4 Hong Kong HKSA 1. SFC pays inspection/audit to regulated firms periodically;
2. SFC conducts special inspection/audit to some firms under certain circumstances;
3. Regulated firms should have their own compliance department to make sure all the internal control measurements for
compliance are in place, and are enforceable.
Under normal conditions, regulated firms must submit their Financial Resource Report (FRR) on monthly basis, but in
some severe situations like huge market volatilities or regional/worldwide financial crises, in order to avoid market risk,
SFC may require regulated firms to submit their financial resource report (FRR) and other reports on daily basis.
5 India 1 ANMI Statutory Regulations provide for the manner in which the Audit process, be it Internal Audit or Statutory Audit, should be
set up and functional. Companies Incorporated under the Companies Act, 1956 or the Companies Act, 2013 are governed
by the applicable provisions of the Act. It also provides for Setting up of An Audit Committee and the composition of the
Audit Committee.
Members should set up a streamlined Audit process including a Systems Audit mechanism which should be undertaken
periodically as per provisions in that regard.
Audit comments, errors, compliance failures, and systems weaknesses, if any, are pointed out after such audit review or
after any inspections undertaken by regulatory authorities, and steps should be taken to initiate remedial measures as may
be considered necessary. It should also be ensured that such instances do not recur.
6 India 2 BBF The Securities Firms are subject to internal audits. Further, the Stock Exchanges inspect from time to time (at least once
every three years). Additional Inspections are conducted by SEBI for the larger securities firms.
7 Indonesia APEI Securities Firms are audited by OJK and IDX—regular and incidental audits are performed annually on all securities
companies in the industry. An audit or an investigation may be conducted by visiting the head office or branch office of the
securities firm. OJK and IDX will examine the financials, standard operating procedures, systems, licenses, KYC
procedures, risk management and other control process.
Aside from the above, IDX also checks up on data feed distribution to investors and indirect vendors. And since 2015, KSEI
also audits securities firms regarding the movement of stocks.
8 Japan JSDA JSDA inspects the observance of laws and regulations as well as the condition of the business and assets of Association
Members, their books and records and other items. Currently, JSDA conducts four types of inspection, namely General
Inspection, Special Inspection, Follow-up Inspection and Moving/Continuous Inspection.
In principle, inspection is conducted by visiting the head office, branch office, sales office, or other facility of the
Association Members and inspecting its account records, etc. (i.e., onsite inspection). In some cases, instead of onsite
inspection, off-site or document-based inspection may be conducted using account records, etc. submitted by the
Association Members without visiting the said Association Members.
9 Korea KOFIA KOFIA may inspect whether a financial investment company and its employees comply with the Regulations and the
appropriateness of internal control. Inspection can be conducted onsite or offsite, depending on the importance, urgency
and characteristics of the subject.
10 Laos LSCO LSCO is given the power to create a task force team to inspect the securities companies both on-site and off-site.
The inspection scope consists of financial statements, business plans, internal control, risk management, and related
activities to ensure securities companies' compliance with laws and regulations for effectiveness, transparency, fairness and
stability of operations of securities activities, and to protect the legistimate rights and interests of investors.
11 Malaysia ASCM Supervision by the SC
The SC undertakes a risk profiling exercise in formulating its supervisory plan for each incoming year. Risk from both
qualitative and quantitative perspectives are considered, which allows the prioritisation of resource deployment and the
focus being placed on intermediaries that require greater regulatory attention. Typically, intermediaries categorised as
high risk are subject to yearly audits, while intermediaries categorised as medium-high and medium-low risk are subject
to an audit once every two (2) and three (3) years, respectively. Low risk intermediaries are subject to a four (4) year audit
cycle. In addition, regardless of the risk category an intermediary may fall under, if it is identified as a Systemically
Important Entity, the intermediary is subject to a two (2) year audit cycle.
Supervision by Bursa Malaysia
In addition to the SC’s supervision, routine inspection and monitoring of intermediaries is also conducted by Bursa
Malaysia.
Routine inspections of stockbroking and futures broking companies are conducted by Bursa Malaysia. Bursa Malaysia
also adopts a risk-based approach in carrying out the inspection of its participants. A risk profile is created for the
intermediaries and is classified into four (4) risk groups: namely, high risk, medium high risk, medium low risk and low
risk. For intermediaries which fall under the High Risk category, inspection is conducted every year and for
intermediaries in the other three (3) categories, inspection is conducted once every three (3) years. The assessment criteria
is based on the regulatory focus and responsibilities of Bursa Malaysia.
24
No. Market Name of
Organization
Securities Firms Inspection or Audit
As a frontline regulator, Bursa Malaysia closely supervises the business conduct of securities firms and CMSRL holders.
Supervision is carried out in the following manner:
Inspection - conduct scheduled and/or ad-hoc inspection visits to the office premises of securities firms with the focus to
assess the degree of compliance, level of market conduct and adequacy of clients’ assets protection.
Compliance Monitoring – ensure timely reporting by securities firms, conduct analytical review on the periodic
submissions and raise alert when the needs arise.
Financial Monitoring - monitor the securities firms’ financial condition and ensure the compliance with minimum
financial requirements from various aspects.
Registration – ensure all licensed securities firms, their key staff and licensed personnel are duly registered with Bursa
Malaysia for monitoring purpose.
Others - Evaluate and process applications received from securities firms that require prior consent of Bursa Malaysia
before implementation, which, among others, include applications for new business activity and establishment of new office
premises.
12 Mongolia MASD The FRC mainly conducts on-site and off-site inspections/audits of regulated entities with regard to legislation compliance.
As MASD became a SRO in June 2015, the FRC aims to transfer some of its rights to MASD. For example, the FRC
Regulation on solvency of securities brokerage, dealer and underwriting firms issued in December 2015 stipulates that the
securities firms must submit quarterly reports on their solvency to the FRC as well as to MASD. Also, in March 2016,
MASD and FRC conducted joint on-site visits to the securities companies. The following are legal provisions related to
FRC monitoring of securities firms:
1. The FRC shall regularly monitor regulated entities’ operations to see whether they comply with laws, rules and
regulations set by the FRC and requirements of the special permits;
2. The FRC may conduct an inspection at any time on its own initiative if deems necessary or upon request or
information received from clients, legal entities, or foreign regulatory organization;
3. A regulated entity is obliged to deliver documents and materials required by the FRC within a specified time;
4. A regulated entity shall have its accounts audited half yearly by a FRC registered auditor and submit paper and
digital copies to the FRC within the period specified in the law;
5. An auditor shall immediately report to the FRC and to the regulated entity in writing, if an auditor becomes aware
of any matter which would critically affect the financial position of the regulated organization or discovers evidence
of violation of financial regulations during the audit;
6. The FRC if it deems as necessary may demand a regulated entity to have its quarterly financial statements audited;
7. A regulated entity is required to have an internal compliance officer and internal audit rule.
13 Myanmar SECM SECM conduct the inspection for the operation and the audit firms audit the financial statement.
14 Nepal SEBON SEBON conducts onsite and offsite inspection of the securities firms. Onsite inspection is conducted by visiting the office
of the securities firm and inspecting its account, other records and physical facilities, etc.
In off-site inspection, SEBON observes the transaction of brokerage firm by means of surveillance software.
The Stock Broker, Securities Dealer and Market Maker are required to keep their books of accounts and prepare financial
reports including profit and loss accounts, balance sheet and cash flow statements in the format and standards as prescribed
under the prevailing laws.
15 Singapore SAS The MAS and SGX carry out regular inspection checks on all licensed financial institutions (MAS) or registered members
(SGX).
16 Sri Lanka SECSL The Supervision Division is responsible for the Licensing/Registration, Supervision, and Compliance Monitoring
and On Site/Off Site Examinations of Stock Broking Companies, Unit Trust Managing Companies and Market
Intermediaries (Investment Manager, Margin Provider, Underwriter, Credit Rating Agency and Clearing House).
The supervisory role of the Division involves both On Site and Off Site supervision on the financial viability and
business conduct of market participants towards investor protection and thereby building investor confidence in
the Capital Market.
On site/Off site supervision is carried out adopting a Risk Based supervisory methodology focusing on different
risk categories such as Prudential, Liquidity, Financial, Credit, Operational, Legal and Reputational Risk with
emphasis on compliance of market participants with applicable Rules & Regulations to strengthen market
oversight.
17 Taiwan TSA 1. TSA may perform general inspection and/or special inspection on members’ financial conditions and operational
situations. The inspections are mainly conducted on securities firms who (1) accept orders to trade foreign securities,
(2) underwrite or re-sell securities and (3) conduct wealth management business. Inspections can be conducted by
physical inspection or document-based inspection.
2. When conducting general inspection, in cases where the TSA discovers that a member is being badly run, has suffered
losses to the extent that it becomes difficult to maintain its creditworthiness, has experienced any serious incident, or
has the likelihood that the trading order and investment security are severely affected, the TSA shall promptly initiate
a special examination and provide advice. Such procedures shall be drafted by the TSA and reported to the FSC for
recordation.
18 Thailand 1 ASCO ASCO has coordinated with regulators (SEC & SET) in supervising and monitoring the business conduct of members. Each
member has to be audited by SEC under SEA supervision and monitoring on financial responsibility rules and regulations.
In addition, each member is audited by SET under SET supervising and monitoring on members’ trading activities.
19 Thailand 2 ThaiBMA ThaiBMA acts as a front line regulator to detect unfair trading practices by using a Market Surveillance System for detecting
25
No. Market Name of
Organization
Securities Firms Inspection or Audit
suspicious patterns and potential fraudulent practices such as volume manipulation, excessive mark up / down, etc.
ThaiBMA also conducts 2 types of inspections, namely Regular inspection and Special inspection with 2 approaches; (1)
on-site inspection by visiting member’s office and facilities related to their bond trading i.e. trading account, electronic
data, etc. (2) off-site inspection by using document-based evidence without visiting each member’s office.
20 Turkey TCMA TCMA has the right and the duty to
Establish professional rules and regulations to provide that activities performed by the Association members are fair
and honest, to provide business ethics, to facilitate solidarity among the Association members, to safeguard the
prudent and disciplined conduct of business by its members
Take necessary measures to prevent unfair competition and inform the CMB
Give disciplinary penalties specified in the Statute of the association
Notify the CMB with respect to its proposal on principles regarding commissions and fees charged by members
Evaluate complaints against its members and inform CMB on the results
Establish, enforce and supervise regulations on subjects assigned by the legislation or specified by CMB
TCMA can enforce compliance with the above regulations. On-site inspection is rare. In most of the cases, investigations
are handled by collecting the necessary documents.
21 Uzbekistan CSM According to Art. 55 of Law “On securities market”, CSM carries out control over implementation of legislation on
securities market and joint-stock companies, as well as the protection of shareholders' rights by government bodies and
securities market participants. In cases where violations of legislation are found, CSM issues inferences and applies
sanctions against violators in accordance with legislation.
CSM undertakes regularly on-site inspections and monitoring of transactions.
22 Vietnam 1 VASB VASB is not authorized or mandated to conduct any inspection or audit of member firms.
23 Vietnam 2 VBMA Under the VBMA Charter, VBMA is not authorized or mandated to conduct any inspection or audit of member firms.
26
III –5. Disciplinary Action and Measures Against Misconducts
No. Market Name of
Organization
Disciplinary Action and Measures Against Misconducts
1 Asian Region ASIFMA N/A
2 Bangladesh BSEC
3 Cambodia SECC According to the Law on Issuance and Trading of Non-Government Securities, there are two kinds of administrative
disciplinary action. One is applied to companies such as securities companies, issuing companies and other market
participants, while the other is applied to individuals.
According to the Anukret (Sub-decree) on the Implementation of the Law on Issuance and Trading of Non-Government
Securities, a person who contravenes any provisions of this Anukret or any requirement prescribed in accordance with this
Anukret, shall commit an offence and be liable to punishments in accordance with the existing laws and provisions in the
Kingdom of Cambodia. Meanwhile, under the Prakas (Regulation) on the Code of Conduct of Securities Firms and
Securities Representative, the Director General of SECC is authorized to apply the following administrative sanction to any
person who contravenes any provisions of this Prakas:
- A warning
- A correction order
- A suspension or dismissal of directors and/or senior officers
- Imposing restrictions on the license
- A suspension or revoke the license
4 Hong Kong HKSA SFO and its sub-laws consist of criminal and civil actions against misconducts, depending on the nature of the wrongdoings.
For criminal cases, the measurement will be imprisonment plus fines or fines only for most of the cases; for civil cases, the
disciplinary actions can include revocation/suspension of license, public reprimand, fines and warnings.
SFO grants SFC full power to investigate, prosecute and apply court orders to freeze assets, disqualify directors of listed
companies or licensed corporations.
5 India 1 ANMI If any conduct or behavior of the member has endangered or is likely to endanger the harmony or has affected or is likely
to affect the character, stability or interests of the Company or has been or is otherwise undesirable, then after giving an
reasonable opportunity, membership of the aforementioned member can be terminated if Board members are not satisfied.
Apart from this, a Member shall ipso facto cease to be a member:
(a). if it ceases to exist as a result of closure, liquidation, winding up, merger, amalgamation, change of business or for
any other reason whatsoever;
(b). if it ceases to carry on the business of stock broking;
(c). If the Authorization or the Certificate of Registration granted by SEBI to carry on the activities of stock broking is
cancelled, withdrawn or revoked by SEBI. Provided, the National Council shall have the discretion to retain it as a
member;
(d). If it ceases to be eligible to be a member.
6 India 2 BBF In case of misconducts, disciplinary action measures range from warning and censures to monetary penalties, suspension
and expulsion. In case of extreme misconduct, criminal proceedings are launched.
7 Indonesia APEI Under the Law Number 8 in 1995 regarding Capital Markets (UUPM), disciplinary actions include:
1. Sanctions against the company in the form of:
- written warning
- penalty
- temporary suspension
2. Sanctions against individuals (Director and/or Employee involved in the Securities)
- written warning
- penalty
- temporary suspension of individual license
- revocation of individual license
Before sanctions are applied, OJK will ask for the explanation of the parties regarding the offense committed and its
supporting documents. The Regulator will impose penalties based on the results of the completed investigation. The
firm’s activities are automatically suspended if the sanctions are connected with the revocation of licenses.
8 Japan JSDA Under the FIEA, there are two categories of administrative disciplinary action. One is applied to companies such as
securities companies, banks, insurance companies and so on. The other is applied to those companies but with regard to
individual sales representatives and others who are affiliated with them and acting as sales representatives. (*)
As the task of taking administrative disciplinary action against sales representatives is assigned to JSDA under the FIEA,
JSDA also has two categories of disciplinary actions similar to those under the Financial Instruments and Exchange Act.
One is applied to the member firm itself while the other is applied with regard to its employees.(*)
There are five kinds of disciplinary actions to be taken against Association Members when disciplinary action is
triggered, namely 1) reprimand, 2) imposition of a negligence fine, 3) limitation of membership, 4) suspension of
membership and 5) expulsion.
As for the JSDA’s disciplinary actions taken against employees of the Association Members, there are two categories: the
first is the treatment of a perpetrator of an inappropriate act, and the second is the prohibition from business of sales
representatives.
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Organization
Disciplinary Action and Measures Against Misconducts
First, a perpetrator of an inappropriate act is an employee of an Association Member that the JSDA has determined to
have been disciplined internally in a manner that is equivalent to dismissal for an act that is deemed to significantly
damage public confidence in the securities industry. Such persons are treated by JSDA as a perpetrator of an
inappropriate act.
Among such perpetrators, those who are recognized as having conducted acts affecting most seriously the credibility of
the securities industry are treated as Class 1 perpetrators of inappropriate act, and the other perpetrators are treated as
Class 2 perpetrators of inappropriate act.
In case the sales representative is treated as a perpetrator of inappropriate act, he or she shall lose his or her qualification
as a sales representative. Class 1 perpetrators lose the ability to recover that qualification indefinitely, while Class 2
perpetrators are prohibited from obtaining that qualification again for five (5) years.
When a person is designated as a perpetrator of an inappropriate act, he or she shall be listed in the perpetrator of an
inappropriate act ledger and other members of the Association are prohibited from employing a person classified as a
Class 1 perpetrator indefinitely and a Class 2 perpetrator for five (5) years.
Second, the measure of prohibiting the business of sales representatives essentially means to prohibit the business of the
sales representative who conducted acts in violation of laws and regulations, etc. for a fixed period which JSDA will
determine (not more than five (5) years).
(*) Because the application for registration of the Sales Representative is made by the Association Member, any related
disciplinary action regarding the said Sales Representative is also by extension taken against the Association Member.
9 Korea KOFIA KOFIA may, when a financial investment company and its employees violate the regulations or do not actively implement
them, impose sanctions by the Association’s Articles of Association. The types of sanctions that can be imposed on the
members(a financial investment company) by the Self-Regulation Committee(hereinafter referred to as the Committee) are
any of the following items, and the sanction of Item 4 may be imposed with other sanctions when deemed necessary:
1. Request for the member to be barred from the general meeting
2. Suspension of the qualification of the member
3. Suspension of the whole or part of the duties provided to the member by the Association
4. Imposing sanctions
5. Warning
6. Caution
The types of sanctions that can be recommended to the executives of the member by the Committee are any of the following
items;
1. Dismissal(including the recommendation for suspension of business practice until the decision of whether of not to
dismiss the executive concerned at the shareholder’s meeting)
2. Suspension of business practices for less than six months
3. Warning
4. Caution
The types of sanctions that can be recommended on the employees of the member by the Committee are any of the following
items;
1. Disciplinary dismissal
2. Suspension
3. Salary reduction
4. Reprimand
5. Caution
10 Laos LSCO According to the Law on Securities and related regulations, persons or organizations who violate the rules shall be subject
to the following sanctions:
(1) Being educated or warned in writing
(2) Being disciplined
(3) Being fined
(4) Repay in values of damage
(5) Suspending or revoking a securities business license or revoking the securities professional license
(6) Being subject to a legal proceeding based upon the character and scope of their violation
11 Malaysia ASCM Under the CMSA, the SC has the power to seek court orders by way of civil proceedings in the High Court. A wide range
of court orders are available to the SC for the following categories of securities breaches:
(1) For serious market misconduct, the SC may, under sections 200(2) and 201(5) of the CMSA:
recover an amount not exceeding three (3) times the gross amount of pecuniary gain or loss avoided and impose
a civil penalty up to RM1.0 million.
(2) Where a director has been convicted of an offence or had any administrative civil action taken against him under
the CMSA or had been compounded for an offence, the SC may under Sections 318 or 360 of the CMSA make an
application to the Court to remove or bar him from:
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No. Market Name of
Organization
Disciplinary Action and Measures Against Misconducts
becoming a director or chief executive of any public company for such time as may be determined by the court;
or
being involved in the management of any public company for such time as may be determined by the court.
(3) Breaches relating to issuance of securities and take-overs and mergers:
Section 220(3) of the CMSA - to compel an offender to give effect to the provisions of the Malaysian Code on
Take-Overs and Mergers or the SC rulings;
Sections 220(5) and 220(6) of the CMSA - to sue as debt due to aggrieved persons or to the Malaysian
Government in cases where offenders have failed to pay penalty or failed to make restitution; and
Section 358(1) of the CMSA - to recover the amount of loss or damage on behalf of aggrieved persons.
To prevent or remedy a contravention of any CMSA provision or to mitigate the effect of such a contravention, under section
360(1) of the CMSA, the SC may:
restrain contravention or require the cessation of the contravention;
restrain dealing in securities or trading in derivatives;
declare a derivative to be void/voidable;
restrain acquisition or disposal or otherwise deal with assets;
direct the disposal of any securities;
restrain the exercise of any voting rights or rights attached to any securities;
restrain a person from making available, offering for subscription or purchase, or issuing an invitation to subscribe
for or purchase any securities;
appoint a receiver of the property of the CMSL holder or of a property that is held by such holder for or on behalf
of another person whether in trust or otherwise;
vest securities in SC or a trustee;
require a person to do an act required to be done which he or she fails/refuse to do;
give direction for the compliance to the rules of a stock exchange, a derivatives exchange or an approved clearing
house;
require a person to remedy the contravention or mitigate its effect including making restitution;
direct a person to do or refrain from doing an act;
direct a person to comply with any directions issued by SC under sections 354, 355 and 356 of the CMSA; and
make any other ancillary orders.
Between 2008 and 2011, the SC initiated 11 civil actions against a total of 40 persons for various breaches of securities
laws.
For entities or persons licensed by the SC, under the CMSA the SC has the power to impose the following administrative
sanctions:
Sections 64 and 65 - non-renewal of license;
Section 72 - revocation and suspension of license;
Section 356 - issue directive for compliance, impose a penalty not exceeding RM500,000; and require the persons
to take steps to mitigate the breach, including making restitution to persons aggrieved.
Under sections 64, 65 and 72 of the CMSA, the SC may exercise the above powers on following grounds:
failure to perform duties efficiently, honestly or fairly;
failure to comply with the rules of the exchange or clearing house; or
failure to comply with the licensing conditions/restrictions.
In its commitment to deter and reduce breaches of the industry law, both Securities Commission and Bursa Malaysia play
their respective roles in enforcing the CMSA and Bursa Malaysia Rules. In undertaking enforcement action, due process
will be accorded where the defaulting parties are given opportunity to provide explanation to Securities Commission and/or
Bursa Malaysia.
In deciding the appropriate sanction to be imposed, a variety of factors are taken into consideration according to the
circumstances of each individual case. The factors taken into consideration include, amongst others, public interest/deterrent
element of the proposed penalty, antecedent character and background of the defaulting party, nature of the breach and
circumstances and manner under which the breach was committed, and mitigating and aggravating factors. As such,
depending on the outcome of the assessment of the various factors in relation to the facts and circumstances of each
individual case, the actions/sanctions imposed may also vary even for the same breach by different parties.
The type of sanctions that may be imposed for the breach include:
reprimand fines
remedial actions
suspension
any other action deemed appropriate
12 Mongolia MASD Suspension or termination of special licenses is the main measure against the misconduct of market professionals by the
FRC and MASD. Also, a measure of suspension and termination of special permits and trading is taken by the FRC, MSE,
etc. against regulated entities for misconduct including the inability to pay membership fees on time (which affects the
customers’ trading rights). Unless it is a case of criminal nature, the misconduct is regulated by the Securities Market Law
and other regulations (of FRC, MSE, CD) which impose administrative sanctions such as various level fines and penalties.
The newly revised Criminal Code (2015) includes in its purview insider trading and market manipulation and imposes
sanctions such as fines, limitation of movement, or 3 months to 2 years imprisonment for violationst.
MASD has a special Disciplinary Board within its structure which overlooks the quality of member firms’ services as well
29
No. Market Name of
Organization
Disciplinary Action and Measures Against Misconducts
as their compliance with the laws. The Board’s functions are regulated by the MASD’s Rule on monitoring of members’
operations and resolving complaints and disputes.
13 Myanmar SECM Securities Exchange Law specifies prohibited acts in Article 49 such as insider trading and market manipulation. Any person
who violates this prohibition shall be punished with imprisonment for a term not exceeding 10 years and may also be liable
to fines.
SECM monitors market participants to implement measures necessary for the prevention of prohibited acts.
14 Nepal SEBON In the case of violation of Acts, rules, bylaws, directives, thereunder or the order or direction issued by the SEBON,
disciplinary action may be taken as punishment as mentioned below:
Alert and/or provide written warning;
Issue order for correctional steps;
Impose partial or full restriction on the transaction of approved securities entrepreneur or security market;
Impose monetary penalty; and
Suspend or cancel licenses.
15 Singapore SAS The supervisory and disciplinary framework for the securities industry is set out by the MAS, which is governed by the
MAS Act. The Act confers powers on MAS to issue legal instruments for the regulation and supervision of financial
institutions. In addition, MAS also has frameworks and guidelines in place on topics which cut across various classes of
financial institutions.
Financial Supervision of Capital Markets
Financial supervision is mainly undertaken by the Capital Markets Intermediaries Departments, the Corporate Finance &
Consumer Department, the Markets Policy & Infrastructure Department and Enforcement Department under the MAS.
Capital Markets Intermediaries Departments I, II and III
The Capital Markets Intermediaries (CMI) Departments have collective responsibility for the admission and supervision
of capital markets intermediaries, including securities and futures brokers, fund managers, real estate investment trust
(REIT) managers, corporate finance advisers, financial advisers, insurance brokers, trust companies, and credit rating
agencies. The three departments administer the licensing and business conduct rules for these intermediaries to promote
safe, sound and fair-dealing intermediaries. Broadly, CMI Department I supervises intermediaries of Singapore and
Malaysian financial groups. CMI II supervises intermediaries of American and UK financial groups, while CMI III
supervises intermediaries of Asia-Pacific and other European financial groups.
Corporate Finance & Consumer Department
The Corporate Finance & Consumer Department has supervisory responsibility for capital markets through the
administration of the Securities and Futures Act, the Business Trusts Act and the Singapore Code on Take-overs and
Mergers. It regulates (i) the offering of securities, business trust, Real Estate Investment Trusts and collective investment
schemes; (ii) the conduct of takeover and merger transactions; (iii) the disclosure of interests in securities of listed entities
and (iv) SGX as a listed entity. It also houses the Consumer Issues Division which spearheads initiatives in financial
education and coordinates MAS' responses to consumers who have disputes with financial institutions.
Markets Policy & Infrastructure Department
The Markets Policy and Infrastructure Department have supervisory responsibility for markets and infrastructures
including central counterparties and trade repositories. The Department formulates and implements policies in relation to
markets and infrastructures, as well as market and business conduct policies to achieve fair outcomes for depositors,
investors and policyholders. It is also responsible for formulating MAS' positions on competition issues and corporate
governance standards.
Enforcement Department
The Enforcement Department aims to uphold the integrity of Singapore’s financial markets by deterring unlawful and
improper conduct through effective surveillance and enforcement. It investigates and enforces breaches of the laws
administered by the MAS. These include the Banking Act, the Financial Advisers Act, the Insurance Act, the Securities
and Futures Act, and MAS regulatory requirements on financial institutions against terrorist financing and money
laundering. The Enforcement Department also jointly investigates market misconduct offences under Part XII of the
Securities and Futures Act with the Commercial Affairs Department, and provides assistance to overseas regulators under
the International Organisation of Securities Commissions (IOSCO) Multilateral Memorandum of Understanding. As part
of its mandate, the Enforcement Department also employs digital forensics, market surveillance and data analytics to
support its investigative and enforcement work.
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No. Market Name of
Organization
Disciplinary Action and Measures Against Misconducts
Enforcement Actions Information on formal regulatory and enforcement actions taken by MAS for breaches of the
Securities and Futures Act (Cap. 289), the Financial Advisers Act (Cap. 110) and the Insurance Act (Cap. 142) is
published. The information will remain on this page for a period of five years from the date of publication except for
prohibition orders which are still in force after the expiry of the five-year period. Information on such prohibition orders
will remain on this page until they cease to be in force.
SGX
The SGX supervises the compliance of listed issuers, their directors, executive officers, sponsors and registered
professionals with the Listing Rules and the compliance of SGX trading and clearing members, their directors, trading
representatives, officers, employees or agents with the Trading and Clearing Rules.
Any suspected breach will be thoroughly investigated by the SGX. SGX’s investigative powers include the conduct of
investigations where there are suspected breaches of SGX’s Rules.
Where the investigation reveals a breach, SGX may either:
a. issue a letter of warning to the Relevant Persons;
b. make an offer of the composition to the Relevant Persons;
c. take other forms of enforcement actions available; or
d. charge the Relevant Persons before the Disciplinary Committee.
In deciding on the appropriate actions, SGX will take into account:
i. market impact of the breach;
ii. nature of the breach;
iii. cause and duration of the breach;
iv. the number of breaches;
v. background of the Relevant Persons, in particular, the past compliance track record; and
vi. mitigating and aggravating factors.
Disciplinary Committee
The Disciplinary Committee hears the charges brought by SGX against Relevant Persons who are alleged to have
breached SGX’s Rules. If the Disciplinary Committee decides that the charges have been established by SGX, it will
decide on the appropriate disciplinary action.
The Disciplinary Committee is able to impose a wide range of sanctions including reprimands, fines, restrictions or
conditions on activities, suspension, expulsion, revocation of authorization, deregistration, requiring Relevant Persons to
undertake an education or compliance program, ordering directors to relinquish their day-to-day roles, and confirming,
charging or discharging the appointment of a manager by the Relevant Person.
Under the Listing Rules, the Disciplinary Committee is able to impose a wider range of sanctions than
SGX for breaches of Listing Rules, including:
1. issuance of a public reprimand;
2. imposition of a monetary penalty in excess of $10,000 per breach;
3. imposition of a monetary penalty in excess of $100,000 in aggregate for multiple breaches; and
4. Issuing an order for the denial of facilities of the market, prohibiting an issuer from accessing the facilities of the
market for a specified period.
A Relevant Person or SGX may appeal against the decision of the Disciplinary Committee to the Appeals Committee. The
decision of the Appeals Committee is final and binding. Disciplinary actions meted out by the Disciplinary Committee or
Appeals Committee will ordinarily be published on the SGX website unless the Disciplinary Committee or Appeals
Committee orders otherwise.
To ensure impartial and independent administration of sanctions, members of the Disciplinary Committee and the Appeals
Committee must not be or have been, within the past 3 years from their respective appointment dates, directors, officers
or employees of SGX or its related corporations.
Past disciplinary actions that the SGX or the Disciplinary/Appeals Committees have taken against offenders who have
breached SGX rules are published on the SGX website.
SGX introduced a Trade Surveillance Handbook to member companies in 2016. This toolkit is to guide members on how
to look at pulling off prices and other activities and complex situations, not necessarily wash trades or prime running.
SGX Disciplinary Committee will investigate any alleged contravention of rules. If found guilty, TRs would face reprimand,
fines, orders to attend education programmes, suspension or even expulsion.
16 Sri Lanka SECSL Cancel or suspend the License/Registration granted to stockbroker, stock dealer or any other market intermediary
Reprimands
Convictions – Indefinite
Compounding – Three years from the date of compounding
Cautions
Warning
17 Taiwan TSA If any member fails to perform any obligations, the TSA may, through resolution of the directory board, request correction,
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No. Market Name of
Organization
Disciplinary Action and Measures Against Misconducts
give a warning or order the member to impose appropriate self-disciplinary sanctions on its responsible person or employee.
Any or all of the following sanctions may also be imposed based on the level of gravity and reports may be filed with the
authority governing the specific business:
1. Impose penalty for breach in the amount of no less than 300,000 and no more than 10,000,000 NT Dollars. The
amount of penalty may be increased by 100% each time for consecutive sanctions until a correction is made or
required actions are undertaken.
2. Suspend all or part of the entitlements enjoyed by the member. Report the case to the governing authority for proper
sanction.
18 Thailand 1 ASCO Under SEA, there are two categories of administrative disciplinary action. The first one is applied to securities business
entity such as a broker, a dealer, an underwriter, mutual or private fund management, an advisory investment service etc.
The second one is applied to an individual in the securities company such as an executive officer, an investment consultant,
a fund manager and trader affiliated with those businesses. The measures are as follows;
Sanction against the company via
1. Writing warning notice
2. Penalization
3. Temporary suspension
4. License revocation
Sanction against individual via
1. Giving probation
2. Suspension of license, approval or registration
3. Revocation of license, approval or registration
Control over contacting with investors and staff’s work procedures
Securities companies must create and publish work procedures that regulate the activities of their personnel. The work
procedures are needed in order to ensure that every staff member performs efficiently and does not cause damage to the
client, themselves, or to the firm. In addition, the procedures help ensure that all of the operations comply with the standards
or code of conduct prescribed by the SEC. In accordance with the best practices for internal control, companies shall
separate their operations into two groups, front office and back office, in order to enhance check and balance in work
procedures. For example, front desk employees are prohibited from safeguarding trading confirmation tickets, client asset
summaries, or modifying client information. Furthermore, securities companies shall establish an internal checks and
balance system so that all the important tasks of a process are not delegated to one person.
In addition to the aforementioned operational controls, securities companies must also control staff trading by establishing
clear rules to prevent conflicts of interest and the exploitation of nonpublic information. If a securities company is also a
brokerage firm, the company should permit staff to have a trading account only with their employer. However, if the
company allows its staff to open trading accounts with other companies, it is crucial to set up a working control and
compliance system. The control and compliance system can ensure the same level of efficiency as when staff open an
account at the company.
19 Thailand 2 ThaiBMA There are two categories of administrative disciplinary action under ThaiBMA rules. One is applied to member firms. The
other is applied to individual registered traders affiliated with those member firms.
There are five kinds of disciplinary actions to be taken against member firms when disciplinary action is triggered, namely
(1) warning (2) probation (3) fine (4) suspension (5) revocation.
20 Turkey TCMA A member which acts contrary to professional honour, professional principles and rules, to legislations related to the capital
market activities and to resolutions of the TCMA can be fined according the measures of the Disciplinary Regulation.
The following disciplinary penalties are applied, depending on the nature and importance of the act.
Warning: a written notice to the concerned member stating that it has to act more diligently and carefully in
performing its activities.
Censure: a written notice to a member stating that it is faulty in its profession and behaviour.
Fine: the amount is paid by the liable party to the Investors Protection Fund within 30 days following the date of
the notice.
Temporary exclusion from the Association membership: direct or indirect restriction of professional activities of
a member for a temporary period of time to be designated according to the nature and importance of the incorrect
act, not exceeding a period of 6 months.
Permanent discharge from the Association membership: in this case, the relevant institution cannot operate in
the capital markets ever.
The actions requiring temporary exclusion are insider trading and market manipulation. The action requiring permanent
exclusion is using customers’ assets (cash or capital market instruments) in favour of the member or third parties by issuing
counterfeit documents or forging documents.
21 Uzbekistan CSM Disciplinary measures are set by Art. 174-1 of the Administrative Responsibility Code, and are outlined as follows:
nonpublishing or delay in publication of information on issuers and securities and reports, as well as failure to
submit or untimely submission of reports or information to state supervision bodies entails the imposition of a fine
on person in charge from 3 to 5 times the minimum wage;
violation of the established procedure for issuing securities by issuers which has not caused damage to investors
entails the imposition of a fine on the person in charge from 5 to 7 times the minimum wage.
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No. Market Name of
Organization
Disciplinary Action and Measures Against Misconducts
violation of the established procedure for the issuance of securities by issuers, which has caused damage to investors
entails the imposition of a fine on person in charge from 7 to 10 times the minimum wage.
infringement of the established order of fulfilment and registration of transactions with securities by participants of
the securities market - entails the imposition of a fine on person in charge from 7 to 10 times the minimum wage;
violation of the established procedure for accounting and reporting on investors, transactions with securities entails
the imposition of a fine on the person in charge from 7 to 10 times the minimum wage;
bon-payment or incomplete payment of relevant incomes to investors entails the imposition of a fine on the person
in charge from 7 to 10 times the minimum wage.
evasion from execution or delay in execution of prescriptions of CSM on termination of violations entails the
imposition of a fine on the person in charge from 5 to 10 times the minimum wage.
misleading investors by securities market participants and state supervision bodies by knowingly providing
unreliable information entails the imposition of a fine on the person in charge from 7 to 10 times the minimum
wage.
committing a violation again within one year after the application of the administrative penalty entails the imposition
of a fine on person in charge from 10 to 20 times the minimum wage.
22 Vietnam1 VASB According to Decree No.108/2013/NĐ-CP of the Government on dealing with administrative violations in the field of
securities and securities markets (Sep 23, 2013) and the amended Decree No. 145/2016/NĐ-CP (November 1, 2016), any
organization or individual (whether Vietnamese or foreign) committing a violation as set forth in the Decree would be
subject to an administrative sanction.
Administrative violations relating to securities are categorized into the following classes:
a. Violations of regulations on offering of securities;
b. Violations of regulation applicable to public companies;
c. Violations of regulation applicable to treasury share transactions;
d. Violations of regulation applicable to tender offers;
e. Violations of regulations on listing of securities;
f. Violations of regulations on organizing stock exchanges;
g. Violations of regulations on securities business;
h. Violations of regulations applicable to securities trading;
i. Violations of regulations applicable to securities business, securities registration, securities depository; clearing and
settlement of securities transactions; custodian banks; depository banks;
j. Violations of regulations on reporting requirements and disclosure obligations;
k. Violations of regulations on auditing applicable to issuers, listing companies and business organizations in the field
of securities; and
l. Violations of regulations of inspection and examination of authorities.
Administrative sanctions include (a) reprimand, (b) imposition of fine (up to VND 2 billion), (c) suspension of a practicing
certificate or a representative office’s operation certificate for a term of up to 24 months, (d) cancellation of securities
operations (such as an offering or listing of securities), and seizure of assets that are used during the course of violation.
Additional remedies are also provided by Decree 108, including refunding the proceeds from issuance of securities or
specific performance of certain transactions or obligations (such as continuity of open tender).
The SSC has power to transfer an administrative violation to a criminal investigation pursuant to The 2012 Law on
Treatment of Administrative Violations. Administrative sanctions and remedies are publicly announced on the website of
SSC.
23 Vietnam2 VBMA Same as the above.
33
III –6. Dispute Resolution System between Securities Firms and Customers
No. Market Name of
Organization
Dispute Resolution System between Securities Firms and Customers
1 Asian Region ASIFMA N/A
2 Bangladesh BSEC
3 Cambodia SECC Under the Law on Trading and Issuance of Non-Government Securities, for any dispute arising in relation to the conduct
of securities business, the disputing parties may bring the case to SECC for mediation before filing a lawsuit to a court,
except in the event of a criminal case. There are two types of dispute resolution, namely mediation and adjudication, which
are conducted by the SECC. First, a party may file a complaint to SECC for mediation. In the event that the mediation
failed, each party may agree to bring the complaint to SECC for adjudication.
4 Hong Kong HKSA The Financial Dispute Resolution Scheme (FDRS) was set up a few years ago, with main purpose of resolving disputes
between securities firms and customers. All regulated financial institutions are required (by SFC) to join FDRS as members,
and all claims up to HKD500,000 can be settled via FDRS by means of mediation and arbitration. During the claim
proceedings, if any misconduct is found, the case will be referred to SFC.
5 India 1 ANMI N/A
6 India 2 BBF Arbitration
7 Indonesia APEI Investors may report securities firms to OJK, which will conduct an investigation regarding the matter. In general, OJK
would prefer that the disputes between Securities Firms and Investors be resolved amicably between both parties. An
alternate dispute settlement may also be reached through the Indonesian Capital Market Arbitration Agency (BAPMI) rather
than the court of law.
In August 2016, APEI revised its Articles of Association to include an Honorary Council who will enforce the Code of
Ethics of the Association. Disputes among members can be resolved through the Code of Ethics Department, and escalated
to the Honorary Council, if necessary.
8 Japan JSDA In April 2009, FINMAC (Financial Instruments Mediation Assistance Center: NPO) was established as a new financial
ADR organization for disputes between customers and financial instruments service providers. FINMAC evolved out of
the previous “Securities Mediation and Consultation Center”, which was an internal organ of JSDA.
The previous organization accepted complaints and consultations from customers about operations performed by
Association Members and conducted “mediation” between member firms and their customers to solve disputes concerning
securities businesses operated by the members. After migrating to FINMAC, the above mentioned services are being offered
through contracted business operators such as members of Financial Futures Trading Association, Investment Trust
Association, JSDA, Japan Commodities Investment Sales Association and to the Specific Business Operators (individually
registered Type 2 financial instruments business operators, etc.)
9 Korea KOFIA KOFIA operates a Dispute Resolution Office that offers investors information and advice about the laws and regulations
governing financial investment products. The office provides advisory service to help investors address every possible issue
they may confront.
10 Laos LSCO Disputes arising regarding securities activities shall be resolved by any of the following methods:
(1) Conciliation
(2) Resolution by the LSC
(3) Resolution by the Economic Dispute Resolution Center
(4) Resolution by the People’s Court
(5) International resolution methods
11 Malaysia ASCM Securities Firms are required to establish their own Complaint Units to deal specifically with any sort of claims, complaint
or grouse by the Customer against the firm and its CMSRL holder. All complaints must be recorded and reported to Bursa
Malaysia within the prescribed time frame.
Simultaneously, the Customer shall have the right to lodge their complaints against securities firms and their CMSRL
holders to SIDREC, a complaint centre established by SC. Complaints against the improper conduct of Bursa’s employees
should be directed to Bursa’s customer service.
SIDREC is an independent alternative dispute resolution body which:
Provides an alternative dispute resolution avenue for investors in relation to claims involving capital markets
services and products against capital market intermediaries
Promotes, encourages, and facilitates the satisfactory resolution, mediation or withdrawal of such complaints,
disputes, and claims
Collaborates with the regulators of the capital markets on all matters relating to or affecting the resolution of
complaints, disputes and claims
12 Mongolia MASD The Securities Market Law introduces a dispute resolution body at the FRC to resolve disputes among regulated entities,
issuers, investors and/or customers. This introduces a non-judicial dispute resolution mechanism which may offer benefits
in terms of efficiency as it is a fast dispute resolution process facilitated by experienced market professionals. The law
stipulates:
1. The Commission shall have a Dispute Resolution Board authorized to settle disputes between the regulated
persons, securities’ issuers, investors and clients, and the Commission shall determine the methods of operation
and composition of the Board.
2. The Dispute Resolution Board shall review the dispute and present the relevant proposed decision to the
Commission’s meeting. The Commission shall decide on one of the following:
to approve the opinion;
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No. Market Name of
Organization
Dispute Resolution System between Securities Firms and Customers
to change the opinion; or
to return the opinion of the Dispute Resolution Board for re-examination.
In 2016, the FRC developed a regulation on the securities market Dispute Resolution Board’s operations which provides
clear procedures for dispute settlement between the regulated entities and investors. Also, MASD as a SRO has approved
its rule on monitoring and settlement of disputes in March 2016.
13 Myanmar SECM SECM urges securities companies to set up clear internal policies for customer disputes.
14 Nepal SEBON SEBON accepts complaints and grievances from customers about securities firms through the “Grievance & Investigation
Subsection”. The dispute of general investors is resolved via telephone and/or written directives. Serious disputes have
been resolved through lawful action from the Legal Enforcement Section.
15 Singapore SAS If the customer complains to SGX about a member firm, SGX may conduct an investigation if the circumstances warrant
it.
If a customer feels aggrieved, he or she has the option to appeal to the Financial Industry Disputes Resolution
Centre Ltd (FIDReC), which is an independent and impartial institution specialising in the resolution of disputes between
financial institutions and consumers. FIDReC subsumes the work of the Consumer Mediation Unit (CMU) of the
Association of Banks in Singapore and the Insurance Disputes Resolution Organisation (IDRO). FIDReC provides an
affordable and accessible one-stop avenue for consumers to resolve their disputes with financial institutions. It also
streamlines the dispute resolution processes across the entire financial sector of Singapore.
FIDReC provides an affordable avenue for consumers who do not have the resources to go to court or who do not want to
pay hefty legal fees. It is staffed by full-time employees familiar with the relevant laws and practices. FIDReC was
initiated by the financial sector to make its services more professional, transparent, customer-focused and service-
oriented.
Dispute Resolution Process
The dispute resolution process of FIDReC comprises 2 stages:
- Mediation (1st Stage)
When a complaint is first received, it is case managed by FIDReC's Case Manager. The consumer and the financial
institution are encouraged to resolve the dispute in an amicable and fair manner.
- Adjudication (2nd Stage)
Where the dispute is not settled by mediation, the case is heard and adjudicated by a FIDReC Adjudicator or a Panel of
Adjudicators. Member firms pay an adjudication case fee of $500 when their cases proceed for adjudication, while a
nominal fee of $50 is paid by the consumers.
16 Sri Lanka SECSL If an investor has a complaint against a Stockbroker Firm with respect to dealings in Securities such an investor shall, in
the first instance, submit a complaint in writing to the Compliance Officer of the Stockbroker Firm within a period of 3
months from the date of the disputed transactions. The Compliance Officer shall deal with the complaint and shall ensure
that it is resolved expeditiously and satisfactorily.
If the investor is not satisfied with the decision taken by the Stockbroker Firm the investor may refer the complaint to the
CSE.
The complaint shall be dealt with by the officer appointed by the CEO of the CSE to deal with such complaints and the
decision of the officer shall be conveyed to the investor and/or Stockbroker Firm in dispute, as appropriate. If a party is not
satisfied with the decision, such party may appeal, within a period of 21 days from the date of the decision, to the Dispute
Resolution Committee for an adjudication of the decision.
17 Taiwan TSA 1. Disputes arising from business related to securities between TSA’s members and investors, or between members, will
be mediated by TSA’s Discipline Committee. In some cases, TSA may select members having expert knowledge in
laws, accounting or securities to settle the dispute.
2. According to the Securities Investors and Futures Traders Protection Act, which became effective on January 1, 2003,
the Securities and Futures Investors Protection Center is an organization set up under the Act to provide consultation
on the trading of securities and futures as regulated by related laws and regulations; mediation of disputes arising from
the trading of securities and futures; and litigation services on behalf of investors. In addition, the Center manages a
protection fund to compensate investors if a securities or commodities firm is unable to do so due to financial
difficulties.
3. Promulgated on June 29, 2011, Financial Consumer Protection Act is specifically enacted to protect the interests of
financial consumers. In order to handle financial consumer disputes, “Financial Ombudsman Institution (FOI)” a
financial mediation organization was newly established in January 2012. Financial consumers may deal with a dispute
by filing a complaint with the financial services enterprise, such as securities firms.
18 Thailand 1 ASCO Arbitration is a disputed settlement procedure whereby the disputed parties agree to be bound by the arbitrator’s decision.
SEC facilitates disputed settlement by means of arbitration between investors and intermediaries (e.g., securities firms,
selling agents of foreign shares, mutual fund supervisors, private fund custodians and derivatives business operators).
A dispute may be settled through arbitration when the following criteria are met:
(1) The dispute is a result of responding to a breach of contract or violation of the SEA, the Provident Fund Act, the
Derivatives Act or any notifications prescribed by SEC Board, the Capital Market Supervisory Board, SEC Office,
SET or Thailand Futures Exchange (TFEX).
(2) The amount of damages claimed by each claimant does not exceed one million baht.
(3) Where the dispute is related to offering of securities services or contravention of the laws governing securities and
exchange, provident funds or any regulation prescribed thereunder, the dispute shall:
35
No. Market Name of
Organization
Dispute Resolution System between Securities Firms and Customers
a. have been taken place within six months as of the date when the claimant became aware or should have been
aware of the causes of such a dispute. This dispute should not be longer than one year as of the date of such causes
unless SEC Office deems it otherwise necessary or appropriate.
b. involve the claimant who is a ordinary person and a respondent that is an operator of securities business or related
business or the claimant who is a provident fund member. In either case, the claimant shall submit evidence of the
respondent’s consent to enter the SEC Arbitral Procedure.
c. have undergone the respondent’s complaint handling procedure if the claimant has not received a response within
15 days or a remedy within 45 days or the claimant views the resolution or remedy inappropriate, or has reserved
the right to enter arbitration.
In addition, securities companies must provide written work procedures to cover client complaints. The procedures must
be clearly stated and fair to clients. For verbal complaints, securities companies must record the complaint in writing and
require the client’s signature. Upon receiving a complaint, a company must resolve it without delay and notify the client
and the SEC of the result. If the complaint is complicated, the company shall notify the client periodically of any progress,
because a complicated complaint can take more time to resolve. Companies shall review all client complaints to find the
causes. If the complaints come from inefficiencies in service or control, the companies shall improve the quality and control
of their operating systems. Companies are required to keep all client complaints, and all supporting documentation, for at
least two years from the settlement date.
19 Thailand 2 ThaiBMA In case of bond trading disputes between members or between members and their clients, the parties may seek arbitration
proceedings or mediation provided by ThaiBMA. A Panel of Arbitrators shall be appointed for this matter.
20 Turkey TCMA Investors in the Turkish capital markets can always resort to courts for all complaints.
However, if the customer prefers alternative dispute resolution methods, the procedure is determined according the nature
of the complaint.
- If the complaint relates to exchange transactions, the customer can resort to the exchange (Borsa İstanbul). The
dispute resolution method is similar to arbitration. The customer can decide to go to the court at any stage. The
decision taken by the exchange is binding for the parties. Appeals on the Borsa İstanbul decisions can be made to
the Capital Markets Board (CMB). CMB decisions can be appealed to administrative courts.
- If the complaint relates to off-exchange disputes, the customer can resort to the TCMA. TCMA offers two alternative
dispute resolution methods; arbitration and mediation.
Arbitration: If the related parties agree to do so, arbitrators are chosen from TCMA’s list of arbitrators. The decision is
binding. Appeals against arbitrators’ decisions can be made to the Court of Appeals. Rules and organization of arbitration
is currently being revised.
Mediation: TCMA helps the parties in solving complaints. TCMA mediation decisions are not binding.
The CMB is not directly involved in customer complaint resolution. However, in case an investor reports a complaint, CMB
may initiate an inspection.
21 Uzbekistan CSM Customers may contact CSM to protect their rights. According to Art. 55 of Law “On securities market”, CSM protects
rights and interests of investors and securities holders, as well as carries out control over the implementation of legislation
of the securities market and joint-stock companies by government bodies and securities market participants. In cases where
violations of legislation are found, CSM issues inferences and binding orders, as well as applies sanctions against violators
in accordance with legislation. CSM may suspend the operations of market participants, and go to court to withdraw
corresponding licenses.
22 Vietnam1 VASB As a dispute arises between securities companies and customers, the stock exchange (HSX & HNX stock exchange) will
be the reconciler. If this mediation fails, the SSC’s inspector will be involved; in the case of unresolved problems, each
party may appeal to a competent court.
23 Vietnam2 VBMA Currently there are no dispute resolution systems as such in place. However, there are precedents in which disputing parties
requested VBMA to act as mediator. VBMA will provide mediation in accordance with Mediation Rules of VBMA.
36
III –7. Investor Education Activities
No. Market Name of
Organization
Investor Education Activities
1 Asian Region ASIFMA N/A
2 Bangladesh BSEC
3 Cambodia SECC SECC has established many programs for investor education including those for market participants, public investors,
students, and the general public through public training, in-house training, seminars, conferences, and the media. SECC
also signed MOU with other universities and financial entities to collaborate on making the public and specific groups
understand the important aspects and benefits of securities. SECC also has invited a successful listed company from
Thailand to present the benefits they got from going public. Besides this, SECC also cooperates with other international
bodies such as Securities and Exchange Commission of Thailand, Stock Exchange of Thailand, and Toronto Centre, etc. to
co-conduct training. Recently, SECC launched the Excellent Program, which helps to expand a company’s market through
facilitating their listing on the stock market. There were a lot of potential companies that joined the program.
4 Hong Kong HKSA SFC set up the Investor Education Center (IEC) in 2012, with a hope that IEC will provide sources of education to public
investors regarding investment decisions guidelines, financial products available in the market and their related risks
involved in the financial market, etc. SFC/IEC normally educates the public by means of TV ads, seminars, print-outs and
so on, to arouse the awareness of associated markets risks.
5 India 1 ANMI For investor education, ANMI frequently organizes seminars and conferences for its Members and educate its members
regarding new updates.
6 India 2 BBF Investor education activities are conducted by SEBI, securities exchanges and other NGOs
7 Indonesia APEI The second National Survey on Financial Literacy and Inclusion (SNLIK) that the Financial Service Authority (OJK)
conducted in 2016 showed that the financial literacy and inclusion indices stood at 29.66 percent and 67.82 percent
respectively.
Those figures were higher compared with result from the previous survey in 2013 that recorded the financial literacy and
inclusion indices at 21.84 percent and 59.74 percent respectively. Thus, now more people are well versed in finance
following the rise of the financial literacy index to 29.66 percent from 21.84 percent previously. Also, today the public has
more access to financial products and services, as indicated by the increase in the financial inclusion index to 67.82 percent
from 59.74 percent earlier.
OJK together with the financial services industry would always promote and implement financial literacy and inclusion
programs in order to achieve the financial inclusion index target of 75 percent by 2019, which the government has stated in
Presidential Regulation No. 82 of 2016 in the National Strategy of Financial Inclusion (SNKI).
The OJK conducted the SNLIK 2016 to measure whether the 2013 survey had been implemented effectively and to make
another mapping that reflect the latest public financial literacy and inclusion rates.
The 2016 survey involved 9,680 respondents from 34 provinces that scattered over 64 cities/regencies across Indonesia.
They were selected based on a number of factors, including gender, domicile, age, spending, occupation and educational
level.
Last year’s survey for the first time measured the public’s Sharia financial literacy and inclusion rates as 8.11 percent and
11.06 percent respectively. Moreover, results of the survey also showed financial literacy and inclusion indices for each
province and each financial services sector for both conventional and Sharia financial services sectors.
The OJK, in compliance with the mandate from Law No. 21 of 2011, should perform its functions to regulate and supervise
the financial services industry as well as protect consumers, especially in their interaction with the industry. There are
aspects of financial literacy and education and capacity building, in an effort to protect the public for preventive purposes.
Thus, specific strategies are needed to implement these efforts effectively.
The OJK conducted the first National Survey on Financial Literacy (SNLK) in 2013 and the survey found that only 21 out
of every 100 Indonesia residents were financially literate (as indicated by the financial literacy index that stood at 21.84
percent). Similarly, in terms of financial inclusion, only 59 of 100 Indonesia residents had access to financial
products/services (as shown by the financial inclusion index of 59.74 percent).
37
No. Market Name of
Organization
Investor Education Activities
Based on those results, the OJK together with the financial services industry drafted the National Strategy of Indonesia
Financial Literacy (SNLKI), which comprises a variety of strategic and initiative programs that aim to raise the public's
financial literacy and inclusion.
Both the OJK and the financial services industry have continuously held a range of financial education and inclusion
programs. They have provided financial education through different types of activities, such as community education,
training of trainers, outreach programs, general lecture, maritime education, public service advertising, education expo,
mobile theaters, shadow puppets (wayang) plays and financial education cars (SiMOLEK). The targeted participants for all
these programs include women/homemakers, MSMEs, farmers/fishermen, Indonesian migrant workers (TKI)/ Indonesian
migrant worker candidates (CTKI), high school students/university students, employees and retirees.
Between 2013 and 2016, 289 financial education activities were carried out in 144 cities. Moreover, as part of its efforts to
boost financial literacy among pupils and university students, the OJK has produced and launched a series of financial
literacy books for different formal educational levels, from elementary, junior high, and senior high school to university
level.
On the other hand, the measures taken to raise financial inclusion include various programs that aim to provide wider
financial access, such as Laku Pandai (branchless banking), Jaring (Reach, Synergy and Guideline) and Micro-Finance
services (Laku Mikro), as well as development of microfinance products, such as Student Savings Accounts (SimPel),
microinsurance, micromutual funds, “let's save in shares” and “let's save in gold”.
The OJK, as member of the National Council for Inclusive Finance, also has held many financial inclusion activities in the
form of action synergy, in partnership with related ministries/agencies, such as development of the Action Synergy for
People's Economy, the Action Synergy to Promote Financial Access for the Public, the National Savings Movement, and
the non-cash, social aid distribution program.
Source: OJK Press Release SP/07/DKNS/OJK/I/2017
IDX and exchange members conduct Regular Education Programs to arouse public interest in learning about stock
investment and to attract new investors, both retail and institutional. The education program is divided into three levels:
1. Basic Education Program is the level for participants with less knowledge of stock investments.
2. Intermediate Education Program is the level for participants who have completed the Basic level and are
interested to learn more about stock investments.
3. Advance Education Program is the level for participants who have completed the Intermediate level and are
interested to learn more about the other investment instruments in capital market.
To reach all parts of Indonesia, IDX made several approaches to the public.
1. One of them is through the establishment of the Capital Market Information Center (PIPM) in remote regions of
Indonesia.
2. To introduce the Capital Market as early as possible to the academic world, the 3-in-1 IDX Representative offices
(co-operation between IDX, universities and securities companies) are established in universities so that the
academic can learn about the Capital Market.
8 Japan JSDA Currently, Japan envisages the following issues;
1. Need to change money flow from savings to investment
2. Continued low interest rates in a mature economy and growing difficulty to build wealth through deposits and savings
3. Growing concerns about the public pension system in an aging society
4. Complex financial products supplied through various sales channels (unexpected losses, financial fraud, etc.)
Under these circumstances, JSDA acknowledges the increasing need for upgrading financial literacy among Japanese
citizens and has been conducting investor education activities as mentioned below;
• Supports school teachers by providing experience-based teaching materials, education programs and information
magazines, dispatching lecturers to schools/universities, and holding seminars
• Sets up websites for teachers and students, as well as for investors and the general public
• Supports securities research activities by university students
• Holds “Investment Day” commemorative events
As a member of the International Forum for Investor Education (IFIE), JSDA participated in its annual conference in Rio
de Janeiro in June 2017 and exchanged views with the members and relevant parties.
9 Korea KOFIA KOFIA consistently strives to protect the rights and benefits of investors through education, working to improve the
current financial system and develop policy recommendations.
KOFIA led the establishment of the Korea Council for Investor Education (KCIE) in 2005 to facilitate investor education
initiatives, and is currently serving as the secretariat.
The KCIE is a non-profit organization specializing in financial education, established by a consortium of five capital
market institutions – the Korea Financial Investment Association, Korea Exchange, Korea Securities Depository, Korea
Securities Finance Corporation, and Koscom. In addition, the Financial Services Commission (FSC) and Financial
Supervisory Service (FSS) are special members.
The KCIE provides life-long education courses to the general public by offering a practical curriculum to support their
financial well-being. Courses are geared toward a wide range of individuals, including teenagers, university students,
38
No. Market Name of
Organization
Investor Education Activities
employees, housewives, the elderly, and people with special vocations, such as certified labor attorneys and tax office
workers.
Education programs come in various forms, including collective classes, online courses, mobile apps, and printed
publications. In 2013, the Council released a U-Learning application named “Master of Wealth Management,” which
enables the general public to easily access financial education courses from a mobile device. Moreover, in 2014, the
Council created a musical for financial investment education, which was performed at schools, and produced webtoons
that make learning about finance and asset management easy and fun.
Meanwhile, the KCIE is actively involved in strengthening financial education in schools to facilitate financial education
at an early age. It has been working to develop financial education for young students in cooperation with school boards
in major cities across the country, designating 100 schools as providers of financial courses.
In December 2011, the KCIE opened the state-of-the-art Financial Village, where the general public can learn about
finance in fun, easy and effective ways. Content is delivered through state-of-the-art technology, such as tablet PCs, large
multi-touch screens and media tables. The Village cemented its position as the premier hands-on financial education
facility in Korea, as it attracted 11,482 visitors during the year 2015.(2016.1.1 ~ 8.31 : 10,625)
Lastly, KOFIA actively participates in promoting international exchange and cooperation as a full member of the
International Forum for Investor Education (IFIE). It expanded its global role in the investor education field by leading
various initiatives, including the establishment of the Asia Forum for Investor Education (AFIE) in February 2010, which
was aimed to facilitate the exchange of investor education knowledge and information concerning capital markets in
Asian countries.
10 Laos LSCO LSCO also working hard with LSX and market intermediaries to enhance the understanding of the Lao Capital Market by
investors, because investor education is a task of high priority for the Strategic Plan on Capital Market Development of the
Lao PDR for 2016-2025.
In order to achieve the above objective, various methods have been used such as training and educating via newspapers,
broadcasting through the national television and radio, as well as on site educating at academies, government organizaions
and other institutes.
11 Malaysia ASCM Both Bursa Malaysia and SC realize that besides well regulated securities firms and trading activities, the educated investor
plays an important role in the development of the capital market. As a result, both parties have either jointly or individually
organized a series of educational programs aimed to educate and invoke awareness amongst investors about industry related
matters.
The SC has initiated various Investor Education activities to enhance its investor protection objective. In support of World
Investor Week (WIW) on 2nd – 8th October 2017, SC carried out two initiatives. In order to raise awareness on the increased
number of reported scams and illegal investment schemes, SC screened an anti-scam awareness video called ‘T.I.P.U video’
at selected TGV cinemas nationwide until 11 October 2017. The screening of the ‘T.I.P.U video’ is part of SC’s investor
education initiative under its annual flagship event, InvestSmart, and serves as a public service message to highlight the
modus operandi of scammers and advise the public on where to seek assistance when they are in doubt.
With strong support from the securities firms and the publicly listed companies as industrial players, Bursa Malaysia has
amongst others spearheaded the following activities based on target groups:
LISTED ISSUERS AND SECURITIES FIRMS
Holding training, dialogues, conferences and direct engagements with Listed Issuers and Securities firms.
Creating awareness and providing continuous education to the listed issuers, directors and advisers to ensure that
the underlying principles of the Bursa Malaysia Listing Requirements are embraced and adopted.
Collaboration with industry institutions and associations to carry out educational and awareness initiatives which
include conferences, roadshows and dialogues with listed issuers throughout Malaysia to share its regulatory
objectives and concerns to help build a relationship of trust and co-operation as well as to promote a self-regulatory
culture.
Practice/guidance notes are issued from time to time to the listed issuers to aid them in compliance with the rules.
The latest developments relating to regulatory services, policies, framework, etc. will also be updated in Bursa
Malaysia website to enhance transparency of its regulatory roles to the public.
Direct engagement with directors and advisers of listed issuers to promote higher standards of conduct among listed
issuers. This is carried out from time to time when issues need to be immediately addressed and clarified.
Annual Conferences and Dialogues
Bursa Malaysia organises annual conferences for compliance officers of both the securities and futures industries and
conducts dialogues with the management of securities firms in various cities located nationwide to achieve the following
objectives:
i. To enable securities firms to learn new regulatory and compliance matters and tap into the wide knowledge of the
speakers
ii. To enable securities firms to learn about the various breaches and issues in the industry from Bursa Malaysia so that
they can better address these issues
iii. To provide an opportunity to have a dialogue with representatives of Bursa Malaysia to enable the securities firms
to better understand the regulators’ perspective and expectations
39
No. Market Name of
Organization
Investor Education Activities
iv. To provide an opportunity for the regulator to understand and act upon the various concerns faced by securities firms
v. To enhance channels of communication between Bursa Malaysia and securities firms so that they have a point of
reference when faced with regulatory and compliance issues
Engagement with Securities firms
Bursa Malaysia carries out various activities to maintain high standards of business conduct, enhance self-regulation
and prevent regulatory transgressions.
Bursa Malaysia conducts regular engagements with senior management and Board of Directors of securities firms
through dialogues and conferences for compliance officers. One-to-one engagements with senior management of
securities firms are also conducted to discuss our specific trading observations and concerns. These engagements
have proven useful as any regulatory concern which requires the immediate attention of securities firms will be
highlighted during the session and securities firms are then able to address the concern instantly to prevent the
condition/situation from deteriorating further.
Securities Industry Development Corporation
Securities Industry Development Corporation (SIDC) is the training and development arm of the Securities
Commission Malaysia (SC). It was established in 1994 and incorporated in 2007.
It organises training programmes for Malaysian and foreign regulators, company directors and market professionals,
and also conducts public investor education seminars on wise investing and investors' rights.
In collaboration with the SC, it develops examination questions and modules and conducts licensing examinations
as part of the licensing regime for Malaysian capital market intermediaries.
12 Mongolia MASD MASD promotes investor education on securities and the securities market to the public, potential issuers, retail investors,
journalists, university students as well as other market participants through conferences, seminars/workshops and training
activities. This October we have organized an open discussion, “One Goal – Collective solution”, in collaboration with the
FRC, MSE and JICA. High level officials including the Prime Minister and Parliament members, professional participants,
foreign and domestic investors, and public and private companies’ representatives took part in this event, altogether making
up more than 400 participants. Joint recommendations for advancing the capital market in Mongolia were developed and
delivered to the policy makers.
Also, some securities firms and accredited individuals have their own short term training programs, websites, Facebook
pages and online education materials for the general public. MSE also provides regular weekly training about the market
(http://mse.mn/content/list/1/0#) since 2005 and has started operating a special helpline 1900-2475 (only during business
hours) to answer public queries about securities from October 2016.
13 Myanmar SECM SECM, Yangon Stock Exchange and securities companies organized to promote investor awareness by holding seminars,
workshops and training sessions.
14 Nepal SEBON SEBON has conducted the following investor education activities:
A separate section for investor education is established in SEBON;
Investor awareness programs conducted in different parts of the country;
Development of educational materials like booklets, pamphlets and leaflets;
Distribution of educational materials in street awareness program and some other programs; and
Training program for economic journalists, teachers and students in different aspects of securities market.
15 Singapore SAS Investor Education Activities are conducted mainly through the following channels:
Online portals – SGX, SAS and ABS have jointly set up two e-learning portals for investors to learn about various
investment products at their own pace. The Customer Account Review (CAR) e-learning portal hosted by SGX
allows investors to provide information such as education and professional qualifications, work and investment
experience, to enable broking firms to better assess whether their customers have the relevant knowledge and
experience to trade in listed SIPs. The Customer Knowledge Assessment (CKA) e-learning portal guides and
assesses investors on unlisted SIPs while the CAR guides investors on listed products. Other than IBF, SGX
Academy is another training avenue for trading representatives.
More information on CAR & CKA
CAR and CKA are online assessments which customers have to undergo before they are allowed to trade complex
products such as Specified Investment Products (SIPs). To protect retail customers, the Monetary Authority of Singapore
(MAS) directed that investors must go through the assessments to understand the product risks before trading SIPs which
may or may not be listed on an exchange. Not all consumers have the knowledge or experience to assess an SIP's
complex features.
To help retail investors and financial institutions better gauge investors' understanding of SIPs, as of 1 Jan 2012 financial
institutions are required to conduct a Customer Knowledge Assessment (CKA) before transacting any unlisted SIP, and
potential investors must undergo a Customer Account Review (CAR) if they wish to open an account to trade SIPs listed
on an exchange.
In 2017, MAS agreed to a SAS and SGX joint proposal to allow the CAR system to be modified to modular basis
for easier understanding by investors on the various listed SIPs. Moreover it would be on formative assessment
without pass or fail. This will allow them to build on their product knowledge.
SGX Academy conducts training seminars for investors, ranging from beginner, intermediate to professional level.
Member companies also organize regular training workshops (self or SAS-SGX funded) for their customers.
Member companies also participate in large-scale Investment Fairs, sometimes organized by MoneySense, SGX
40
No. Market Name of
Organization
Investor Education Activities
or Securities Investors Association of Singapore (SIAS) or shareinvestor.com.
MoneySense is the national financial education programme for investors in Singapore. Launched in 2003, the
programme aims to enable consumers to become more self-reliant in their financial affairs.
It does this by helping consumers acquire the knowledge and skills to manage their day-to-day finances, make
prudent investments, plan for their longer-term needs and exercise their rights as consumers of financial services.
This, in turn, serves the twin objectives of helping consumers to attain financial well-being and consumer
protection. Recently MoneySense partnered with the industry to launch the “World Investor Week in Singapore”
in October 2017.
16 Sri Lanka SECSL The SEC undertakes extensive investor education programmes to raise investor awareness on the benefits and risks
associated with investing in the capital market as well as provide investors with the requisite skills, knowledge and tools to
make informed investment choices.
“Isura” Television Series -
The television programme titled “Isura” was telecasted on Sirasa TV on Sundays from 11.00 am to 12 noon for
18 weeks to educate the corporate sector and top business executives of potential listed companies on listing on
the CSE.
“Danno Dinanno” Reality Quiz programme The SEC and the Colombo Stock Exchange (CSE) together with Sirasa
TV successfully conducted a television Quiz programme titled “Danno Dinanno” comprising of 12 programmes to
disseminate comprehensive knowledge on investing in the stock market as well as unit trusts.
Awareness through print media
The SEC published more than 250 weekly/monthly newspaper articles pertaining to the capital market during the
year in Daily Mirror, Ada and Thinakural.
A regional training conference on “Effective Oversight of Capital Markets: Investigation and Prosecution of
Securities Fraud and Abuse” was organized by the SEC in collaboration with the US SEC from 19th to 22nd
September 2016. Nearly 80 participants from 14 countries and employees of Colombo Stock Exchange, Central
Bank of Sri Lanka and the Attorney General’s Department of Sri Lanka attended the conference.
The SEC with the participation of the CSE conducted a forum on 6th April 2016 to reflect on the Rules imposed on
maintaining a minimum public float.
17 Taiwan TSA 1. Subsidizing personal investment and finance literacy knowledge classes hosted by non-finance faculty in tertiary
education institutes: A total of 23 lectures had their proposals approved in 2010 (9 were sponsored by TWSE and 2
were sponsored by GTSM); a total of 1,657 non-finance faculty students attended general knowledge classes.
2. Giving speeches of correct investment and finance concepts to secondary education institutes: TSA accepted
applications from secondary education institutes to appoint qualified lecturers to promote correct investment and
finance concepts to secondary education students. For the year 2010, a total of 2,078 students from five schools
participated.
3. Publishing investment and finance promotional material: TSA has put together the “Securities and Me” and “Explore
Securities Market” promotional booklets, which were published in 2011.
18 Thailand 1 ASCO Essential functions of investor education activities are enacted by Capital Market Development Function (CMDF)
operated by Thailand Securities Institute (TSI), focusing on the full range of targets such as youth, school, university and
vocational students, and the general public. The programs contain curricula, including train-the-trainer, teacher
development and activity-based education. Program resources cover student and teacher manuals, e-learning, as well as
various books, games, and media such as Money Channel.
SET in the City
SET in the City is a one-stop investment expo organized by the Stock Exchange of Thailand. SET in the City was
organized with the cooperation of SET's members, partners and alliances in the capital market, ranging from financial
institutions, listed companies, securities companies, asset management companies and insurance companies to
associations with teams of experts.
The central themes of this financial conference are to enhance the knowledge of the economic situation in Thailand under
the current conditions of volatility and political factors that affect the economy and investment. This event will be presented
in the form of seminar/discussions and advice from experts to provide information, suggestions and answers for investors.
19 Thailand 2 ThaiBMA ThaiBMA regularly organizes free seminars for both retail and institutional investors. Advanced training courses in the area
of bond and financial markets are also offered to professionals in the bond market at minimal cost. (for more details:
http://www.thaibma.or.th/EN/Training/SeminarCourse.aspx)
Besides this, as part of ThaiBMA’s role in promoting investor education, ThaiBMA has conducted several activities related
to investor education including;
- Establishing a website to provide bond market information in both primary and secondary markets for investors
through www.thaibma.or.th
- Developing a “Bond Supermart” to provide indicative bid/offer of government and corporate bond quoted by active
dealers for retail investors.
20 Turkey TCMA TCMA is forming an industry-wide Financial Education Working Group to coordinate efforts on financial education.
TCMA organises university visits in order to create and increase the awareness of capital markets among students.
TCMA organises risk management seminars in cooperation with regional commerce chambers.
TCMA is running a financial education campaign mainly on social media under the “My Money and I” brand. In
addition, panels, a photography competition, a short-film competition, a theatre show for school children, and an e-
learning program were organised.
41
No. Market Name of
Organization
Investor Education Activities
21 Uzbekistan CSM CSM regularly undertakes seminars and round tables. Art. 5 of Regulation “On the Centre for coordination and development
of the securities market under the State Committee on Competition of Uzbekistan” stipulates that CSM must inform
investors and the public about the status of the securities market and its participants.
22 Vietnam1 VASB - Securities training programs are organized by the Securities Research and Training Center of the State Securities
Commission (SSC)
- Training courses and seminars are also organized for investors and the public by the HCM City Stock Exchange,
Hanoi Stock Exchange and VASB
- Securities companies also organize training courses for their sales people and clients, as well as seminars on various
topics, such as macroeconomics updates, market views, financial analysis, etc.
23 Vietnam2 VBMA Quarterly, The Dialogue between Regulators and VBMA members and non–members is organized. The Dialogue is a
communication channel between regulators and market players. At the Dialogue, The Regulators explain new policies to
the market players and the market players update the market situation to the Regulators.
The Investor Guide which has been pending for a long time that should be issued soon helps to inform the public
Basic and advanced training for members is organized
42
IV. Market Structures
IV – 1. Breakdown of Financial Assets held by Household Account
No. Market Name of
Organization
Breakdown of Financial Assets held by Household Account
1 Asian Region ASIFMA N/A
2 Bangladesh BSEC
3 Cambodia SECC In Cambodia, the financial assets of households are primarily composed of cash deposits and securities deposits, with record
of the real owner under the sub-account of the securities firms.
4 Hong Kong HKSA N/A
5 India 1 ANMI N/A
6 India 2 BBF Fixed Income (Bonds, bank fixed deposits, etc.)
Equity shares
Gold and precious metals
Real estate
7 Indonesia APEI N/A
8 Japan JSDA The financial assets of households at the end of 2016 rose about ¥4.7 trillion year on year to ¥1,807.9 trillion, making it
the second highest figure after that in 2016. Positive expectations of the Trump administration in the wake of the US election
in November 2016 encouraged a weaker yen and stronger stock prices, which raised the appraisal value of stocks and
foreign currency-denominated assets, pushing up the financial assets of households.
Broken down to components, shares & other equities increased about ¥15.2 trillion year on year to ¥182.9 trillion, while
investment trust beneficiary certificates rose about ¥6.6 trillion to ¥98.5 trillion. Currency and deposits were up about ¥21.4
trillion to ¥932.4 trillion, a record year-end high for two successive years.
Regarding the composition ratio, cash and deposits, which had reached a record high (as shown above), fell 0.1 points
year on year to 51.6% of total financial assets of households, which continued to be high, as in the previous year. Both
shares & other equities and investment trust beneficiary certificates had increased composition ratios: up 0.6 points to 10.1%
and up 0.2 points to 5.4%, respectively.
Composition of Financial Assets of Households
FY2014 FY2015 FY2016
FY2016 (E)
(Amount)
(¥ trillion)
Financial assets of households 1,755.9 1,761.5 1,807.9 1,807.9
Cash and deposits 51.2% 51.7% 51.6% 932.4
Debt securities 1.5% 1.4% 1.4% 24.5
Shares & other equities 9.7% 9.5% 10.1% 182.9
Investment trust beneficiary
certificates
5.4% 5.2% 5.4% 98.5
Insurance, pension and
standardized guarantees
29.3% 29.3% 28.7% 518.3
Others 2.9% 2.8% 2.8% 51.2
(Note) Data released on December 29, 2017
(Source) Bank of Japan
9 Korea KOFIA The breakdown (%) of financial assets of households at the end of 2016 is as follows: (data from Bank of Korea)
cash and deposit 43.7
insurance and pension reserve 31.8
bonds 4.8
Stocks & funds 18.9
etc. 0.8
10 Laos LSCO Deposit is the major component of the financial assets held by households in Lao PDR. In 2016, there were 60,993.30
billion LAK in deposits, an increase of 12.72% from the previous year (47.8% of GDP).
43
No. Market Name of
Organization
Breakdown of Financial Assets held by Household Account
(Billion LAK)
Year 2012 2013 2014 2015 2016
Total Deposits 29,684.30 35,290.90 45,995.70 54,109.80 60,993.13
Source: Bank of the Lao PDR.
11 Malaysia ASCM Detailed breakdown of Malaysian household financial assets for 2016 is not readily published by the Central Bank.
However, the Central Bank reported that the household financial assets in 2016 were 3.5 times higher than the household
financial debt.
12 Mongolia MASD Currently no entity publishes such data in Mongolia. However, the nonbank financial sector constitutes less than 3 percent
of the total assets in the financial sector, with capital markets contributing less than 1 percent. The rest of the financial
sector is comprised of the commercial banking sector. The Mongol Bank publishes monthly data on cash in banks and
outside banks, current accounts and saving deposits, but does not analyze the data of the financial assets of households.
13 Myanmar SECM N/A
14 Nepal SEBON 10 percent are institutional investors and 90 percent are general investors in Nepalese Capital Markets. 1.5 million people
(estimated) are involved in securities transactions.
15 Singapore SAS Singapore Household Balance Sheet
Variables 2013 2014 2015 2016 2017 2Q
Household Net Worth $1,437,209 $1,477,102 $1,533,948 $1,629,625 $1,688,537
Assets $ 1,717,247 $1,771,441 $1,835,361 $1,938,713 $2,002,350
Financial Assets $ 888,831 $ 952,730 $1,001,872 $1,076,488 $1,127,305
Currency & Deposits $ 322,598 $ 342,274 $ 365,827 $ 395,597 $ 406,715
Shares & Securities $ 174,847 $ 184,163 $ 179,079 $ 181,972 $ 193,561
Listed Shares $ 91,835 $ 91,987 $ 83,796 $ 83,376 $ 90,318
Unlisted Shares $ 31,423 $ 34,696 $ 36,852 $ 38,157 $ 38,264
Unit Trusts & Investment Funds $ 51,589 $ 57,481 $ 58,431 $ 60,439 $ 64,979
Life Insurance $ 124,339 $ 136,666 $ 141,756 $ 153,843 $165,076
Central Provident Fund (CPF) $ 252,969 $ 275,364 $ 299,522 $ 328,895 $ 345,712
Pension Funds $ 14,078 $ 14,264 $ 15,687 $ 16,180 $ 16,242
Residential Property Assets $ 828,416 $ 818,711 $ 833,490 $ 862,225 $ 875,045
Public Housing $ 412,753 $ 394,669 $ 400,951 $ 413,576 $ 418,073
Private Housing $ 415,663 $ 424,041 $ 432,538 $ 448,649 $ 456,972
Liabilities $ 280,038 $ 294,338 $ 301,413 $ 309,087 $ 313,813
Mortgage Loans $ 205,385 $ 216,714 $ 224,733 $ 233,228 $ 236,269
Financial Institutions $ 168,623 $ 179,536 $ 186,864 $ 194,188 $ 196,867
Housing & Development Board (HDB) $ 36,762 $ 37,178 $ 37,869 $ 39,040 $ 39,401
Personal Loans $ 74,652 $ 77,624 $ 76,681 $ 75,859 $ 77,545
Motor Vehicle $ 12,433 $ 10,265 $ 9,611 $ 9,738 $ 9,946
Credit/Charge Cards $ 9,949 $ 10,429 $ 10,266 $ 10,800 $ 10,554
Others $ 52,271 $ 56,930 $ 56,804 $ 55,321 $ 57,045
44
No. Market Name of
Organization
Breakdown of Financial Assets held by Household Account
Source: Allianz Global Wealth Report 2017
16 Sri Lanka SECSL The state of deposits held by Sri Lankan institutions is as follows (the statistics of household assets were not available):
Source: CBSL
45
No. Market Name of
Organization
Breakdown of Financial Assets held by Household Account
17 Taiwan TSA Assets Structure for Households Sector In Taiwan (End of 2015)
Assets (Based on final ownership)
Amount
(NT$100 M =US$3.06M)
Composition
%
1. Net Non-financial Assets 509,290 37.70
Real Estate 471,405 34.90
Household's Equipment 37,885 2.80
2. Net Financial Asset 841,468 62.30
(1)Net Foreign Financial Assets 63,718 4.72
(2)Net Domestic Financial Assets (A-B) 777,750 57.58
Domestic Financial Assets (A) 921,607 68.23
Cash and Demand Deposits 128,377 9.50
Time Deposits & Foreign Currency Deposits 159,731 11.83
Securities 368,621 27.29
Life Insurance and Pension Fund Reserves 199,656 14.78
Other Financial Assets 65,221 4.83
(Less) Domestic Financial Liabilities (B) 143,858 10.65
Loans 139,221 10.31
Other Financial Liabilities 4,637 0.34
3.Total Net Assets 1,350,758 100.00
Note:
Securities consist of government securities, domestic corporate bonds, bank debentures, mutual funds, shares and other
equities.
Other financial assets cover repurchase agreements, loans by nonfinancial institutions, short-term securities, accounts
receivable/payable and net other assets & liabilities.
https://eng.stat.gov.tw/ct.asp?xItem=41250&CtNode=1640&mp=5
18 Thailand 1 ASCO From the survey of the National Statistics Office in 2015, property comprised the majority of Thai household assets. In
particular, property was 75.67% of the total asset, whereas the financial asset accounted for 10.27% of the total.
Value of Household Assets 100%
1. Property 75.67
- Resident - 58.63
- Leasing and etc. - 41.07
2. Vehicle 14.0
3. Financial Asset 10.27
- Saving (Saving account, bonds, etc.) - 7.68
- Investment (bond, debenture, etc.) - 0.48
- Other type (jewelry, gold, etc.) - 1.83
Source: National Statistic Office Survey
In terms of financial assets, the data indicates that the value of household savings and investments increase every year.
Although the household saving makes up the largest portion of total figures of Thai household savings and investments, its
proportion to the total savings and investments is in decline. This shows that the investment in products other than saving
accounts are gaining more popularity over time.
Figure 1: Savings and investments of households 1992-Jun 2017
46
No. Market Name of
Organization
Breakdown of Financial Assets held by Household Account
Figure 2: Savings and investments of households in 2017
Note: 1. Mutual Fund NAV exclusive of Retirement Mutual Fund (RMF).
2. Retirement investments comprise: Provident Fund NAV, Government Pension Fund NAV, RMF
NAV and Social Security Fund NAV.
3. Household Deposits.
Sources : Assembled by Association of Investment Management Companies from data sources as follows
1. Association of Investment Management Companies-Mutual Fund NAV, Private Fund NAV and
Provident Fund NAV
2. The Government Pension Fund -Government Pension Fund NAV.
3. Social Security Office-Social Security Fund NAV.
4. Bank of Thailand - Deposits of households.
5. The Thai Life Assurance Association - Life Policy Reserves received on the annual life insurance
report.
19 Thailand 2 ThaiBMA
Source: (1) Bank of Thailand, (2) ThaiBMA, (3) Association of Investment Management Companies
20 Turkey TCMA Financial Assets of Households
2016/03 2016/09 2017/03 2017/03
(Bn. $)
Cash 5% 5% 6% 15.7
TL Deposits 50% 53% 49% 133.8
FX Deposits 32% 29% 32% 88.7
Equities 5% 5% 5% 14.0
Mutual Funds 4% 4% 4% 10.5
Pension Funds 6% 6% 6% 17.8
Bonds/Bills-Eurobonds 2% 2% 2% 4.7
Precious Metals 1% 1% 2% 4.8
Repo 0% 0% 0% 0.2
Total 100% 100% 100% 290.2
Source: Central Bank of the Republic of Turkey
Deposits (TL and FX) are the major component of the financial assets representing 81% of households’
total savings. Total deposits measure US$ 223 billion, as of end of first quarter of 2017.
21 Uzbekistan CSM N/A
22 Vietnam1 VASB N/A
23 Vietnam2 VBMA N/A
Financial Asset Held by Household (THB Trillion) 2012 2013 2014 2015 2016
Cash Deposit 6.16 6.51 6.76 6.83 7.07
Government Bond 0.40 0.36 0.22 0.29 0.18
Corporate Bond 0.85 0.92 0.69 0.76 0.80
Mutual Funds 2.49 2.94 3.64 3.88 4.43
Private Funds 0.32 0.43 0.48 0.59 0.75
Retirement Funds & Pension Funds 2.23 2.44 2.75 2.79 3.11
47
IV – 2. Share of Foreign Investors in the Stock Trading on the Exchange
No. Market Name of
Organization
Share of Foreign Investors in the Stock Trading on the Exchange
1 Asian Region ASIFMA N/A
2 Bangladesh BSEC
3 Cambodia SECC Foreign investors are allowed to trade in the market.
4 Hong Kong HKSA A) Local investors included
B) Local investors exluded
48
No. Market Name of
Organization
Share of Foreign Investors in the Stock Trading on the Exchange
Distribution of overseas investor trading value by origin
5 India 1 ANMI Foreign Investment in India is increasing on a yearly basis. FDI investment in FY 2017-18** is
US$15.54 billion, much higher compared to the US$ 7.38 billion investment in FY 2016-17 .
Source:https://www.fpi.nsdl.co.in/web/Reports/Yearwise.aspx?RptType=5
** Up to current date
As per the FDI Report 2017, India retained its position as the leading recipient of capital investment in the Asia-Pacific
region, with a growth rate of 2% to $62.3bn. Project numbers also grew by 16% to 809.
FDI INTO ASIA-PACIFIC BY PROJECT NUMBERS
Country Projects2016 % change
India 809 16%
China 710 -10%
Singapore 343 -3%
Australia 291 1%
Vietnam 265 18%
Malaysia 179 13%
Japan 174 13%
Hong Kong 165 11%
Philippines 157 -7%
Thailand 156 -2%
Other 672 -9%
Total 3921 1%
FDI INTO ASIA-PACIFIC IN 2016
Capital Investment
Asia-Pacific market share Capital investment ($bn) 2016
18% India 62.3
17% China 59.1
12% Kazakhstan 40.1
11% Vietnam 36.6
6% Indonesia 22.1
6% Malaysia 19.3
5% Australia 18.8
3% Singapore 11.3
3% Philippines 10.5
3% Myanmar 10.4
17% Other 58
Source: http://forms.fdiintelligence.com/report2017/files/The_fDi_Report_2017.pdf
49
No. Market Name of
Organization
Share of Foreign Investors in the Stock Trading on the Exchange
6 India 2 BFF N/A
7 Indonesia APEI
In 2016, foreign investors booked a net buy totalling Rp.16.17 trillion, contrasting the Rp.22.59 trillion net sell recorded
the year earlier.
8 Japan JSDA Market Shares & Trading Balance by Types of Investors―Tokyo, Nagoya―
Market share Selling on balance (-) / Buying on balance (+)
(¥ billion)
2014 2015 2016 2014 2015 2016
Securities company
self-dealing 13.0% 13.8% 15.2% 288 1,558 2,412
Individual 23.3% 20.0% 17.4% -3,632 -4,999 -3,162
Foreigner 55.5% 58.4% 59.6% 852 -250 -3,688
Investment trust 1.8% 1.8% 2.0% -210 242 -389
Business company 0.9% 1.0% 1.0% 1,101 2,963 2,223
Insurance company 0.2% 0.2% 0.2% -503 -584 -573
Major city bank /
regional bank 0.1% 0.1% 0.1% -129 -309 -493
Trust bank 3.3% 3.2% 3.2% 2,784 2,007 3,265
Other financial
institution 0.1% 0.2% 0.1% 8 260 261
(Source) Japan Exchange Group
9 Korea KOFIA From Jan.1 to Dec.31, 2016 (data from Korea Exchange(KRX))
Sale Purchase Net purchase
Trading
volume
(mil. share)
Trading value
(bil. KRW)
Trading
volume
(mil. share)
Trading value
(bil. KRW)
Trading
volume
(mil. share)
Trading value
(bil. KRW)
Total 92,686 1,112,668 92,686 1,112,668 - -
Foreign 8,064 315,434 8,300 326,770 236 11,336
% 8.70% 28.35% 8.95% 29.37% - -
10 Laos LSCO Foreign investment ratio (As of 25 September 2017)
Source: Lao Securities Exchange.
50
No. Market Name of
Organization
Share of Foreign Investors in the Stock Trading on the Exchange
11 Malaysia ASCM The table below indicates the market demography by trading value (in %) for domestic and foreign investor categories over
the past 4 years:
Year
2013 2014 2015 2016
Foreign
Investors (%)
26 23 27 27
Domestic
Investors (%)
74 77 73 73
12 Mongolia MASD As of August of 2017, the total trade volume for both bond and stock was 95.0 billion of which only 0.05% was traded by
foreign investors. However foreign investors’ trade was doubled according to government bond trading growth. There is no
segregated data available for stocks and bonds (MSE and CD do not publicly release such data although they may have
internal records). Please see below the FRC information on the share of foreign and domestic investors in 2006-August
2017 (the blue indicates foreign investor share while the red indicates domestic investors).
On September 1st 2017, foreign investment in the stock market doubled from that of 2016. Between the years 2013 and
2016, foreign investors’ share decreased for the following reasons.
foreign investment reduction on the whole due to unstable and unfavorable investment conditions;
change of systems caused some registration problems, i.e. during transit to MillenniumIT system some foreign
investors were automatically registered as domestic;
Trading of Government bonds at the MSE had increased from end of 2014, and the main buyers are domestic banks
and retail investors.
13 Myanmar SECM Currently, foreign investors are not allowed in the Myanmar market.
14 Nepal SEBON The Nepalese capital market has not yet been opened to foreign investors but homework is underway for policy making.
15 Singapore SAS N/A
16 Sri Lanka SECSL Foreign contribution to Total Market Turnover (%) 2015 2014 2013
Foreign companies (%) 33 26.0 34.3
Foreign individuals (%) 1.6 1.6 1.8
Total foreign investor contribution (%) 34.6 27.6 36.1
Foreign trading statistics 2015 2014 2013
Primary Market (Rs. Mn.)
Purchases (Rs. Mn.) 1.4 579.9 11,198.8
Sales (Rs. Mn.)
Net Foreign Flow (Rs. Mn.) 1.4 579.9 11,198.8
Secondary Market
Purchases (Rs. Mn.) 85432.0 104689.8 83607.0
Sales (Rs. Mn.) 89858.1 83550.8 60873.3
Net Foreign Flow (Rs. Mn.) (4426.1) 21139.0 22733.7
Total Net Foreign Flow
(Pri & Sec market) (Rs. Mn.)
(4424.7) 21,718.9 33,930.5
51
No. Market Name of
Organization
Share of Foreign Investors in the Stock Trading on the Exchange
17 Taiwan TSA Highlights of Foreign Investment in Taiwan’s Stock Market Unit:US$100Million
Year
FINI FIDI Total Accumulated
Net Inward
Remittance
Percentage of Market
Value Held by
Foreign Investors
Accumulated Net
Inward
Remittance
Accumulated Net
Inward Remittance
2012 1,628.42 4.90 1,633.32 32.62%
2013 1760.37 4.76 1,765.13 33.14%
2014 1,920.78 3.66 1,924.45 36.43%
2015 1,934.81 3.36 1,938.17 36.69%
2016 1,990.34 3.38 1993.72 38.14%
2017/8 2,085.45 3.69 2,089.13 40.11%
Note:
1. Each foreign institutional investor (FINI) is allowed to invest directly in the stock markets without an upper limit. The
maximum ceiling of foreign exchange settlement for each onshore and offshore overseas Chinese and foreigner is US$5
million; and US$50 million for each onshore judicial person.
2. The accumulated net inward remittance of FINI has been adjusted by incorporating QFII and GFII.
18 Thailand 1 ASCO Stock Market
Trading value of the Thai stock market can be divided into 2 groups: the retail investor and the institutional investor, who
share roughly the equal amount of trading value. In 2016, 54% of the total turnover came from local retail investors, a
decrease from 59% in 2015, while the proportion of foreign investors increased from 22% to 26%, and proprietary traders
and local institutional traders held 11% and 10% respectively. In the first half of 2017, the proportion remained the same.
Local retail investors contributed 48%, while the foreign investor share increased to 30% of the total turnover.
Figure 3: Stocks Trading Value by Investor, 2000-2017
Source: SET
Derivatives Market
The major player of the derivatives market is the local investor, which retains a proportion of more than 50% of the total
market, whereas the share of foreign investors range from 6% - 12% in the past 6 years.
Figure 4: Derivatives Trading Value by Investor, 2010-2017
52
No. Market Name of
Organization
Share of Foreign Investors in the Stock Trading on the Exchange
Source: SET
19 Thailand 2 ThaiBMA The table below indicates the share of foreign investors in the Stock Exchange of Thailand (SET) by trading value (%) in
the past five years.
20 Turkey TCMA % in Free Float Mcap % in Trading Volume
2013 62.5% 20%
2014 63.8% 20%
2015 62.4% 22%
2016 63.4% 21%
2017/08 66.1% 23%
21 Uzbekistan CSM It is not possible to determine the total number of foreign investors and their shares.
22 Vietnam1 VASB
23 Vietnam2 VBMA N/A
Stock Trading in Exchange Market 2012 2013 2014 2015 2016 2017(Jan-Aug)
Domestic Investor* 76% 78% 80% 78% 74% 70%
Foreign Investor 24% 22% 20% 22% 26% 30%
Total Investor 100% 100% 100% 100% 100% 100%
* Domestic Investor= Local Institutes Investor +Local Retail Investor+Proprietary Trading
53
IV – 3. Share of Foreign Investors in the Bond Trading on Exchange/ OTC Market
No. Market Name of
Organization
Share of Foreign Investors in the Bond Trading on Exchange/ OTC Market
1 Asian Region ASIFMA N/A
2 Bangladesh BSEC
3 Cambodia SECC Recently, SECC adopted Prakas (Regulation) on corporate bond issuance. However, as it was just adopted, there have not
been data on trading as of yet.
4 Hong Kong HKSA N/A
5 India 1 ANMI India currently caps total foreign investments into corporate bonds at 2.44 trillion Indian rupees ($38.1 billion). In July,
overseas buying crossed 92 per cent of that quota.
Instead of slowing down, buying enthusiasm gained more momentum: foreign ownership of Indian corporate bonds pushed
past 96 per cent of the allowed cap and has stayed above 99 per cent for most of the last month.
Source: According to data by National Securities Depository Limited
6 India 2 BBF N/A
7 Indonesia APEI N/A
8 Japan JSDA Bond Trading Volume By Sector (2016)
9 Korea KOFIA 1. Share of Foreign Investors in Bond Trading on the Exchange from Jan. 1 to Dec.31, 2016 (data from Korea
Exchange(KRX))
Year Total (tril. KRW) Foreign (tril. KRW) %
2009 510 0.03 0.005%
2010 585 0.07 0.012%
2011 825 0.15 0.018%
2012 1,376 0.15 0.011%
2013 1,322 0.08 0.006%
2014 1,395 0.04 0.002%
2015 1,792 0.03 0.002%
2016 3,245 0.02 0.001%
2. Share of Foreign Investors in Bond Trading on the OTC Market (data from KOFIA)
Year Total (tril. KRW) Foreign (tril. KRW) %
2009 4,217.8 97.5 2.3%
2010 5,678.4 145.2 2.6%
2011 5,863.1 93.4 1.6%
2012 6,018.1 94.5 1.6%
2013 6,187.7 113.6 1.8%
2014 5,259.6 99.8 1.9%
2015 5,333.0 122.8 2.3%
2016 4,770.7 118.3 2.5%
10 Laos LSCO N/A
11 Malaysia ASCM Bursa Malaysia does not publish statistics on foreign investors’ trading for the Exchange Traded Bond and Sukuk
(ETBS).
As for the OTC market, the data of foreign investors’ holdings in debt securities and Sukuk for 2017 (up to September
2017) is as below:
54
No. Market Name of
Organization
Share of Foreign Investors in the Bond Trading on Exchange/ OTC Market
12 Mongolia MASD Please see the above explanations for the share of foreign investors. Please see below for MSE 2017 September 1st data on
government bond trading and market share of securities.
55
No. Market Name of
Organization
Share of Foreign Investors in the Bond Trading on Exchange/ OTC Market
13 Myanmar SECM Currently, foreign investors are not allowed in Myanmar market.
14 Nepal SEBON There is no provision allowing foreign investment in the market of Nepal.
15 Singapore SAS N/A
16 Sri Lanka SECSL
Source: CBSL
17 Taiwan TSA N/A
18 Thailand 1 ASCO N/A
19 Thailand 2 ThaiBMA Exchange trading platform in Thailand’s bond market is offered by the Stock Exchange of Thailand (SET) and it accounts
for less than 1% of total trading value in bond market. This trading channel is used by only a few investors and foreign
investors do not participate in this system.
The table below indicates the share of foreign investors in the OTC market by trading value (%) in the past five years.
20 Turkey TCMA As of July 2017, foreign investors’ share in the government bonds holdings is 21% whereas their share for corporate bonds
is 4%.
Banks and brokerage firms can operate in the secondary bond market. The breakdown in terms of trading volumes is not
available.
21 Uzbekistan CSM It is not possible to determine the total number of foreign investors and their shares.
22 Vietnam1 VASB
23 Vietnam2 VBMA Foreign investors share 14 % of the aggregate bond trading on HNX as of June 15, 2017.
18.8
28.6
77.1
41.5
32.2
0.7
18.3 15.8
2.3
0.0
10.0
20.0
30.0
40.0
50.0
60.0
70.0
80.0
90.0
Outstanding Corporate Bonds as a % of GDP
Bond Trading in OTC Market* 2012 2013 2014 2015 2016 2017(Jan-Aug)
Domestic Investor 81% 82% 87% 90% 86% 86%
Foreign Investor 19% 18% 13% 10% 14% 14%
Total Investor 100% 100% 100% 100% 100% 100%
* Trading among Bond Dealers is excluded.
56
IV –4. Settlement and Clearing Systems for Securities Transaction (for Stocks, Bond, Derivatives Respectively)
No. Market Name of
Organization
Settlement and Clearing Systems for Securities Transaction
1 Asian Region ASIFMA N/A
2 Bangladesh BSEC
3 Cambodia SECC In Cambodia, the Securities Clearing and Settlement Facility is provided by Cambodia Securities Exchange (CSX).
Securities transactions are settled at cycle T+2 through the CSX. Cambodia has also just updated the regulation to allow
trading before settlement, as well as continuous trading. For the derivatives market, all transactions are done through a
derivative broker and the central counterparty.
4 Hong Kong HKSA There are three settlement and clearing houses in Hong Kong: Hong Kong Securities Clearing Co Ltd (HKSCC), HKFE
Clearing Corporation Ltd (HKCC) and The SEHK Options Clearing House Ltd (SEOCH). They are all wholly-owned by
Stock Exchange of Hong Kong (HKex). HKSCC settles all products listed in HKex, while HKCC settles all products listed
in Hong Kong Futures Exchange, and SEOCH clears all listed options as its name implies. At the moment, there is no
centralized system.
Recently Bond Connect was introduced, which is a pilot scheme that will connect China’s interbank bond market with the
world, giving international investors “Northbound” access to trade bonds directly on the China Foreign Exchange Trading
System (CFETS) for the first time. “Southbound” trading will start later, giving Mainland investors the opportunity to trade
in major overseas OTC bond markets.
Moreover, under Bond Connect, there is no quota or the need to stipulate an intended investment amount, which is required
under the existing CIBM scheme. Also, while the access rules are the same under both schemes, we expect a simplified and
streamlined admission process for Bond Connect.
5 India 1 ANMI In India, Clearing & Settlement Process are:
NSE:
https://www.nseindia.com/products/content/equities/equities/clearing_settlement.htm
BSE:
http://www.bseindia.com/bse_slb/clearingandsettlement.aspx?expandable=2
6 India 2 BBF Though Clearing Corporations only.
7 Indonesia APEI Settlement, safe-keeping, and clearing of securities transactions in the exchange are handled by the Indonesian Central
Securities Depository (KSEI) and the Indonesian Clearing and Guarantee Corporation (KPEI).
KSEI was established to provide orderly, proper, and efficient Central Securities Depository and Transaction Settlement
services. In order to perform its function, KSEI has developed a dependable and secure system known as C-BEST (The
Central Depository and Book-Entry Settlement System).
KPEI’s settlement body differentiates its clearing system based on the following products:
1. Settlement and Clearing System for Equity: Electronic Clearing and Guarantee System (e-CLEARS)
This is an on-line system which is owned and operated by KPEI to support the clearing and settlement process
in a proper, regulated, and efficient manner. All clearing and equity transaction settlement activities consists of
stock exchange validation, netting, positioning, and the reporting process which is done through e-CLEARS
system.
This web-based system connects KPEI, Clearing Members and the Custodian Center online.
2. Settlement and Clearing System for Bonds: Electronic Bonds Clearing System (e-BOCS)
This is a system to settle the corporate and retail bonds transactions in Indonesian Stock Exchange that involve
the Custodian Bank as one of the proactive parties over the confirmation and affirmation process of the bonds
transaction data. This clearing mechanism shortens the settlement period for bonds obligations and also
increases efficiency.
3. Settlement and Clearing System for Derivatives : Risk Monitoring On-line (R-MOL)
This system was developed by KPEI to support clearing and risk management of the derivatives transaction
settlement process. This system combines client-server and web-based technology to manage all clearing
processes, transactions settlements, administration and reporting. This system enables a seamless data interface
between KPEI, IDX, exchange members and Payment Bank without manual intervention.
8 Japan JSDA In Japan, the settlement services for securities transactions are provided mainly by Japan Securities Depository Center, Inc.
(JASDEC). Its services consist of the registration of securities, settlement by book-entry transfer of securities, custody and
its related operations such as general shareholders notification, conversion agency service (CB), dividend payments and
proxy services for foreign stocks. In addition to those services, JASDEC provides settlement matching services, and pre-
settlement matching services.
On the other hand, Japan Securities Clearing Corporation (JSCC) provides clearing services for securities such as obligation
assumption, netting of cash/securities positions, settlement instruction to CSDs/Settlement Banks for securities/cash, and
settlement guarantees.
In Japan, the settlement period for stock transactions is T+3, and the settlement period for JGB is T+2. There are discussions
to shorten these settlement periods. (Please refer to VI. “Specific Measures introduced/implemented for the Securities
Market” 1, and 5.)
57
No. Market Name of
Organization
Settlement and Clearing Systems for Securities Transaction
9 Korea KOFIA All trading orders submitted to the KRX by member firms shall be traded in accordance with the matching principles
specified in business regulations of the KRX. Immediately after the transaction, KRX shall inform (in electronic format)
member firms of the trading results which shall then be relayed to respective customers.
Customers shall conduct settlement of their transaction with member firms by deposit of money or relevant securities for
buying or selling securities on T+2 (exact time for settlement deadlines are set by each member firms). Entire process of a
trade will be complete when every member firm completes their required settlement transaction with KRX (as a CCP) by
16:00 of T+2.
KRX shall, as a clearing institution, perform transaction confirmation, debt acquisition, deduction, confirmation of
settlement securities, settlement item, and settlement amount, settlement execution guarantee, follow-up measures on
settlement failure, or settlement instruction as a result of transactions on the securities market and derivatives market.
10 Laos LSCO LSX provides settlement and clearing services for securities transactions (i.e. currently there are only stocks available for
trading in the exchange). Its services include registration and depository of securities, transferring securities ownership to
the holders, clearing and settlement relating to securities transactions and other services relating to the distribution of
dividends and the request of organizing the shareholders’ meeting upon the request of public companies and issuers. The
settlement period for stock transactions in the Laos is T+2.
11 Malaysia ASCM The settlement services for securities transactions are provided by Bursa Malaysia Depository. Its services consist of the
registration of securities, settlement by book-entry transfer of securities, custody and its related operations such as general
shareholders notification, electronic dividend payments, electronic share application and provision of depositors’ records
service. For institutional clients, there is a matching facility provided by Bursa Malaysia Depository i.e. the Central
58
No. Market Name of
Organization
Settlement and Clearing Systems for Securities Transaction
Matching Facility (CMF) in which the settlement via book-entry transfer of securities could be expedited through file
transfers. In Malaysia, the settlement period for securities transactions is T+3.
Additionally, Bursa Malaysia Securities Clearing and Bursa Malaysia Derivatives Clearing provide clearing services for
securities and derivatives transactions respectively. The clearing services include netting of cash/asset positions,
settlement instruction to settlement banks for asset/cash, and settlement guarantees.
Government and corporate bonds are settled and cleared at the Central Bank’s Real Time Electronic Transfer of Funds and
Securities (RENTAS) settlement system.
12 Mongolia MASD In Mongolia, the settlement services for securities transactions were provided by the Mongolian Securities Clearing House
and Central Depository (MSCHCD) until April 2016. However, with a view to establish an integrated clearing system, the
MSCHCD was divided into 2 separate entities in April 2016: Securities Central Depository and Trades Clearing. Both
organizations are currently under the Ministry of Finance and the operations and ownership of the Trades Clearing LLC is
still to be discussed. The Central Depository conducts registration of securities, settlement by book-entry transfer of
securities, custody and its related operations such as general shareholders notification and dividend payments. The Trades
Clearing LLC provides clearing services for securities such as obligation assumption, netting of cash/securities positions,
settlement instruction to CSD/Settlement Banks for securities/cash.
Currently, the settlement period for secondary market transactions is T+1, and the settlement period for primary market is
T+0 (mostly Government bonds). There are discussions to shift the settlement period back to T+3 or T+2 once the clearing
system and custodian services are stabilized. Below is a general scheme of the current settlement system of T+1.
With regard to primary market bond trading, no settlement banks are involved and the settlement is done through a
prefunded T+0 system.
13 Myanmar SECM YSX works as a clearing institution, a Central Counter Party (“CCP”), according to section 51 of the Securities Exchange
Law. YSX calculates the trading position of each Securities Company and replaces claims and obligations between
Securities Companies into ones between each and YSX in a scheme of novation.
14 Nepal SEBON CDS and Clearing Limited, a company established in 2010 to provide centralized depository, clearing and settlement
services in Nepal, is the sole clearing house to settle all securities. The transaction settlement period for stock transactions
is T+3.
15 Singapore SAS Clearing of Securities
The Central Depository (CDP), a wholly owned subsidiary of SGX, provides clearing for products listed for trading on
SGX’s securities market. These include shares, ETFs, REITs, Business Trusts, bonds, structured warrants and Extended
Settlement contracts. These are cleared and settled in accordance with the Clearing Rules on Settlement Day. An SGX
trade may be taken out of Inter-Broker Settlement and cleared and settled through CDP under DVP Settlement in
accordance with the DVP Rules.
CDP acts as a central counterparty to all matched trades executed on the SGX-ST Trading Engine, as well as privately
negotiated married trades that are reported to the clearing house for clearing on the trade date. Being a central
counterparty (CCP), CDP assumes the role of seller to the buying Clearing
Member and buyer to the selling Clearing Member. CDP therefore takes the buyer’s credit risks and assumes seller’s
delivery risks. This inter-posing of CDP as the CCP eliminates settlement uncertainty for market participants.
Clearing and Settlement of Cash Trades
On T+3, settlement of cash trades take place, i.e. sellers deliver securities to the clearing house in exchange for cash
payments, and the clearing house delivers securities to the buyers in exchange for cash payments. ('T' refers to the trade
date.) CDP moves the securities via book-entry electronic system. Should a seller have insufficient shares for delivery as
at noon on T+3, CDP will conduct buying-in on that afternoon to fulfil the seller’s delivery obligation. There are plans by
the MAS and SGX to shorten the cycle to T+2 in 2018.
59
No. Market Name of
Organization
Settlement and Clearing Systems for Securities Transaction
Clearing of Derivatives
SGX Derivatives Clearing (SGX-DC), a wholly owned SGX subsidiary, provides clearing for:
1. Products listed on Singapore Exchange Derivatives Trading (SGX-DT)
2. OTC commodity trades registered via the SGX OTC Trade Registration Platform (TRS)
3. OTC financial derivatives trades registered via industry-used trade registration system
A SGX-DC Member may clear proprietary and customer transactions of SGX-DT products, OTC commodities products
and/or OTC financial derivatives.
Derivatives Clearing System
SGX-DC adopts two different clearing engines to support the clearing of different asset classes:
1. SGXClear – for clearing of equity, dividend, interest rate and commodity derivatives
2. Calypso® – for clearing of OTC financial products (e.g. interest rate swaps)
SGX-DC runs a settlement cycle for all derivatives products daily. During the settlement cycle, margins for outstanding
positions are calculated and the following are settled on trades executed for current day clearing and positions that are
brought forward from previous day.
To reduce SGX-DC’s exposure to intra-day price changes, SGX-DC performs 3 intra-day margin cycles daily: once in the
late morning, once in the afternoon for current day trades and positions, and once immediately after the end-of-day
settlement cycle that includes trades for next day clearing.
At each intra-day cycle, trades and positions are marked-to-market and margin requirements are re-calculated. The
computed profits and losses for futures and OTC swaps, and premium for option trades are collateralized together with
margin requirement.
16 Sri Lanka SECSL The SEC is presently facilitating the implementation of a Central Counter Party (CCP) mechanism jointly with the CSE.
Existing settlement and clearing system
Central Depository Systems (Pvt) Ltd (CDS) is the sole Clearing House in Sri Lanka which is a fully owned subsidiary of
Colombo Stock Exchange. CDS provides depository facilities and clearing services for securities traded on the CSE. It also
provides a safe keeping facility and an electronic record of all listed securities that are dematerialized.
Settlement
For Equity on T +3
The settlement of securities is akin to DvP 2 where securities are settled on a gross trade-by-trade at the beneficial owner
level and funds are settled on a net basis at the Trading Participant level. For equities, securities of selling investors are
immediately transferred to the buying investors upon the matching of orders. Funds settlement is conducted on a net basis
only on T+3 at the Trading Participant level.
For debt securities investors have a choice of doing trades on two separate settlement boards.
•TOM Board - Settlement on T+1(Early Settlement)
•SPOT Board - Settlement on T+2(Normal Settlement)
Accordingly, cash settlement can be done on T+1 or T+2 and Debt securities settlement is on DVP (Delivery versus
Payment) basis.
17 Taiwan TSA 1. All payment and settlement operations for securities traded on the Taiwan Stock Exchange or through the OTC Center
shall be handled on a centralized basis by Taiwan Depository & Clearing Corporation (TDCC). TDCC’s major services
includes：(1)Custody of securities and short-term bills; (2) Book-entry for uncertificated securities and registration of
short-term bills; (3) Settlement, pledge and book-entry operations for securities and short-term bills; (4) Computerizing
book-entry operation for securities; (5) Distribution of securities by book-entry; (6) Clearing and settlement of
emerging stocks; (7) Payment processing of offshore fund transactions; (8) Payment processing for underwriting and
redemption of short-term bills; (9) Clearing, settlement and confirmation of short-term bills transactions; (10)
Maintaining a short-term bills interest index and so on.
2. In Taiwan, the settlement day is T+2. In case of a block trade, investors can choose the settlement day to be T+2 or T.
18 Thailand 1 ASCO The Thailand Clearing House Co. Ltd. (TCH) serves as the central counterparty to all securities and derivatives traded on
SET, MAI, BEX and TFEX. TCH is governed by SEA for equity, bond and the Derivatives Act of 2003 (DA), and is under
the supervision of SEC.
Stock
Clearing and settlement of stock trading transactions are centralized at Thailand Securities Depositary Co., Ltd. (TSD) and
Thailand Clearing House Co., Ltd. (TCH), subsidiaries of the Stock Exchange of Thailand. All transactions use the
“Delivery Versus Payment: DVP” settlement procedure and the settlement date convention is T+3. In March 2018, Thailand
is going to apply a T+2 settlement cycle to be aligned with international trends.
Derivatives
Exchange traded derivatives are listed and traded on Thailand Futures Exchange (TFEX), a subsidiary of SET. Clearing and
settlement of derivatives transactions are done through Thailand clearing house (TCH) with settlement on T+1.
19 Thailand 2 ThaiBMA Stock
See above.
Bond
60
No. Market Name of
Organization
Settlement and Clearing Systems for Securities Transaction
Clearing and settlement of government bond are done on DVP procedure and real time gross settlement basis (RTGS)
through ‘BAHTNET’ operated by the Bank of Thailand. Most corporate bonds are cleared and settled at Thailand
Securities Depositories (TSD), a subsidiary of the SET. The settlement date convention is T+2 but can be varied upon
counterparty agreement.
Derivatives
See above.
20 Turkey TCMA (for Stocks, Bond, Derivatives Respectively)
In Turkey, while Istanbul Settlement and Custody Bank (Takasbank) is responsible for settlement and clearing services,
Central Registry Agency serves as the central depository for the dematerialized capital markets instruments.
Takasbank is a specialized bank dedicated to securities services in Turkey. In addition to settlement and clearing services,
Takasbank operates the Takasbank Money Market, an OTC market where Borsa İstanbul’s members can lend and borrow
funds.
The Central Registry Agency Inc. (CRA) is the only central depository for all dematerialized capital market instruments. It
was established in 2001 as a private company. The main functions of the CRA are to dematerialize and register capital
market instruments and the rights attached in electronic form, with respect to issuers, intermediary institutions and rights
holders. The dematerialization process was completed in 2006 for equities and in 2007 for mutual funds and corporate
bonds. The dematerialization of government bonds started in 2012. CRA dematerialized investors’ (individual and
corporations) government debt holdings. On the other hand, banks and brokerage firms have an option to register their own
government debt holdings at the Central Bank or the Central Registry Agency.
Equities
The settlement of equities and cash is done on T+2 by Takasbank, through a delivery-versus-payment (DVP) system. The
securities settlement operations are carried out via Takasbank Settlement Pool Account with the Central Registry Agency
(CRA). CRA and Takasbank systems are fully interlinked in real time, so securities transfers are reflected in the CRA
instantaneously. Settlement is realized along with the details transferred from the CRA.
The custody accounts are held with the CRA. Intermediaries have a settlement pool account besides their own portfolio
account and client sub-accounts. The cash accounts are held at Takasbank.
At the end of each trading day, Borsa Istanbul transmits details of all transactions to Takasbank. Takasbank multilaterally
nets the settlement positions, determines the obligations of each broker in each security, and calculates their net cash
position.
The net settlement position on client basis is transmitted to CRA on the trade day (T). Details of netting are available to
brokers electronically on T, showing also settlement amounts due. At the end of the day, the securities of the delivering
clients are blocked automatically by the CRA for settlement purposes.
On T+1, net settlement records that are checked by the CRA are made available to brokers electronically. On T+2, the
securities of the delivering clients are transferred from the blocked settlement account to the settlement pool account of the
broker within the CRA system. Securities are transferred to client sub-accounts by the CRA.
Bonds & Bills
Clearing and settlement is handled by Takasbank. The settlement date for transactions is T+0, unless otherwise agreed
between the parties. On the other hand, for the foreign currency denominated securities, settlement date is T+3.
The settlement of government debt securities traded in the organized and OTC markets are done through the Electronic
Securities Transfer System operated by the Central Bank of the Republic of Turkey (CBRT). Takasbank has a securities
account with the CBRT in order to facilitate the settlement of government debt securities.
After a trade, the Borsa Istanbul issues confirmations to both parties and to Takasbank. Takasbank multilaterally nets all
trades for each Borsa Istanbul’s member for each security traded and for cash. Netting results are reported to the members
electronically on trade day. Only trades done before 14:00 hrs can be settled on the same day.
Derivatives
The clearing and settlement of transactions are executed on a cash settlement basis.
Takasbank acts as the central counterparty and guarantees the settlement of transactions. However, the guarantee is limited
to the collateral taken from the members and the size of the guarantee fund.
Trades are executed on a client account basis, which means that margins are also monitored on account basis. However,
although the margins are followed on account basis, clearing members are responsible for the margin calls.
Every day, after the announcement of daily settlement prices of contracts by Borsa İstanbul, Takasbank starts marking-to-
market on account basis. If the collateral falls below the maintenance margin, a margin call is announced by Takasbank. If
the collateral is above the maintenance margin in an account, but the cash margin is negative after the losses are deducted
from the cash collateral, the relevant member shall be required to compensate for the negative balance by a margin call.
61
No. Market Name of
Organization
Settlement and Clearing Systems for Securities Transaction
While daily losses are deducted from the cash collateral on the same day (T+0), profits are added to the cash collateral on
the following day (T+1).
21 Uzbekistan CSM According to Art. 22 of Law “On securities market”, clearing is carried out by an organizer of trading with securities. The
major securities trade organizer in Uzbekistan is the Republican Stock Exchange “Toshkent”.
The authorized settlement bank is the National Bank for Foreign Economic Activity of Uzbekistan, which provides a
clearing house with a deposit account on demand of the settlement, intended for conducting the business activities of the
settlement and clearing house itself, and/or a secondary demand deposit account intended for recording and storing funds
of members and customers of the settlement and clearing house.
Control over settlement and clearing transactions is carried out by CSM.
22 Vietnam1 VASB Vietnam Securities Depository (VSD) provides the settlement and clearing system for securities transactions through the
“Delivery Versus Payment DVP” principle. These transactions include registration and depository of securities, settlement
and clearing of securities, transferring securities ownership to the holders, and dividend payments.
The settlement period for stock transactions is T+2; for bond transactions it is T+1.
23 Vietnam2 VBMA The HNX has the “Electronic Bond Trading” system or EBT, which is a modernized and advanced alternative in bond
trading. EBT allows only members of HNX to enter bond trading by EBT system. This system is very convenient and
efficient, and facilitates electronic negotiation, payment by SBV and settlement by VSD.
Transaction or dealing date (T-n)
Front office negotiates and makes deals with counterparty.
Back office verifies deals with internal front office, confirms deal with counterparty, and sends payment to BIDV
to ensure cash availability or checks with VSD to make sure that bonds are available for selling.
Transactions and subsequent confirmations could be done within the same day as trading date (T) or up to a week
before trading date (that is “n” could be a number from zero to 7) or even longer.
Note that the larger number of n means that there could be more risk in settlement if the bond market is very volatile.
Trade date (T)
Back office input the details of the deal to the Electronic bond trading system (EBT).
Settlement date (T+ 1)
The EBT will automatically notify the SBV and VSD to make the payment and transfer of securities.
Processing timing for bond dealing, confirmation, payment, and settlement depends on the agreement among the parties
and has to be done within the office hours of three main organizations, i.e., HNX, SBV and VSD, and before entering deals
into the EBT system to prevent a failed settlement.
62
IV –5. Current Status of Off-Exchange Transaction (including PTS, ATS, MTF, etc.)
No. Market Name of
Organization
Current Status of Off-Exchange Transaction (including PTS, ATS, MTF, etc.)
1 Asian Region ASIFMA N/A
2 Bangladesh BSEC
3 Cambodia SECC N/A
4 Hong Kong HKSA Off-exchange transaction is not a common practice in Hong Kong, but the dark pool system exists among large financial
institutions. However, once a transaction is conducted by dark pool, the institution must report to the Exchange immediately
and the trades will be recorded accordingly.
Aside from the dark pool transactions, some of the bonds and funds (authorized and unauthorized mutual funds) are also
traded off-exchange.
The SFC is working with the industry to encourage the development and use of alternative funds and bonds distribution
platforms. For instance, the SFC and the Government are exploring with Hong Kong Exchanges and Clearing Limited the
possibility of creating an exchange-based platform for fund and bonds distribution. The establishment will help Hong Kong
to establish itself as the regional capital raising and product distribution centre.
5 India 1 ANMI N/A
6 India 2 BBF Off-Exchange Transactions are minimal.
7 Indonesia APEI Bond trading in Indonesia is mostly on an Over The Counter (OTC) basis. All OTC trading is required to report to the IDX
through the Central Trading Platform (CTP) within 30 minutes of transaction.
8 Japan JSDA The 1998 abolishment of the obligation to trade stocks on exchanges allowed off-exchange transactions in Japan.
However, , unlike the US and European markets, most stock orders are still executed through the stock exchanges and
market fragmentation is not so notable in general. Having said that, the PTS (proprietary trading system) operators are
gradually entering the Japanese market as order placement through DMA, algorithm trading, etc. grow.
63
9 Korea KOFIA In March 2003, the Korea Securities Dealers Association -now KOFIA- launched an OTC trading system in order to
supplement the KRX and make the trading of OTC shares more convenient. The name of the OTC market was changed to
the FreeBoard Market in July 2005.
KOFIA revised how the operation of the market is approached, shifting the focus from promoting direct investment in
SMEs and venture companies to providing a practical venue for the transparent and active trading of all unlisted stocks in
companies, regardless of their size.
Based on these reforms, KOFIA launched the K-OTC in August 2014 to replace the existing FreeBoard Market, and the K-
OTCBB (Bulletin Board) in April 2015. On Oct 2017, a total of 116 corporations were being traded on the K-OTC, with a
market capitalization of KRW 13.3 trillion. The average daily trading volume since the launch of the K-OTC was KRW
1.2bn.
KOFIA also manages and administers the OTC bond market in Korea. Since most bonds in Korea are traded on the OTC
market, KOFIA plays an important role in this secondary market. To enhance the transparency of OTC bond trading, KOFIA
provides market participants with essential information such as the details of bond trading, mark to market yields,
representative bond yields, and final quotation yields for different bond types on its website. To facilitate greater
transparency and more transactions in OTC bond trading, KOFIA launched a special website (www.bondmall.or.kr) where
information on retail bonds by securities firms is collected, compared, and disclosed in February 2010 and. an online bond
trading system, FreeBond in April 2010.
As of the end of July 2017, 300 institutions and 4,770 individuals were registered with FreeBond.
10 Laos LSCO N/A
11 Malaysia ASCM Equities, derivatives and exchange traded bonds in Malaysia are traded on the Exchange. Unlisted debt securities are
however traded over the counter and most of the debt securities available in the market are unlisted.
The Electronic Trading Platform (ETP) operated by the Central Bank facilitates over the counter trading transactions. ETP
is a centralized database on Malaysian government and corporate debt securities that is integrated with Fully Automated
System for Issuing/Tendering (FAST). ETP provides information on terms of issue, real-time prices, details of trades done,
and supplies relevant news on debt securities issued by both the government and the private sector.
12 Mongolia MASD There are no off-exchange trade transactions in Mongolia currently.
13 Myanmar SECM N/A
14 Nepal SEBON SEBON has approved the Over the Counter Bylaws of the Stock Exchange. Hence the facility for the trading is there;
however, trading is limited in the Over the Counter Market.
15 Singapore SAS N/A
16 Sri Lanka SECSL N/A
17 Taiwan TSA According to the Article 150 of Securities and Exchange of Taiwan, the trading of listed securities shall be conducted on a
centralized securities exchange market operated by a stock exchange except in the following situations:
1. Transactions in government bonds.
2. Due to the operation of an act or regulation, the transacting parties are unable to acquire or dispose of the ownership
of the securities through trading on the centralized securities market.
3. Direct private transfer of securities not in excess of one trading unit and the interval between any two such transfers
is not less than three months.
4. Other transactions in conformity with the regulations prescribed by the Competent Authority.
Paragraph 4 of the same Article above empowers the Competent Authority to make provisions for permitting off-exchange
transactions in certain situations. For example, a foreign investor who has received approval from the Investment
Commission of the Ministry of Economic Affairs under “the Act Governing Investment by Foreign Nationals” to transfer
assets to another foreign investor may do so through off-exchange trading. Many foreign investors have invested in Taiwan
stocks through such off-exchange channels over the years.
Under current law, securities listed on the Taipei Exchange (TPEx) (formally named the GreTai Securities Market) can be
traded off-market. However, in those cases of securities for which the relevant authorities have duly set a foreign investment
ceiling in accordance with law, foreign investors (who must have obtained approval or registration in accordance with the
Regulations Governing Securities Investment by Overseas Chinese and Foreign Investors) are required to trade such
securities through the TPEx trading system. However, only very few TPEx-listed stocks are subject to this requirement.
Most TPEx-listed stocks can also be traded by foreign investors via price negotiation at the business places of securities
firms.
After each market closes, the TWSE also provides paired block trades and auction and tender offer systems in which
securities prices are negotiable to satisfy various investors’ demands.
18 Thailand 1 ASCO N/A
19 Thailand 2 ThaiBMA Bond trading in Thailand is mostly on an over-the-counter (OTC) basis. Although an electronic trading platform is offered
by the Stock Exchange to be an alternative for trading, it accounts for less than 1% of total trading.
Inter-dealer trading is actively done through voice box from the two main inter-dealer brokers.
All trading (no matter where it takes place) is required to be reported to ThaiBMA within 30 minutes. ThaiBMA then
disseminates these executed transactions to the market to provide for intraday market movement information.
20 Turkey TCMA The buying and selling of listed stocks and/or securities on the exchange is the main rule. However, upon the proposal of
the relevant exchange and the necessary arrangements by the CMB, authorization may be granted for off-exchange trading.
Unless an exception has been made to such trading, exchange members cannot trade securities of their customers off-
exchange.
64
21 Uzbekistan CSM mln. UZS
Market Securities For 9 months of 2016 For 9 months of 2017 Change (%)
Volume Amount Volume Amount Volume Amount
Primary
Stocks 12 921 231.6 133 14 541 507.39 845 112.5 635.3
Bonds 0.0 0 34 180.1 1 0.0 0.0
In total: 12 921 231.6 133 14 575 687.5 846 112.8 636.1
Secondary
Stocks 59 670.8 2 116 680 300.08 3 384 24 369.6 159.9
Bonds 6 608.0 3 4.0 1 0.1 33.3
In total: 66 278.8 2 119 680 304.1 3 385 1 026.4 159.7
Stock market, total 12 980 902.4 2 249 15 221 807.5 4 229 117.3 188.0
Total: 12 987 510.4 2 252 15 255 991.6 4 231 117.5 187.9
22 Vietnam1 VASB All off-exchange transactions are required to be settled via VSD
(in VNDbn)
23 Vietnam2 VBMA N/A
65
IV –6. Share of On-line Trading
No. Market Name of
Organization
Share of On-line Trading
1 Asia Region ASIFMA N/A
2 Bangladesh BSEC
3 Cambodia SECC N/A
4 Hong Kong HKSA
5 India 1 ANMI N/A
6 India 2 BBF N/A
7 Indonesia APEI Basically, all trades that go into the exchange are sent remotely, and 75% of retail houses have on-line programs with
most also having mobile trading platforms (on android). Only approximately 25% of the institutional orders are not done
through Direct Market Access.
In an archipelago country like Indonesia, it makes more sense to do things on-line. However, there are a few things which
make it not 100% workable:
1. Limited internet access including through mobile. Although there are more than 200 million active mobile phones
in Indonesia, the majority of users are concentrated in the big cities where an individual can have more than one
number. Even there, the data connection is spotty at best. Home internet penetration is even worse.
2. The need for face-to-face meeting with potential clients. This requirement is another dampener in the expansion of
retail clients. Somehow the excessive worries of criminal phenomena in mature markets such as Money
Laundering are applied too early in the infant market of Indonesia.
8 Japan JSDA Japan has witnessed a rapid increase in the number of Internet users and the PC market penetration rate since the latter half
of the 1990s. In addition, in October 1999, the Japanese stock market entered a new era of complete liberalization of
commissions and fees in the stock brokerage business. These two factors have led to the birth of online brokers in Japan.
Since then, competition among online brokers has been severe. Most of them cut commissions and fees in stock trading
significantly to increase their customer base. In October 1999, there were around 300,000 internet brokerage accounts in
Japan, and this number had reached 23.8 million accounts in September 2017.
66
No. Market Name of
Organization
Share of On-line Trading
Mar. 2016 Sept. 2016 Mar.2017 Sept.2017
Number of member firms engaged in
Internet trading 66 71 70 72
Number of Accounts (million) 22.6 22.8 23.3 23.8
Stock Trading Amounts
(billion Yen) 150.7 135.1 138.4 143.2
Source: JSDA
9 Korea KOFIA (including institutional, retail, foreign)
The share of on-line transactions is 59.63% (with retail making up 89.8%) in KOSPI market(’17.1.1~’17.6.30). The trend
currently is that percentage of HTS is decreasing while that of wireless phone(smart phone) continues to increase.(data
from KRX).
[KOSPI]
% Securities
Company
Terminals
Wire terminal
(telephone)
Wireless terminal
(smart phone,
PDA)
HTS etc
2011 45.84 0.39 4.90 41.33 7.55
2012 46.12 0.33 7.36 35.83 10.36
2013 46.35 0.30 9.28 30.62 13.44
2014 47.11 0.28 10.70 28.08 13.83
2015 39.27 0.29 15.65 32.84 11.93
2016 39.54 0.25 17.31 28.05 14.82
2017
(6.30)
40.37 0.21 17.66 24.38 17.35
10 Laos LSCO To support and expand the investor base especially for foreign investors, an on-line trading system has been used in LSX
since 2013 under the name of Home Trading System (HTS) in order to provide investors with more convenience and
optional channels of trading.
11 Malaysia ASCM Bursa Malaysia does not publish statistics on online transactions traded at the Exchange.
12 Mongolia MASD In 2015, a couple of securities firms announced that they have introduced online trading platforms; however, there is no
official data on their share in trading. Securities firms have two trading options since 2013: 1) trading on the exchange
floor and 2) trading from their offices through VPN connection to the exchange program.
MASD is actively seeking for possibilities to improve its member firms’ front office and back office programs, which
should also have an opportunity to provide online account opening and trading services for the investors. The appropriate
legal framework also needs to be advocated.
13 Myanmar SECM Although on-line trading is not allowed currently, SECM is looking into the Securities Companies to see whether their
system and regulations are ready for such a step.
14 Nepal SEBON On-line trading is being developed. Trading is fully automated on the intranet platform of the Nepal Stock Exchange.
15 Singapore SAS According to SGX, online trade is about 50% of the total trades.
16 Sri Lanka SECSL At present 27 Stock Broker Firms provide internet facilities for Investors. On line trading is not very popular but volumes
have grown in comparison to previous years.
17 Taiwan TSA As of the end of August 31, this year, there were 59 securities firms providing on-line trading, which accounted for
50.94% of the total number of transactions, and 54.16% of total trading value.
18 Thailand 1 ASCO The share of internet trading in SET (stock market) grew from 24% in 2010 to 30% in August 2017, with the highest record
at 38% in 2015. The share of internet trading in TFEX (Derivatives market) shrunk from 25% in 2010 to 23 % in the same
time.
Figure 5: Share of Internet Trading Value compare to the Total Trading Value
Source: SET&TFEX
19 Thailand 2 ThaiBMA N/A
67
20 Turkey TCMA
Internet Transactions of Brokerage Firms
2014 2015 2016
Equities
No. of Active Internet Investors 326,241 342,122 371,096
No. of Trades 47,044,408 56,991,476 75,169,088
Internet Trading Volume (mn. US$) 187,546 194,128 220,840
Futures
No. of Active Internet Investors 11,212 11,443 12,944
No. of Trades 11,979,095 7,779,398 8,868,611
Internet Trading Volume (mn. US$) 131,664 134,186 114,963
Leveraged FX Trading
No. of Active Internet Investors 27,125 53,575 58,103
No. of Trades 17,601,754 47,471,658 61,943,100
Internet Trading Volume (mn. US$) 1,243,053 2,415,713 2,951,207
Source: TCMA
21 Uzbekistan CSM In 2016, Korea exchange (KRX) implemented an IT Complex for trading, which allowed 100% online trading on the
securities market.
22 Vietnam VASB N/A
23 Vietnam VBMA HNX introduced a new electronic system for the auction of government bonds in July 2012.
HNX also introduced an electronic trading system for T-bills in September 2012.
HNX introduced EBTS for bond trading in 2015 and this EBTS runs parallel with BTS which was launched in 2012
68
V. Safety Net for Investors Protection
No. Market Name of
Organization
Existence of Investor Protection Fund
1 Asian Region ASIFMA N/A
2 Bangladesh BSEC
3 Cambodia SECC SECC is in the process of establishing an Investor Compensation Fund as well as Regulation on said Compensation Fund.
4 Hong Kong HKSA Investor Compensation Fund was established in 2003 in accordance with SFO. The source of funds is from the
compensation levy contributed by investors who trade listed products in the HKex. The fund is maintained by The Investors
Compensation Co Ltd (LCC) which is wholly owned by HKex and recognized by SFC. Under the compensation scheme,
the claim ceiling is HKD150,000.00 per either a securities or a futures account.
5 India 1 ANMI As ANMI is a NPO registered under Companies Act which works for the benefit of its Members and contributes to Investor
Education & awareness, our organization has implemented a Members/Investors Education Reserve for this purpose.
6 India 2 BBF N/A
7 Indonesia APEI OJK has established the Investor Protection Fund Institution which began its operations in September 2013.
Currently, the funds put aside for this institution are still contributed by SROs (IDX, KPEI, and KSEI).
8 Japan JSDA Japan Investor Protection Fund (JIPF) was established in 1998 as a private & independent organization, authorized by the
Japanese Prime Minister and the Minister of Finance.
JIPF collects contributions among its members and compensates investors. JIPF manages and invests the fund. It can audit
its members, but has no supervision powers.
JIPF is supervised by the Japanese Prime Minister and the Minister of Finance.
JIPF’s members are supervised by the Finance Bureaus.
There is mandatory membership in JIPF for all securities companies, with 259 member institutions as of August 2017.
JIPF is the only organization to compensate securities investors in Japan, and does not provide DGS service.
9 Korea KOFIA N/A
10 Laos LSCO An investor protection fund in Laos has yet to be established. Currently, there is a compensation fund into which the member
firms of LSX are required to contribute a certain amount of money. The Compensation Fund was established in 2013 in
order to reduce risks associated with members’ default.
The fund shall be managed by LSX and separated from its assets, as well as deposited at the Bank of Lao PDR.
11 Malaysia ASCM N/A
12 Mongolia MASD Currently, there is no special Investor Protection Fund in Mongolia. However, to protect investors the FRC required all
securities firms to deposit cash equal to 3 percent of their paid-in capital into a special account at the MSCHCD managed
by the FRC. In 2013, it amended the Risk Fund regulation to keep the Risk Fund reserves by the regulated entities in their
own bank accounts and to provide financial statements to the FRC on a quarterly basis.
13 Myanmar SECM N/A
14 Nepal SEBON There is a provision for an investor protection fund in our Act but it is still in the process of being implemented.
15 Singapore SAS Retail investors are protected from default by their brokers by the SGX Fidelity Fund, which has a cap of
$50,000 on individual investor claimants. Currently, the SGX Fidelity Fund has some $52 million in net assets. In addition,
there is a Clearing Fund maintained by the Central Depository (CDP) which can be tapped in times of need to maintain
integrity in the clearing of Member’s positions, so that investors will not be adversely impacted, and trading and clearing
can continue unabated.
Protection on Clearing House & Clearing Members (for Equities)
CDP maintains a Clearing Fund that can be applied in the event a Clearing Member is unable to discharge its money
obligations to CDP or if CDP suffers any loss as a result of liquidating a defaulted Clearing Member's position.
The Clearing Fund structure is scalable and clearing members’ contributions is linked to the level of risk (securities traded
value) they bring to the clearing system. CDP requires only a portion of Clearing Members’ required contributions to be
deposited upfront; Members will be called upon to deposit the remaining contributions (known as “Contingent
Contributions”) under conditions of increased risk or to meet losses arising from Clearing Member default(s).
The Clearing Fund comprises the following:
CDP’s contribution to the first layer. This is the higher of S$30 million or minimum 15% of the total Clearing Fund;
Collateralised Contributions from Clearing Members. Each Member’s contribution is the higher of S$500,000 or
0.5 basis points of its past 12-month traded value (i.e buy + sell value). Total Clearing Member Collateralized
Contributions is subject to minimum of S$40 million in aggregate terms;
Contingent Contributions from member firms. Each Clearing Member’s contribution is computed as 0.4 basis points
of its past 12-month traded value; and
Funds set aside by CDP for such purposes.
The Clearing Fund will be applied in the following order:
Defaulting Clearing Member's Clearing Fund contributions.
CDP's funds set aside for such purpose, in the first layer of the CDP Clearing Fund. CDP’s current contribution is
S$30m.
Collateralised Contributions made by all other Clearing Members on a pro rata basis in proportion to each Clearing
Member’s collateralised contribution.
Contingent Contributions made by all other Clearing Members on a pro rata basis in proportion to each Clearing
Member’s contingent contribution. CDP’s funds set aside for such purpose in excess of its contribution in the first
69
No. Market Name of
Organization
Existence of Investor Protection Fund
layer (if any).
16 Sri Lanka SECSL Compensation Fund
The Compensation Fund came into operation along with the establishment of the SEC in 1987. Section 38 of the Securities
and Exchange Commission Act No 36 of 1987 as amended states as follows: “There shall be established a fund called the
Compensation Fund, for the purpose of granting compensation to any investor who suffers pecuniary loss as a result of any
licensed stock broker or licensed stock dealer being found incapable of meeting his contractual obligations”
17 Taiwan TSA “The Securities Investors and Futures Traders Protection Act” became effective on January 1 2003.
Under the Act,“The Securities and Futures Investors Protection Center” was set up to provide:
1. Consultation on the trading of securities and futures as regulated by related laws and regulations;
2. Mediation of disputes arising from the trading of securities and futures; and litigation services on behalf of investors.
3. In addition, the Center manages a protection fund to compensate investors if a securities or commodities firm is
unable to do so due to financial difficulties.
The protection fund was valued at NT$1.031 billion (=34.94 million US dollars) when the Center was established. Donors
to the fund include: the Taiwan Stock Exchange, Taiwan Futures Exchange, GreTai Securities Market, Taiwan Securities
Central Depository, Taiwan Securities Association, Securities Investment Trust and Consulting Association of ROC, Taipei
Futures Association, Fuhwa Securities, Global Securities Finance, Fubon Securities, and Entie Securities.
Meanwhile, Article 18 of the Protection Act requires securities firms, futures firms, Taiwan Stock Exchange, Taiwan Futures
Exchange, and GreTai Securities Market to contribute each month to the fund.
18 Thailand 1 ASCO SET and TFEX established the Securities Investor Protection Fund (SIPF) and the Derivatives Investor Protection Fund
(DIPF) in cooperation with some of its member firms who volunteered to join the funds. The purpose is to create confidence
among investors who trade securities on the Exchange through the Fund's member brokers. Investors who are clients of
SIPF members or DIPF members can receive their assets back or compensation for the price of assets from this fund in
certain circumstances as defined in the regulations.
The entitlement to compensation for assets or compensation for the price of assets from the Fund will not exceed the actual
damage incurred to them and each investor will be compensated no more than one million baht. Investors are automatically
protected when they open a trading account as long as their broker remains a member.
19 Thailand 2 ThaiBMA This part is applied only to equity and derivatives market traded on SET.
The Stock Exchange of Thailand has established the Securities Investor Protection Fund or SIPF in cooperation with some
of its member firms who volunteered to join the fund. Its purpose is to create confidence among investors who trade
securities on the Exchange through the Fund's member brokers. Investors who are clients of SIPF members can receive
their assets back or compensation for the price of assets from this fund in certain circumstances as defined in the regulations.
SIPF provides protection to investors who fail to receive returns on their assets or compensation for the price of assets from
SIPF members if :
1. Any member broker of SIPF is adjudicated bankrupt
2. Any member broker of SIPF fails to comply with an arbitral award requiring them to return the assets or compensate
for the price of assets to investors.
This protection does not include losses incurred from price decreases due to the securities trading. The investors shall be
entitled to compensation for assets or compensation for the price of assets from the Fund not exceeding the actual damage
incurred to them and each investor will get no more 1 THB million per one SIPF's member broker.
Investors are automatically protected when they open a trading account as long as their broker remains a SIPF member.
Moreover, investors do not need to apply for this protection or pay anything.
20 Turkey TCMA The Investor Compensation Centre covers all capital market instruments including equities, bonds and bills, forex
transactions and cash. The maximum coverage amount of all settlement obligations is TL 125,451 (~$ 35,000) for the year
2017.
21 Uzbekistan CSM RSE “Toshkent” holds the guarantee fund, which is accumulated from the funds of investment intermediaries.
According to Art. 23 of Law “On securities market”, the organizer of trading with securities creates a guarantee fund to
compensate the investor for losses caused by the investment intermediary at the expense of the retained part of the
commission fee due to each investment intermediary. The funds of the guarantee fund belong to investment intermediaries,
and are formed and accounted for separately by each investment intermediary.
The funds of the guarantee fund cannot be used for other purposes and have to be returned to the investment intermediary
in the event of termination of its activities as an investment intermediary.
The procedure for the formation and use of the guarantee fund is established by CSM.
22 Vietnam1 VASB There is no Investor Protection Fund.
23 Vietnam2 VBMA N/A
70
VI. Challenges for Securities and Capital Market
V – 1. Major Recent Incidents and/or Challenges in Securities and Capital Markets as a Whole
No. Market Name of
Organization
Major Recent Incidents and/or Challenges in Securities and Capital Markets as a Whole
1 Asian Region ASIFMA 1. Compliance to regulatory extraterritoriality such as MiFID II
2. Fragmented markets with distinct legal systems and market structures
3. Pension fund and insurance reform to broaden the institutional investor base in the local capital markets
4. Lack of well-developed electronic systems and connectivity
5. Unnecessary restrictions and requirements that are either complex or bring unintended consequences, which serve as
impediments to investment (particularly in India…withholding taxes on bond coupons, absolute limits on foreign
investment in government bonds and caps on total interest payable, regardless of perceived riskiness of issuer)
6. Cybersecurity threats and business continuity management
7. Improvements to conduct and risk culture in financial institutions
2 Bangladesh BSEC
3 Cambodia SECC - Business owner understanding about securities market. Most of companies in Cambodia are SMEs and family owned.
They do not want to be listed on the market since it is costly.
- Lacking investors.
- Since the securities market in Cambodia is quite new, public awareness is still the main challenge.
- Transparency and Governance Concerns…Having to open up their business and operations for the public to see is
simply not an idea that Cambodian business owners believe have any merit. They can only see the disadvantages of
this.
4 Hong Kong HKSA General Observation over the market:
1. Recent inter-ballistic nuclear missiles testing from North Korea causes instability in global capital market.
2. The introduction of “One-Belt-One-Road” with the hope of enhancing Hong Kong’s significant role by increasing
investment exposures.
3. Geopolitical tensions in Southeast Asia affect investor confidence
4. Slower Chinese GDP growth
5. Limited channels of Capital flow in China
6. Increased concerns over Corporate Governance, compliance, AML policies and procedures
7. Technology innovation attracted more retail and overseas users
5 India 1 ANMI Educating Members regarding new compliances as applicability of Goods & service Tax (GST) as well as applicability of
new regulations and compliances by Regulator at the same time.
Smooth Running of business operations along with timely completion of compliance to generate a source of Income for
Members.
6 India 2 BBF Misuse of clients assets by some securities firms.
7 Indonesia APEI The main challenges in the securities market are:
1) Increasing the public knowledge of the Capital Market so that the public is aware:
a) Which investment products are actually of the capital market and supervised by authorities.
b) Of the benefit of investing in the capital market.
c) That investing in the capital market is not the same as gambling – a practice forbidden in the generally Muslim
population of the country.
d) That investing in the capital market is not limited to rich investors only.
2) Enforcing the rules and regulation to monitor the securities firms, the investors and also the listed companies.
3) The small percentage of domestic investors – less than 0.2% of the population invest in the Capital Market.
4) Difficult KYC process – need to simplify
5) Shortage of licensed professionals in the capital market
6) Low number of product range available for investors
7) Fluctuating currency which discourages foreign investors
8) Synchronization of rules between OJK, Tax Office and Bank Indonesia
8 Japan JSDA Strengthening the functions and competitiveness of the capital market underpinning the Japanese economy
Supporting individual investors by expanding and promoting financial and economic education
Responding to the influence of Fintech to Japan’s securities market
9 Korea KOFIA KONEX
The Korea New Exchange(KONEX) was first established on July 1, 2013 with the aim of creating a stock market incubator
for nurturing new venture companies. Despite concerns at the early stage, KONEX achieved remarkable growth in size. At
the beginning in July 2013, KONEX’s market cap hovered around only KRW 558 billion, but four years later in July 2017,
it reached KRW 4.171 trillion, a 7.48-fold increase from the market’s establishment. However, KONEX showed an abrupt
decline once from KRW 5.3 trillion in mid-2016 to KRW 4.2 trillion in early 2017 because stocks representing a large
portion of the market moved to KOSDAQ. However, doubt has been raised over the market’s fundamental functions due
to some issues. For example, an excessively large stake of major shareholders in quite a few KONEX-listed companies
hinders active trading as well as proper valuation. Moreover, some KONEX companies have long business history, e.g., 10
year, to be labeled as a startup, while most of those who moved to KOSDAQ entered the market in the first or second year
of KONEX, which makes it hard for KONEX to take credit for the success. Expecting KONEX to make visible
achievements in nurturing startups is certainly a far-fetched goal given the bourse’s short history spanning only four years.
Even so, multi-faceted plans are necessary to help KONEX to stand on its own and aggressively discover and nurture new
venture companies with growth potential in order to facilitate the market’s continuous development.
71
No. Market Name of
Organization
Major Recent Incidents and/or Challenges in Securities and Capital Markets as a Whole
10 Laos LSCO 1. Implementation of legal and regulatory frameworks;
2. Limited choice products.
3. Lack of human resources in the field and inadequate IT.
4. Limited investor base from local, institutional and foreign investors.
5. Limited knowledge and understanding of the public related to the capital market.
11 Malaysia ASCM There are several challenges in the securities market, particularly those facing the stockbroking industry. The economic and
business environment is less than conducive as the cost of doing business in Malaysia is gradually increasing whilst the
regulators and the Exchange have been introducing new fees. Further, the brokerage rate and commission sharing with
commission-based dealers have been fully liberalized. As a result, the stock securities firms’ profitability has been affected
and this is more apparent in the case of small to medium sized stock securities firms. Coupled with the dwindling trend of
the market volume, the stock securities firms are now facing the challenge to enlarge the market pie for their business
continuity and future plans.
From the regulatory perspective, the stockbroking industry has also been inflicted with additional regulatory structures.
Previously, the industry has been regulated by the Securities Commission and Bursa Malaysia which acts as the frontline
regulator. However, in the recent years, the Central Bank has also been actively involved on the regulations of the industry,
particularly to the stock securities firms that are licensed as investment banks. Inevitably, the additional regulatory structures
and the embedded bureaucracies have in some ways affected the smoothness of the stock securities firms’ business
operations.
In tackling these challenges, the ASCM has been engaging the regulators as well as the Government with appropriate
proposals to resolve the issues facing the industry and Malaysian capital market as a whole.
There are also challenges faced by Islamic securities and the Islamic Capital Market whereby there is a misconception by
Muslim retail investors regarding their investor portfolios, as they do not realize that almost 80% of the securities traded
on Bursa Malaysia are Shariah approved securities by SC. Thus, a more effective awareness program should be created
among the investor community. Focus also needed by regulators to promote and develop end to end Shariah compliant
Stockbroking firms or fund management to ensure a level playing field in the Islamic capital market. In addition, the
shortage of talents and inadequate pool of Shariah scholars who have the right combination of knowledge in Islamic law
and capital market environment to serve the Islamic Capital Market industry may need addressing.
12 Mongolia MASD Strengthening the capacity of MASD as a SRO and improving our activities, in particular in advocacy for policy
change and training for member firms and professionals. This year the Parliament/Government was newly
elected/established, thus promoting the sector with them is essential;
Advancing the market infrastructure such as establishing an adequate clearing system to eliminate counterparty risk,
opening up opportunities to investors to open accounts, trade and make transactions online, etc.;
Improving corporate governance of listed companies, their information disclosure to the public;
Improving public understanding and education on securities and securities market;
Promoting the development of institutional investors and improving capacity of professional participants;
Establishing a favorable tax environment for the investors as well as issuers to attract more investment and products;
Privatization of state-owned enterprises through the MSE in an open and accessible manner for the public;
Some sort of de-regulation and legal reform is needed according to the participants of the recent open discussion on
developing the capital market in Mongolia. For example, investors need to be meaningfully protected and not to be
restricted in trading when the FRC or MSE takes disciplinary measures (suspension of special licenses) on securities
firms.
13 Myanmar SECM On the supply side, Listing with IPO and qualified companies are needed. YSX was established in December 2015, trading
started on March 2016, and now four listed companies are trading. The market situation is calm and needs IPO & more
listed companies. On the demand side, knowledge and awareness for investors programs are also needed.
14 Nepal SEBON Last year’s massive earthquake and border blockade affected Nepalese daily life and National economic activities. We
are still in a period of national reconstruction.
Absence of real sector companies and dominance of banks and financial institutions has increased the sectorial risk of
the market.
Lack of institutional investors and the dominance of the individual investor causing high volatility in the secondary
market.
15 Singapore SAS Singapore Exchange (SGX), in consultation with the Monetary Authority of Singapore (MAS), formed a Securities
Industry Working Group (IWG) in September 2016 to assess and make recommendations on the processes of SGX and
industry participants to improve the operational resilience of Singapore’s securities market.
The composition of the IWG included a broad base of stakeholders from local and international members to an independent
software provider, end-user market participants, specialists in Business Continuity Management and experts from other
areas including defence systems design, ensuring wide expertise and perspective on the Singapore securities market.
The IWG has independently assessed and recommended practices that are best suited to the Singapore securities industry.
In doing so, it took into consideration feedback garnered from members and participants as well as SGX’s own
investigations following the 14 July 2016 market disruption. The IWG also appointed an independent consultant to
review and provide international best practices from other relevant exchanges.
72
No. Market Name of
Organization
Major Recent Incidents and/or Challenges in Securities and Capital Markets as a Whole
Throughout the deliberations, the Securities Association of Singapore (SAS) was instrumental in soliciting input through
their various working and discussion groups.
The IWG has made specific recommendations in six areas:
1. Restoration of corrupt data
2. Market recovery procedures
3. Market closure and resumption
4. Trade assumption
5. Incident communication
6. Business continuity testing and support
SGX has adopted all six recommendations and will implement some with immediate effect. For the remaining
recommendations, the exchange will form and chair an Executive Steering Group, comprising SGX and existing broker-
members of the IWG, to oversee full implementation.
Dual Class Shares
SGX listing advisory committee is still reviewing the dual-class share structure as it can potentially help SGX attract new
IPO listing, especially for high profile tech companies. This move can help narrow the gap with Hong Kong Exchange
where minority-control voting structures are not permitted. However, concerns have been raised by business watchers that
there is a risk to corporate governance issue and agency problem. Such a structure is disadvantageous to minority
shareholders and do not protect their interest. There have been proposed safeguards to be implemented and explored in the
event dual-class structures are approved. This is still pending regulatory approval.
16 Sri Lanka SECSL - Lower Liquidity in the market
- Lack of financial literacy among investors
- Attracting new listings
17 Taiwan TSA Major incidents in Taiwan’s capital market:
1. Proposed Tax Reform: Taiwan’s Ministry of Finance (MOF) announced a proposed tax reform package on 1
September 2017 that would overhaul the income tax system. The proposals include the following:
Increase in the corporate income tax rate from 17% to 20%, accompanied by a reduction in the rate of the corporate
surtax from 10% to 5%;
Increase in the withholding tax on dividends for foreign investors from 20% to 21%;
Reduction of the highest tax bracket for individuals from 45% to 40% and increases in deduction thresholds;
Abolition of the imputation system.
If approved, the measures are expected to apply for tax years beginning in 2018 (i.e. 1 January 2018).
The MOF has proposed to eliminate the imputation system and replace it with one of two alternative systems. Under
Option A, individual shareholders would enjoy a tax exemption on 37% of dividends they receive, with the remaining
63% taxed as personal income at the relevant rate. Option B includes two alternatives: (i) all dividend income would be
taxed as personal income, but an exemption on the tax liability would be granted for 8.5% of the dividend income capped
at NTD 80,000 annually; or (ii) all dividend income would be taxed at a flat rate of 26%.
The proposed reform aims to ease equity investors' financial burden by cutting their tax payment on dividends they
receive from investments in listed companies in Taiwan. Once the tax on dividend income is lowered, the local equity
market is expected to become more attractive to retail investors who will likely become more willing to raise their equity
holdings. That could boost daily turnover in the exchange, as long as turnover increases, securities brokerages will also
become beneficiaries under the tax reform.
2. Promoting Reform of the Financial and Economic Legal System: In recent years, international organizations, such
as the OECD and APEC, and advanced countries have paid closer attention to the development of the digital economy
and advocated related policies to provide an innovative business environment, to lower barriers to the use of digital
technology, and to increase public trust in the Internet. This policy aims to provide a friendly regulatory environment
for the digital economy related industries and entrepreneurship in Taiwan, with consideration of points of major
international, industry and online community concern. It uses fundamental and application aspects of the digital
economy as its review framework and also incorporates the Company Act, and other current elements of the financial
and economic legal issues such as talent recruitment and retention to thoroughly review relevant laws and regulations
and promote adjustment of regulations.
3. Taiwan government is promoting the Forward-looking Infrastructure Development Program to build a new
generation of infrastructure for the nation’s future. This program includes funding for eight categories: railway projects
to provide safe and fast transportation, water environments to build resilience against climate change, green energy
infrastructure to ensure environmental sustainability, digital infrastructure to create a smart and connected nation,
urban and rural projects to balance regional development, child care facilities to reverse declining birth rate trends,
infrastructure to ensure food safety, and human resources infrastructure to nurture talent and boost employment.
18 Thailand 1 ASCO 1. Global capital market stability
The global capital market situation, from Brexit to North Korea's nuclear program, always affects the Thai capital market.
The movement of the money supply directly cause a stir to economic indicators, which influence the direction of the
securities and capital market investment.
2. ASEAN Economic Community (AEC)
The regional economic integration, AEC, will transform ASEAN into a region with free movement of goods, services,
investment, skilled labor, and freer flow of capital. AEC gives an opportunity to expand the capital market through the
increase in cross border financial and trading activities. At the same time, AEC also engenders higher competition and more
risk exposure. Better infrastructure redesign, network connectivity, and most importantly, business strategies deserve
priority.
73
No. Market Name of
Organization
Major Recent Incidents and/or Challenges in Securities and Capital Markets as a Whole
3. Financial Technology
Financial technology, “FinTech”, is most vital technological change that creates opportunity in the capital market, not only
for traditional financial institutes and customers, but also new types of service providers. The development of social media,
mobile technology, analytics and the cloud made the FinTech possible. Global investment capital in FinTech has increased
from less than 1% to more than 8% of the capital pool in 2016. This growth brings challenges to regulators. They have to
reconcile how to apply existing regulation to new products and services. Consequently, a regulatory sandbox has been
launched to allow testing of innovative products in a safe space.
4. Regulatory Reform
Global financial crisis forced regulators to review the existing rulebooks. More transparency driven and stricter regulations
were developed over the years to safeguards the financial system from collapse. For example, MiFID II and MiFIR entered
into force in Europe and created changes in many areas, such as trading venues, derivatives, third-country firms, automated
trading, investor protection, and enforcement. Under this interconnected world environment, effects naturally ripple when
someone moves. Therefore, the challenges come to every entity in capital markets.
19 Thailand 2 ThaiBMA 1. Fund flows in and out the emerging markets according to the expectation of FOMC decision on raising the policy rate
2. BREXIT effect
3. Fluctuation of the exchange rate
4. Fed Fund Rate expectation
5. Block Chain technology
20 Turkey TCMA In order to increase the domestic savings of the country, an automatic-enrollment scheme was introduced for the
private pension system in 2017. Under the new law, all employees in the private or public sector, who are less than
45 years of age, are automatically assigned to an individual pension plan arranged by the employer and start
contributing at the minimum rate of 3% of their taxable earnings. Employees have the right to opt out within two
months of their automatic enrolment in the plan. Enrolment in private pension system for private employers was put
into action gradually according to the firms’ number of employees.
Source: Pension Monitoring Center
21 Uzbekistan CSM Excessive concentration of shares that are state-owned;
Low number of securities issuers and unwillingness to share the capital with broad number of investors
22 Vietnam1 VASB - Vietnam’s financial system is still a bank-based system and the capital market remains underdeveloped
- The stock and corporate bond markets, which provide a more reliable supply of long-term funding to the private
sector, remains underutilized
23 Vietnam2 VBMA Government to establish an ‘Interagency Working Group’ to spearhead bond market development and ensure coordination
among key stakeholders
Urgent need to have short term rate benchmark
Number of
Employees
Auto-Enrolment
Date
1.000 + 01.01.17
250 - 999 01.04.17
100 - 249 01.07.17
50 - 99 01.01.18
10 - 49 01.07.18
5 - 9 01.01.19
74
V – 2. Specific Challenges in Equity Markets
No. Market Name of
Organization
Specific Challenges in Equity Markets
1 Asian Region ASIFMA 1. The reporting requirements of dual-listed shares due to MiFID II
2. Lack of competition: exchanges in Asia are mostly monopolies. Alternative market structures and healthy innovation,
such as Alternative Trading Systems (ATSs), are needed to meet diverse needs of investors and to make the market
more efficient and liquid.
3. Scarce capital and collateral: cross-margining between cash, futures, options, and OTC
a. Derivatives, as well as flexible collateral management, may help Asia markets face the capital-short environment.
4. High explicit and implicit costs: Asian exchanges tend to have higher trading, clearing, and settlement fees as well as
high implicit costs compared with exchanges in developed markets.
2 Bangladesh BSEC
3 Cambodia SECC - Lack of trading on the market.
- Securities market and investment awareness is still a main concern. Securities market awareness in Cambodia is still
limited.
- Lack of companies going public. At present, there are only five listed companies.
- Financial literacy amongst the Cambodian public is still limited.
4 Hong Kong HKSA 1. Lower trading volume and valuation of Hong Kong equity market, limiting the ability to raise funds through IPO
a) New mainland entrée and intensified competition
b) Reduced trade volume, and increase in proprietary trading activities
2. “Joint consultation on the proposed enhancements to the Exchange’s decision-making and governance structure for
listing regulation”, more stringent compliance and AML requirements for licensed corporations
3. Increased market and operational risk by online trading
5 India 1 ANMI - Financial Literacy is the major challenge in the Market as well as declining Retail Participation in the Capital Market.
6 India 2 BFF Too much flow into Mutual Funds, and not enough paper leading to market heating.
7 Indonesia APEI Low liquidity in the market
Brokerage and underwriting fee’s war
An easier, more transparent and more public IPO process starting with State-Owned Enterprises
Restriction on bank support
Despite ongoing issues pertaining to liquidity and volatility as well as more recent concerns about slowing GDP growth
and rising inflation, there can be little doubt that Indonesia continues to hold attractive prospects for long-term investment.
The mixture of global and domestic factors that has prompted some companies to reduce or reconsider their equity issues
is largely of a temporary nature.
Greater depth of both the equity and bond market is vital as Jakarta competes with bourses in the ASEAN region to attract
foreign capital and improve businesses’ funding options at a time when the country requires ambitious plans for investment
in transportation and energy infrastructure. Substantial growth potential still remains to be unlocked, meaning the mid to
longer-term outlook for Indonesia’s capital markets remains bright.
8 Japan JSDA Shortening the settlement period of stocks
Developing new methods to foster startup and growth companies (crowdfunding, shareholders community)
9 Korea KOFIA Please see our discussion in “Major Recent Incidents and/or Challenges in Securities and Capital Markets as a Whole”
10 Laos LSCO The specific challenges in the Lao Capital Market are:
Introduce new regulations to facilitate the market.
Encourage more companies to be listed in LSX.
Encourage more securities intermediaries in appropriate and sufficient quantities.
Develop personnel in charge of supervision of securities activities.
Focus on expanding the dissemination, education and training for the public to raise awareness and understanding
of securities by using various forms.
11 Malaysia ASCM Specific challenges facing the Malaysian Equity Market are:
Falling brokerage rate in the face of new players including discount brokers
Increasing cost of doing business
Disruptions brought about by digitisation
Increase risk posed by cybersecurity
Challenges of increasing compliance requirements by multiple regulators.
Malaysian equity market will continue to be inflicted by issues of truncated participation from foreign funds and retail
investors. In terms of market demographics, foreign investors by trading value have been stagnating around the mid-
twenties percentage while participation from retail investors has also been flat at around 20%.
12 Mongolia MASD Account opening, cash withdrawal, and dividend collection are too manual, time consuming and costly, especially
with the settlement banks operating under the Banking Law of Mongolia. Online systems need to be provided,
especially for foreign investors;
There is still no reliable front and back office system for securities firms (maintaining two different systems (MDS
and back office) is hard);
Illiquid market, lack of quality stocks and lack of information on companies;
Costly and time consuming process for listing on the exchange, no leverage for potential issuer companies;
Securities firms support the current T+1 settlement system, however regulators aim to reintroduce T+3. It is preferable
to have a T+2 system and not to put all the risk/burden onto securities firms.
13 Myanmar SECM Currently, only existing shares of Listed Companies are trading at YSX and listed without IPO. It is important to increase
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No. Market Name of
Organization
Specific Challenges in Equity Markets
the number of listed companies on YSX. We continue to make efforts to facilitate companies to go to public, cooperating
with securities companies and so on.
The limitation of potential listed companies is a key challenge. Among 303 Public Companies, 30 companies which have
over 100 shareholders meet the quantitative requirement of the listing criteria at YSX, but not the qualitative requirements.
The lack of Institutional Investors is another problem in expanding the market.
It is also important to encourage the participation of foreign investors, but preparations need to be made beforehand.
There are a lot of challenges we have to cope with. For example, we have to strengthen market surveillance and oversight
and protect our market from Money Laundering (AML) and Tax issues. From the viewpoints of Foreign Capital flow, it is
necessary to cooperate with CBM. Increasing the financial knowledge of investors is important for the market.
14 Nepal SEBON Lack of Real Sector Companies;
Provision of issuing shares at par;
Concentration of bank and finance institutions;
Provision of market expansion from foreign investment; and
Adoption of standards for organizational strengthening of SEBON prescribed by International Organization of
Securities Commissions. (Associate Member of IOSCO from July 2016)
15 Singapore SAS Drawing Retail Participation
The SGX is trying to increase the investor base by bringing more retail investors into the market. Many Singaporeans are
highly risk adverse, preferring to put their monies into fixed deposits and properties, rather than equities. MAS and SGX
are tying up with member companies to conduct seminars to educate the investing public.
Singapore is on an ambitious drive to build itself as a Smart Nation as promulgated by the Prime Minister Lee Hsien Loong.
One of the initiatives is the National Digital Identity System that uses MyInfo (central database hosted by GovTech) to
allow financial institutions to onboard investors easily by drawing pre-filled common personal particulars.
Attracting New Sales People
Turnover for sales people in this industry has been high as the broking profession has been increasingly perceived as a
sunset profession. This is due to the low commission and increase in passive investing environment.
Singapore is reinventing itself to be an Asian financial technology, or Fintech, hub. Steps have been taken by MAS and our
local polytechnics to groom young Fintech potential. The five local polytechnics will be reviewing and enhancing their
banking and IT-related curricula so that they are aligned with the latest developments in the field. Scholarships and industry
mentorship will be available to final year students.
FinTech is proving to be another great challenge where many startups firms have started to build competency in robo
advisory services. This leads to disruption to the traditional dealer-broker role in the stockbroking industry.
Subdued Transaction Turnover due to high stock valuations and into passive investing
SGX securities turnover increased by 21% year-on-year to S$25.5b in August 2017. This was attributed to higher turnover
in Exchange Traded Funds and structured warrants. However, this came from a 20% fall in 2016. Due to high valuations
and record highs for all markets, the overall tone is still pretty cautious.
This resulted in lackluster interest in equities investing among retail investors, with 17% household invested into
Securities (Alliance Wealth report 2017)
16 Sri Lanka SECSL 1. Lack of proper risk management framework in the market. Presently, the SEC is facilitating the establishment of a
Central Counter Party (CCP) mechanism jointly with the Colombo Stock Exchange (CSE).
2. Attracting more foreign portfolio investments to the market.
3. Promote new listings.
4. Lower liquidity in the market
5. Lack of financial literacy among investors
17 Taiwan TSA 1. Percentage of market value held by foreign investors has reached 40.15%, which implies that the recent momentum
of TAIEX is mainly triggered by foreign investors.
2. Percentage and transactions of Taiwanese retail investors is greatly decreased.
3. Before the aforementioned proposed tax form is passed, current capital gain tax rate favors foreign investors, making
domestic investor more lukewarm in participating in the equity market.
4. Shortage of young retail investors participating in the equity market.
18 Thailand 1 ASCO 1. Relaxation for individuals oversea investment
Bank of Thailand has relaxed the regulation on individual overseas investment aiming to manage the capital flows.
The new regulation allows a specified group of individuals, “qualified investors”, and Thai residents with liquidity of
more than THB 100 million, to invest in securities abroad up to five million USD per year without the need to go
through local intermediaries. Furthermore, the BOT plans to allow Thai residents with no liquidity limits to freely
invest in offshore securities in next few years.
2. FinTech
The new technological changes come into effect in every part of the financial landscape e.g. E-KYC, automatic advice
on research, robotic process automation, robo advice on asset allocation service, algorithmic trading on investment
section, blockchain on execution, settlement, and safe keeping, as well as crowdfunding on fund raising. To be capable
of new technology adaption and adopting new business strategies to deal with the change are the keys to successful
business.
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Organization
Specific Challenges in Equity Markets
3. Liberalization of securities business
Since securities brokerage fees have been fully negotiable in 2012, severe competition comes to be one of the top
issues. As a result of competition, brokerage fees keep being driven down and push more pressure on brokerage
companies’ income. The need to adjust and improve better and wider range of services is required to serve the investor
wealth management.
19 Thailand 2 ThaiBMA N/A
20 Turkey TCMA 80% of the household assets remains in the deposit accounts. Only 5% of household assets invested in equity directly as
the end of first quarter 2017.
21 Uzbekistan CSM Delay in payment of dividends to minority shareholders;
Non-transparent market for different types of investors.
22 Vietnam1 VASB - Vietnam stock market remains a relatively small market with total market capitalization of US$ 111bn (57% GDP)
at the end of June 2017. The market is dominated by a large number of small cap companies.
- The foreign investors participation in the stock market have been increasing, however its share remains low at 15-
16% of total trading value.
- The available products remains simple
- The lack of financial investment institution and domination by the majority of individual investors may lead to an
unstable development of security market together with fluctuated variables due to the cause of investors’ insights.
The solution is to promulgate regulations, and prioritize in setting principles of investment.
- It is needed to develop new derivative products for risk management purposes in order to eliminate the consequence
of the investors as participating in the stock market because currently the investors only earn interests from buying
stock and profits from increasing stock price; and reverse is still impractical lacking derivative tools
23 Vietnam2 VBMA N/A
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V – 3. Specific Challenges in Bond Markets
No. Market Name of
Organization
Specific Challenges in Bond Markets
1 Asian Region ASIFMA 1. Lack of calibration and consistency of local and international ratings, which limits the development of domestic bond
markets and foreign investor participation;
2. Lack of high quality, regular and benchmark-sized bond issuance;
3. Establishing a project bonds market in Asia to close the infrastructure gap;
4. Effects of extraterritorial regulations and their effects on local liquidity (i.e., MiFID II); and
5. General lack of liquidity in secondary markets on account of the “Buy and Hold” mentality of investors (India, China)
6. Limited range of institutional investors such as pension and mutual funds, whose establishment is essential to the
development of fixed income markets. Some progress in recent years, but more needs to be done.
7. Withholding tax issues and administrative limits/ceilings on bond interest costs (India)
2 Bangladesh BSEC
3 Cambodia SECC N/A
4 Hong Kong HKSA 1. Bond Connect is a pilot scheme that allows connection between China’s interbank bond market with the world, giving
international investors “Northbound” access to trade bonds directly on the China Foreign Exchange Trading System
(CFETS) for the first time. “Southbound” trading will start later, giving Mainland investors the opportunity to trade in
major overseas OTC bond markets.
2. Most of the Bonds are OTC traded and there is a lack of transparency to the public investors; listed bonds, except a
few government bonds, lack liquidity in general.
3. Bond market in Hong Kong is under-developed when compared to other mature equity markets.
4. Slower growth of mainland Chinese economy, weakening RMB increases the liquidity crisis of some mainland cities
and State Owned Enterprises (SOEs), affecting investor confidences in bonds.
5. Under the linked exchange rate regime of HKD, Hong Kong lacked independency in the monetary policy and the bond
market will be affected by the rate hike of the FOMC in 2017.
5 India 1 ANMI - Govt. Bonds are not listed in the Retail Equity Market but studies show that the development of a government bond
market will have a positive effect on the corporate bond market.
- Lack of diversity in the instruments and supply side issues are the other factors which hamper the development of
corporate debt markets in India
6 India 2 BFF Buy and hold strategy leading to illiquidity.
7 Indonesia APEI Low liquidity in the market.
Bringing bonds to the general masses.
Creating a better and more transparent bond price reference.
Enhancement of the bond transactions reporting (through CTP system); though KPEI has a clearing system for bond
trading transactions, many of the participants deals directly among themselves without reporting.
8 Japan JSDA Shortening the settlement period of JGBs
Vitalizing the corporate bond market
9 Korea KOFIA N/A
10 Laos LSCO N/A
11 Malaysia ASCM Malaysia faces the challenge of how to improve broader access and efficiency of the bond market. A high degree of investor
concentration, dominated by government pension funds, plays a significant role in impeding the growth of the higher-yield
bond market. The role of the government in stimulating the growth of the bond markets should be now shifted toward
encouraging more diversity. In order to promote risk diversity, significant measures should be taken to increase competition
on the demand side. In Sukuk market for example, the most common type of Sukuk format used in Malaysia is murabaha
but many international issuers and investors prefer to use other structures such as ijara and wakala. In order to reduce
Malaysia’s reliance on murabaha, it was announced in the budget 2015 that the government would extend tax deductions
for ijara and wakala Sukuk structures from 2015 until 2018. These two Shariah principles are widely adopted internationally
and the extension of tax incentives would further promote cross-border transactions. The move could attract more foreign
issuers and investors to the Malaysian market and narrow differences with the Gulf. Going into 2015, although we expect
market sentiments to shift towards a more cautious tone amid developments on the external front – as US normalisation
cycle will play a part as well as less sanguine growth emanating from the EU. Domestically, Inflationary pressure is
something investors need to be wary come GST implementation in 2015.
12 Mongolia MASD The bond market mainly consists of Government bonds and its secondary market is only at an initial development
stage;
Settlement and prefunding system is different for the primary market bond trade, which is confusing and complicated
for investors, particularly the foreign version;
Savings rate provided by the banks and the Government bond coupon rates are high, which hinders issuance of
corporate bonds. Also, issuance of corporate bonds needs to go through almost the same process as the making of
IPOs.
13 Myanmar SECM 1. Currently, Banks are mostly buying in CBM auction. Other financial institutional investors should participate.
2. Secondary Bonds market is needed to meet the requirements of Bondholders. Currently the system of operation is
under discussion.
14 Nepal SEBON Low number of companies issuing bonds;
Major investors are institutions;
Lack of knowledge;
Lack of legal framework for promotion; and
Lack of interest of institutions.
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15 Singapore SAS Current challenges in the bond markets are:
Lack of liquidity in the secondary bond trading market (especially in the oil and gas sector), which is required to create
more depth in the corporate and government bond market.
The current landscape is the lack of high grade new issuance with lots of real money ready to be soaked up.
Use of ratings in SGD bond space – more than 80% of bond issues do not have credit ratings from accredited rating
agencies.
SGX has introduced Bond Pro, an OTC trading venue dedicated to Asian’s Bonds. This is to improve the Bond market’s
liquidity.
16 Sri Lanka SECSL 1. Low liquidity prevalent in the secondary market
Investment policy of institutional investors: The investment activities of most institutional investors and
individual reflect a predominately passive buy-and-hold investment strategy, which limits the secondary trading
activities.
2. Access to the market
Limited outreach of intermediaries: There are limited numbers of retail investors in the corporate bond market.
The primary reason is the limited number of brokers which provide services of corporate bonds to their clients.
Also, their outlet branches outside Colombo area are very law.
3. Lack of demand: Limited participation of institutional investors such as pension funds, unit trusts, and insurance
companies who are the key players for the development of a debt market and for the mobilization of long-term capital.
4. Lack of awareness among the investors.
17 Taiwan TSA The Federal Reserve has announced it will begin reducing its balance sheet in October. It is also expected to raise the interest
rate. Since last year, major central banks around the world have tended to normalize their monetary policy by raising interest
rates, shrinking balance sheets and stopping buying bonds, which will cause the dropping of bond price and rising of bond
yields.
18 Thailand 1 ASCO N/A
19 Thailand 2 ThaiBMA Currently we see a rapid growth in corporate bond market; however, the infrastructure development of the market is
insufficient to support such growth and this could cause the problem of systemic risk such as Settlement risk, etc. to arise.
With all being said, Corporate Bond Market Development plan known by the name of “Corporate Bond Market 4.0” is
necessary in order to promote Market Integrity & Efficiency and to protect investor which in effect will decrease
Systemic risk toward 0.
Work scope will mainly focus on the current market failure area. Here we drafted the Corporate Bond Market
Development Road Map as follows:
20 Turkey TCMA Most of corporate bond issues are done by banks.
Liquidity in the corporate bond market is quite low.
Recent default cases raise concerns.
21 Uzbekistan CSM Revitalizing the corporate bond market through simplification of the issue process;
Infrastructure modernization for bond selling.
22 Vietnam1 VASB - Vietnam remains one of the smallest debt markets in the region. The total local currency bond market amounted to
27.2% of GDP at the end of 2016, compared to the ratio of 40-70% GDP in the regional countries.
- Secondary market trading is subdued
- Government bond ownership is concentrated with the largest state-owned commercial banks holding majority of
total outstanding bonds.
- The corporate bond market remains underutilized with low liquidity (4.4% GDP)
- There is a lack of reliable credit rating information relating to corporate bonds
23 Vietnam2 VBMA MOF’s lack of ability to issue bonds for certain tenors and amount as constrained by parliamentary resolutions
Lack of tool and product for hedging. There is no IRS, bond future, or VND option markets, so foreign participation
in Vietnam bond market is nonexistent.
No official benchmark curve for short end (1-12 month) that can be traded or used for swap transaction.
Corporate Bond Market 4.0
Primary market convention /
Code of conduct / Supervision Scripless
Standardization Real time DVPCentral Registrar
Corporate Bond Market 4.0
Fiduciary duty of
Intermediaries
Market Integrity Efficiency Investor Protection
Regulatory Fram
ework / Enforcem
ent
• Minimum requirements of Term
and Conditions , UW agreement
• Prospectus
• Dealer vsUnderwriter model
• Underwriter/FA
• Dealer
• Bond holder rep
GOAL
S
• Information disclosure
• Revisit Pricing methodology
• Pricing Standard
• Clearing & Settlement
• Mitigate settlement risk
• Optimize fees
Reg
ulat
ory
Fra
mew
ork
/ Enfor
cem
ent
• Registrar/Custodian
Secondary market convention /
Code of conduct / Supervision
• Issuers
No Systemic Risk
GOALS
79
The government is trying to develop the corporate bond market but the progress is very slow due to lack of rating
agencies and no diversified investor base. Most of the investors for bonds are banks and follow “Buy and hold”
practice, hence there is virtually no secondary market for corporate bonds.
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V –4. Specific Measures introduced / Implemented for the Securities Market
No. Market Name of
Organization
Specific Measures introduced / Implemented for the Securities Market
1 Asian Region ASIFMA N/A
2 Bangladesh BSEC
3 Cambodia SECC - Financial Sector Development Strategy 2016-2025
- Sub-decree on Tax Incentives in Securities Sector, 2015
4 Hong Kong HKSA 1. SFC is taking steps to have a closer look at the Bond and Fund market especially to the Fund market.
2. Shenzhen-Hong Kong connect began its operations.
3. The re-implementation of the After Market Auction Period on 25th July 2016, increased trading volume of HKEX
5 India 1 ANMI In order to enhance market integrity and safeguard the interest of investors, Securities and Exchange Board of India (SEBI)
and Exchanges, have already issued various enhanced surveillance measures such as reduction in price band, periodic call
auction and transfer of securities to Trade to Trade segment from time to time.
The main objectives of these measures are to –
Alert and advise investors to be extra cautious while dealing in these securities and
Advise market participants to carry out necessary due diligence while dealing in these securities.
Graded Surveillance Measure (GSM):-In continuation with the various measures already implemented including the ones
mentioned above, SEBI and the Exchanges have decided that along with the aforementioned measures there shall be Graded
Surveillance Measures (GSM) on securities that witness an abnormal price rise that is not commensurate with financial
health and fundamentals of the company which inter-alia includes factors like Earnings, Book value, Fixed assets, Net
worth, P/E multiple, etc.
6 India 2 BBF N/A
7 Indonesia APEI Growing market capitalization through addition of more and more publicly listed companies – including more
Government Owned Enterprises.
Continuing education to the public: General and University level. Through the cooperation between OJK, IDX and
Brokers, all sides understand the difficulty that the other sides face. We hope that there will be a breakthrough in the
simplification and enforcement of processes.
Increased co-operation between the KSEI (Central Depository Agency) and the banks – through which investors can
monitor and control their portfolio through ATMs – along with using internet means.
8 Japan JSDA 1. Partial revision of the Financial Instruments and Exchange Act
In May 2017, a bill that partially revised the Financial Instruments and Exchange Act was enacted and promulgated.
This revision includes the following measures and is intended to make institutional reforms in response to changes in the
environment surrounding the financial and capital markets brought about by improvements in information and
telecommunications technologies. (The revisions will be implemented from a date determined by a government ordinance
within one year of the promulgation.)
（1） Streamlining laws, regulations and systems related to high frequency trading (HFT)
① Introduction of a registration system for HFT traders
② Institutional streamlining and risk management measures for HFT traders
③ Measures related to data submission to the authorities that are concerned (e.g., performance of HFT and trading
strategy)
（2） Flexibility in the business scope of the Exchange Group
① Aggregation of common or duplicate businesses within the Exchange Group
② Flexibility in regulations regarding the financing of overseas exchanges
（3） Introduction of the fair disclosure rule (obligating a company to promptly provide the same information to other
investors in a fair manner if it has disclosed critical information, such as unpublished earnings data, to a securities
analyst)
2. Partial revision of the Banking Act
In May 2017, a bill to partially revise the Banking Act was enacted and promulgated.
This revision covers the following measures to protect consumers and to promote open innovation (innovation through
partnerships and collaboration) between financial institutions and fintech companies in response to the accelerating
development of fintech worldwide. (The revision will be implemented from a date determined by a government ordinance
within one year of the promulgation; items (3) and (4) below may be postponed to a date determined by a government
ordinance within two years from the date of the implementation.)
(1) Introduction of a registration system for electronic payment intermediate service providers
(2) Institutional streamlining and risk management measures for electronic payment intermediate service providers
① Institutional streamlining for consumer protection
② Responsibility for secure data management, etc.
③ Securing a financial basis
（3）Contract between electronic payment intermediate service providers and financial institutions, etc.
To sign a contract to cover the following items in providing services:
① Sharing of liability for damages to a consumer
② Secure data management concerning a consumer
(4) Measures related to the promotion of open innovation at financial institutions
① Enactment and promulgation of policies on partnerships and collaborations with electronic payment intermediate
service providers and of standards relating to the connection
② Responsibility of good faith efforts for the introduction of open API
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No. Market Name of
Organization
Specific Measures introduced / Implemented for the Securities Market
3. Establishing Principles for Customer-Oriented Business Conduct
In March 2017, the Financial Services Agency published Principles for Customer-Oriented Business Conduct.
These principles lay out the following rules deemed necessary to ensure best practices for customer-oriented business
behavior by financial businesses based on the results of deliberations on stable asset building by the public, as well as
customer-oriented business conduct (fiduciary duty), etc., from the Working Group on Financial Markets under the
Financial System Council.
（1） Establishment and announcement of policy concerning customer-oriented business conduct
（2） Pursuit of the best interests of the consumer
（3） Proper management of conflicts of interest
（4） Clarification of fees, etc.
（5） User-friendly provision of important information
（6） Provision of customer-oriented services
（7） Framework of effective incentives for staff, etc.
When adopting these principles, financial businesses are required to establish a clear policy for customer-oriented
business behavior and to perform business based on that policy. Should a financial business decide not to implement part
of the principles under certain circumstances, it must provide an adequate explanation.
4. Revision and improvement of NISA scheme
The Installment-type NISA will be launched in January 2018 to promote regular and diversified investments of a small
sum of money (with an annual investment limit of ¥400,000; nontaxable for up to 20 years). Additionally, the upper limit
of the rollover amount at the end of the nontaxable period was removed from NISA and Junior NISA so that the full amount
may be rolled over to the following year’s nontaxable investment limit.
According to a survey by the FSA, the number of NISA accounts at the end of March 2017 was 10.77 million with a total
purchase amount of ¥10.5 trillion. Junior NISA had 210,000 accounts with the total purchase amount of ¥40.5 billion
9 Korea KOFIA N/A
10 Laos LSCO The Strategic Plan on the Lao Capital Market Development (2016-2025) has been approved by the government which
included 12 Programs (38 Projects) as follows:
1. Expanding No. of listed companies (2 projects);
2. Strengthening the quality of listed companies (2 projects);
3. Securities products development (4 projects);
4. Securities intermediaries establishment and development (7 projects);
5. LSX and CSD development (2 projects);
6. Investor expansion and protection (3 projects);
7. Securities related legislation formulation and amendment (3 projects);
8. ICT system development (4 projects);
9. Securities supervision activities development (1 project);
10. Training and education (2 projects);
11. Human resource development (4 projects);
12. International cooperation (4 projects).
11 Malaysia ASCM There are several initiatives implemented to further stimulate market growth and operational efficiency. At the end of 2013,
the SC had revised the Shariah Screening Methodology in order to spur greater foreign Islamic funds inflows. Under the
new methodology, a two-tier quantitative approach which applies the business activity benchmarks and the financial ratio
benchmarks is adopted. The revision has taken into consideration of the rapid development of the Islamic finance industry
in Malaysia, since the Shariah screening methodology was first introduced in 1995. The revision will potentially spur greater
inflow of foreign Islamic funds into Malaysian Shariah-compliant equities, thus expanding the Islamic capital market’s
global reach, as outlined in the Capital Market Master plan 2.
Apart from that, SC also revised its Equity Guidelines to enhance investor protection and market efficiency. The key changes
include additional investor safeguards and a practice note to clarify the regulatory principles and requirements of Special
Purpose Acquisition Companies (SPACs), as well as introducing an easier transfer process for ACE Market counters to
move to the Main Market of Bursa Malaysia Securities Berhad (Bursa Securities).
In addition, a new market was introduced to further strengthen the capital market. Bursa Malaysia introduced the Leading
Entrepreneur Accelerator Platform (LEAP) Market which is a new market offered which aims to provide SMEs and other
companies with greater fundraising access and visibility via the capital market. It is meant to be accessible only to
sophisticated investors (as prescribed under the Capital Markets and Services Act 2007).
The LEAP Market aims to bring together potential issuers, intermediaries and Sophisticated Investors onto a new platform
to create a conducive marketplace for fund raising. The LEAP Market provides an efficient and transparent capital formation
and price discovery mechanisms compared to private market. Sophisticated Investors can now have greater opportunities
to participate in the growth of SMEs in Malaysia.
The establishment of the LEAP Market is premised on the following key guiding principles:
Cost-efficient fundraising & listing
Appropriate rules and regulation based on intended SMEs and companies
Qualified Market for Sophisticated Investors
The changes are part of the SC’s on-going efforts to ensure that regulations and guidelines remain relevant and effective
with balanced regulation to ensure the risk associated is proportionately addressed.
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No. Market Name of
Organization
Specific Measures introduced / Implemented for the Securities Market
In order to enable more confident and informed retail participation in the capital market, SC had launched Peer-to-Peer
financing to ease raising of funds. In addition, InvestSmartTM, a comprehensive investment literacy outreach campaign
under the SC’s Investor Empowerment initiative was launched since June 2014. InvestSmartTM aims to provide the public,
particularly the next generation of investors, with valuable investment information, presented in a simplified format through
new technology and multimedia platforms, which will supplement existing investor education channels.
12 Mongolia MASD Strengthening MASD as a Self-Regulatory Organization: collaborating and negotiating with the FRC on transfer of
some rights and responsibilities such as accreditation of professionals, monitoring of member firms; promoting MASD
among the market participants and taking part in policy development whenever possible;
Promoting the securities market among the public through organizing conferences, workshops and training;
Initiating the signing of MoU by the market participants (exchanges, central depository and clearing house) in order
to promote collaboration and foster sound market development.
Improving the qualification training course
Privatization of state-owned enterprises through the MSE
13 Myanmar SECM There are plans to set up a special promoting team to find the potential listed companies. First, we will conduct the DICA
to get the updated lists of Companies and conduct with UMFCCI to make a seminar for sharing knowledge of IPOs in stock
exchanges and encourage companies to become listed in the stock exchange. Then we will request to submit the audited
report from some public companies which have over 100 shareholders.
14 Nepal SEBON Allowing easier access to the market depth;
Introduction of over the counter market;
Compulsory dematerialization of accounts; and
Make direct deposits in investors’ bank accounts for refunding and distributing dividends.
15 Singapore SAS In Nov 2017, the SGX shall reinstate lunch break for the stock market in Singapore after this was removed in 2011. In
addition, SGX is making a number of other changes to the equities market structure.
The minimum bid size (MBS) for securities in the S$1.00 to S$1.99 price range, has shown the biggest decline in traded
value and has the lowest level of retail participation in recent years, will go up to S$0.01 from the current S$0.005. SGX
will also widen the forced order range (FOR) for relevant securities to +/- 30 ticks from +/- 20 ticks.
16 Sri Lanka SECSL 1. Facilitated the implementation of a Central Counter Party (CCP) mechanism.
2. Facilitated the implementation of a Broker Back Office (BBO) & Order Management System (OMS).
3. Facilitated the demutualisation of the CSE.
4. Initiatives to develop the Corporate Bond Market
Proposed and facilitated bringing withholding tax on corporate bonds in line with government Securities via the Budget
2010.
Proposed and facilitated the complete removal of withholding tax on corporate bonds through the Budget 2012. As a
result, the impetus for the corporate bond market growth was provided. Accordingly, the amount raised via corporate
bonds remained as Rs.68.3bn(2013), Rs.54.2bn(2014), Rs.83.4bn(2015) and Rs. 77.9 bn(2016).
Formulated a policy paper jointly with Colombo Stock Exchange (CSE) and the industry input to widen the breadth
and depth of the market. Key policy decisions/initiatives included;
Approval for Primary Dealers (PDs) and other market intermediaries to engage in corporate debt trading;
Streamlining issuing process and listing requirements at the CSE;
Finalising eligibility criteria for brokering and dealing in corporate debt securities including SEC qualification
framework which was included in the CSE Member rules;
Improving the reporting infrastructure for better information dissemination at the CSE;
Imposing a minimum subscription ceiling of Rs.10,000 to enable retail participation in the corporate bond
market;
Expanding awareness building activities on corporate bond market.
5. Facilitated the introduction of an Initial Public Offering (IPO) preferential share allocation mechanism for retail
investors and Unit Trusts.
Relaxation provided under Gazette No. 1704/18 (20th May 2011) enabling private funds to have a maximum 20%
exposure to listed securities is applicable to unit trusts as well.
6. Enabled inclusion of unit trusts that invest exclusively in Government Securities within the definition of 'Government
Securities’ for the purposes of calculating Statutory Liquid Assets by Licensed Commercial Banks and Licensed
Specialised Banks (Directive 02/17/500/0540/001 dated 05th April 2013)
7. Mandated listing of voting shares of Registered Finance Companies (RFCs).
8. Enabled listed companies to release Annual Reports in CD form.
9. Facilitated provisions for voice recording of broker dealings under section 3.2 of the new CSE Stock Broker Rules,
which were effective from August 2012.
17 Taiwan TSA 1. Expansion of the Scope of Securities Eligible for Day Trading: To facilitate the use of trading strategies by
investors, the FSC announced that it would expand the scope of securities that may be traded in day trading, with a
scheduled implementation date of 21 November 2016. In addition to the currently available component stocks of the
Taiwan 50 Index, Taiwan Mid-Cap 100 Index, and TPEx 50 Index, securities that are eligible to underlie call (put)
warrant issues, and securities eligible for margin purchases and short sales, the new rule additionally allows day
trading of securities eligible for securities borrowing and lending transactions.
2. Deregulation of Brokerage Trading of Foreign ETFs by Securities Firms for Non-Professional Investors: To
satisfy demand by non-professional investors for more flexible asset allocation, and to bring investors under the
protection of the Financial Consumer Protection Act and foster the development of securities firm business, the FSC
issued Order No. FinancialSupervisory-Securities-Firms-1060003019 on 19 April 2017, which deregulates brokerage
trading of foreign ETFs by securities firms for non-professional investors. Under the order, non-professional
investors, when meeting specific qualifying requirements, may place brokerage orders for leveraged ETFs not
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Specific Measures introduced / Implemented for the Securities Market
exceeding 2x and inverse/short ETFs not exceeding 1x.
3. Amendment to Provisions Regarding Borrowing and Lending of Securities by Offshore Foreign Institutional
Investors: In keeping with its policy to expand the scope of traders eligible to participate in the Taiwan Stock
Exchange’s securities borrowing and lending (SBL) system, to promote greater consistency and liquidity in the
securities borrowing and lending market, the FSC issued Order No. Financial-Supervisory-Securities-Firms-
1060004899 on 15 March 2017. Whereas formerly only specific types of offshore foreign institutional investors
were permitted to borrow and lend securities through the SBL system, the order now permits offshore foreign
institutional investors of all types to borrow securities through the SBL system.
18 Thailand 1 ASCO 1. SEC regulation revision to support the securities market
Establishment of equity-based crowdfunding regulation
SEC announced the equity-based crowdfunding regulations to allow public limited companies and limited
companies to raise funds through crowdfunding portals approved by the SEC. The crowdfunding portals will review
and monitor fundraising companies with requirements such as information disclosure. For investors, they must
become members of the crowdfunding portals to gain access to share offering information and, prior to making
investment, must pass knowledge tests on the risks associated with the investment. In order to limit risk exposure,
the retail investor is allowed to buy shares at the maximum amount of THB 50,000 per company and the total
purchase not over THB 500,000 during the 12 month-period.
Debt securities offerings process
SEC eased the process to facilitate debt securities offerings. An approval of two year program will be introduced
under the revised regulations enabling the issuer to make several offers for sale of debt securities by simply filing
securities’ features. The additional information is required in case of the event affecting investment decision making.
Nonetheless, the issuer must maintain its qualifications and compliance with approval conditions as well as
disclosure requirements all through the program.
Relaxing the minimum requirement for paid-up capital rule
SEC proposed amendment to the paid-up capital rules to mitigate the barrier to entry to support the development of
new business that make use of financial innovations, such as the operator who seeks to service by online/algorithm
trade only or use Robo-advisor. Pursuant to the current rules, the paid-up registered capital of securities and
derivatives business operators determined by the license package. For example, Type A Securities Business License
requires the minimum paid-up capital of 500 million baht for undertaking the following businesses – brokerage,
dealing and underwriting of securities, investment advisory. As a result, any intermediary wishing to operate only
brokerage business would have to meet the high minimum paid-up capital rule despite its own low risk exposure.
The proposed paid-up capital is 100 million baht each for dealing and underwriting of securities license.
The digital listing services (Digital IPO)
SEC has coordinated with SET to launch digital listing services (Digital IPO), enabling all new securities (IPO, IFF,
REIT, and ETF) to be listed via electronic system, starting from January 25, 2016. The issuers could submit listing
and public offering applications to the SEC and SET through one-stop digital services.
2. SET infrastructure development to support the capital market
FundConnext and Settrade Streaming for Fund
SET—in cooperation with capital market partners, the SEC and business operators—launched FundConnext to
increase opportunities for investors to invest in mutual funds with more convenience. This project was developed
in 2016, and was ready to operate in Q3/2017. Currently, five asset management companies and three securities
companies are utilizing the system. SET is currently working with stakeholders including banks, insurance
companies, and unit investment trusts for more services to come. In addition, SET has developed Settrade Streaming
for Fund, an application to support fund trading for investors.
T+2 Settlement cycle
SET has set the target date to move toward T+2 settlement cycle from the current T+3 on March 2, 2018. The
research and discussion process with all of the stakeholders have already been settled. T+2 settlement cycle will
reduce risk exposure and operation costs. T+2 settlement cycle will also increase the chance and make it more
convenient for cross-border portfolio investment.
3. ASCO Regulation formation and review
ASCO continues to coordinate closely with regulators in supervising and monitoring business conduct of members.
ASCO issued and reviewed the securities business code of ethics for ASCO members, along with several notifications
and guidelines to enhance the effectiveness for members.
ASCO Notification on securities transfer: this regulation was developed to set a standard of securities transfer for
internal control. The regulation aims to protect customer assets, minimize fraudulent activities and avoid
exploitation of nominee accounts.
Operating guidelines for receiving money from customers: this guideline was developed to minimize fraud cases
of false claims of money transferred from customers.
19 Thailand 2 ThaiBMA 1. ThaiBMA launched the Code of Conduct for Quotations to ensure that no one can manipulate bond yields. In effect,
the process of yield quotation must be inspected before submitting to ThaiBMA to derive the Government Bond Yield
Curve. There are 3 persons included in this process: Submitter, Checker and Reviewer.
2. ThaiBMA proposed the Bond Consolidation method to The Public Debt Management Office (PDMO) as a tool for
managing the public debt.
3. ThaiBMA proposed Standard Practices for bond investment to the Office of Insurance Commission (OIC) for
insurance companies.
4. ThaiBMA launched “ThaiBMA in Focus” on its website for monitoring bond trading, especially fund flows, in case
of emergency situations.
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Specific Measures introduced / Implemented for the Securities Market
5. ThaiBMA initiated the major revision of the standardized terms and conditions for bond issuance after it has been used
for 15 years without official review.
20 Turkey TCMA The regulation regarding forex transactions was revised in February 2017 to reduce the maximum allowed leverage ratio to
10:1. Prior to this change, the maximum leverage was 50:1 for investors with less than TL 20,000 margin deposit for EUR
and USD denominated transactions, and 25:1 for the other currencies. In addition to the leverage cap, the required margin
deposit was raised to TL 50,000 from TL 20,000.
21 Uzbekistan CSM “Programme of measures for fundamental improvement of the corporate governance system” approved by Decree of
President of Uzbekistan dated 24.04.2015 #PD-4720, envisages carrying out following measures:
Application of modern methods of corporate governance based on an in-depth study of international experience;
Creation of favorable conditions to attract foreign investments into joint-stock companies, raise the openness and
transparency of joint-stock companies’ activity, as well as introduce international accounting and reporting
practices;
Clear separation of tasks and authorities between state bodies, shareholders and management in the activities of
joint-stock companies;
Increase the role of shareholders, including minority shareholders, in strategic management and ensuring control
over activities of joint-stock companies;
Introduction of modern information technologies in corporate governance;
Further development of the securities market, especially the secondary market, and the strengthening of its
information and technical base;
Training and professional development of personnel in the sphere of corporate governance.
22 Vietnam VASB According to the Financial Sector Development Strategy undertaken until 2020:
Bond market:
- The primary government bond market is proposed to be supported by a predictable pre-announced debt auctions and a
coordination mechanism for debt issuance between the SBV and Treasury.
- Foundations for market makers in the secondary market and a primary dealer system are proposed to develop, such as
two-way quotations and letters of authorization to traders who engage in bond trading, infrastructure required for bond
trading.
- To stimulate demand, the policies are proposed for voluntary supplementary pension funds to make long-term
investments in the bond market and encourage bond purchases by the deposit insurance fund, social security fund,
insurance companies, investment funds
- To allow the use of government bonds for reserve requirements of commercial banks.
- To improve IT infrastructures to provide more secure and efficient procurement, registration, custody and listing of
government bonds.
- To develop different sets of conditions for private placement of corporate bonds and initial public offering of corporate
bonds.
- To diversify product offerings
Stock market:
- To increase the depth and liquidity of the stock market by diversifying the investor base and increasing stock market
capitalization to 70% of GDP by 2020.
- To improve the effectiveness of the market by consolidating into a single stock exchange, which is scheduled in 2017
- To reinforce the managerial, supervisory and surveillance capabilities of the regulatory agencies
- To amend the Securities Law, applying international standards on information disclosure and corporate governance
23 Vietnam VBMA - More frequent dialogues between regulators and market participants
- Bond future will be launched in the first quarter of next year
- Decree 90/2011/ND-CP dated 14/10/2011 on corporate bond issuance is in the process of amendment
- GMRA prepared by VBMA and ADB will help to develop the REPO market
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V – 5. Measures to Invite Foreign Investment (De-regulation, Promotion Activities, etc.)
No. Market Name of
Organization
Measures to Invite Foreign Investment (De-regulation, Promotion Activities, etc.)
1 Asian Region ASIFMA 1. Passporting of various types of licensing across jurisdictions
2. Eliminate or add flexibility to rules governing use of offshore processing hubs in the region
3. More reasonable capital requirements for financial service entities in line with risk
4. Allowing international clearing/settlement of domestic bond issues, thereby providing greater convenience for
international investors to access local markets
5. Removal of capital controls, facilitating easy remittance into and repatriation out of local markets.
6. More transparency in rules and regulations (including English translations)
7. More consultation with industry before formulating and introducing new rules and regulations
8. Longer notice periods before introducing new rules and regulations
9. Adoption of best-practices in corporate governance
10. Rigorous cost-benefit analyses for new rules and regulations
11. More streamlined licensing processes in some jurisdictions
2 Bangladesh BSEC
3 Cambodia SECC - Providing incentives like tax exemption (WHT) on dividends for foreign investors
- Amending Prakas on Public Issuance of Equity Securities to reduce some requirements
- Amending Prakas on the Implementation of Listing Rules to reduce some requirements
- Conducting seminars and workshops to the public and establishing an elite group of potential listed companies.
4 Hong Kong HKSA 1. Adoption of Fintech- Certification authorities outside Hong Kong whose electronic signature certificates (“recognised
signing certificates”) have obtained mutual recognition status accepted by the HKSAR government and the electronic
signatures generated by these recognised signing certificates shall have the same legal status as that of handwritten
signatures within the applicable scope of the ETO in Hong Kong. The SFC considers that the use of the certification
services provided by such certification authorities outside Hong Kong could be accepted for client identity verification.
2. SFC is in the final stages of adapting our suitability requirement for product sales in the online world, including
implementation of automated funding platforms and automated advices.
3. A new corporate structure for funds – open-ended fund company which enables firms to take advantage of new market
access arrangements simply by choosing this way of domiciling in Hong Kong.
5 India 1 ANMI - Recently Government of India relaxed the Foreign Direct Investment (FDI) regulations in key sectors like Pharma,
Defence, and Aviation.
- The Government of India has approved 100 per cent of FDI in other financial services carried out by non-banking
finance companies (NBFCs), which is expected to attract more foreign capital into the country.
- The National Highways Authority of India (NHAI) plans to offer a risk cover to foreign investors who are willing to
invest in government owned operational national highways, which would cover risk associated with the possibility of
structural design fault, sub-standard quality of construction, and loss of traffic.
- The Union Cabinet has approved a scheme allowing the grant of Permanent Residency Status (PRS) to foreign
investors based on a minimum investment of Rs 10 crore (US$ 1.5 million) within 18 months or Rs 25 crore (US$ 3.6
million) within 36 months, which is expected to encourage foreign investment and facilitate the Make in India
programme.
- The Department of Industrial Policy and Promotion (DIPP) has allowed 100 per cent foreign direct investment (FDI)
in asset reconstruction companies (ARC) under automatic route, which will help to tackle the issue of declining asset
quality of banks.
- The Government of India has amended the FDI policy regarding Construction Development Sector. The amended
policy includes easing of area restriction norms, reduction of minimum capitalization and easy exit from project.
Further, in order to provide a boost to low cost affordable housing, it has indicated that conditions of area restriction
and minimum capitalization will not apply to cases committing 30 per cent of the project cost towards affordable
housing.
- The government has also raised the FDI cap in insurance from 26 per cent to 49 per cent through a notification issued
by the DIPP. The limit is composite in nature as it includes foreign investment in the form of foreign portfolio
investment, foreign institutional investment, qualified foreign investment, foreign venture capital investment, and non-
resident investment.
- The Government's Make in India campaign has attracted investment across sectors from various Chinese companies,
as is evident from cumulative Foreign Direct Investment (FDI) inflows of Rs 9,933.87 crore (US$ 1.54 billion) between
2014 and December 2016.
- The Government of India is likely to allow 100 per cent foreign direct investment (FDI) in cash and ATM management
companies, since they are not required to comply with the Private Securities Agencies Regulations Act (PSARA).
- The Government of India plans to scrap the Foreign Investment Promotion Board (FIPB), which would enable the
foreign investment proposals requiring government approval to be cleared by the ministries concerned, and thereby
improve the ease of doing business in the country.
- The Central Board of Direct Taxes (CBDT) has exempted employee stock options (ESOPs), foreign direct investment
(FDI) and court-approved transactions from the long term capital gains (LTCG) tax, under the Finance Act 2017.
- India and Japan have joined hands for infrastructure development in India's north-eastern states and are also setting up
an India-Japan Coordination Forum for Development of North East to undertake strategic infrastructure projects in the
northeast.
- The Government of India is in talks with stakeholders to further ease foreign direct investment (FDI) in defence under
the automatic route to 51 per cent from the current 49 per cent, in order to give a boost to the Make in India initiative
and to generate employment.
6 India 2 BBF Ease of doing business.
Welcoming foreign individuals along with institutions.
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Organization
Measures to Invite Foreign Investment (De-regulation, Promotion Activities, etc.)
7 Indonesia APEI Lower price spreads to lower the impact of increasing or decreasing share prices.
Continuing effort to achieve Investment Grade status for the Country (FITCH Rating Agency).
Promoting the Capital Market Industry through various International Expos and Events.
System upgrades of the infrastructure systems to increase stability, safety and efficiency.
8 Japan JSDA The JSDA has regularly been holding the “Japan Securities Summit” since 2008 in many of the world financial centers
including London, New York, Hong Kong and Singapore to promote the benefit of the Japanese capital market and to
promote foreign securities investment into Japan.
In addition to the case of Japanese public bonds, overseas investors are exempt from withholding tax on Japanese
corporate bonds for eternity (this preference measure is called “J-BIEM”).
Japan is now leading the discussion of ASEAN+3 Bond Market Forum (under ABMI) in order to facilitate the cross-
border issuance of and investment into the bonds in the region by standardizing and harmonizing the market rules,
practices and infrastructures.
9 Korea KOFIA N/A
10 Laos LSCO 1. Currently, LSCO is encouraging the financial institutions to provide custody services in order to facilitate the
investment of foreign investors;
2. Foreign securities firms are permitted to be a selling agent of a local securities company to attract more foreign
investors;
3. LSCO together with LSX and the market participants have organized the Investment Promotion Campaign to enhance
securities investment for potential local and foreign, both individual and institutional investors to participate in such
events;
4. Granting a reducation of corporate tax of listed companies by 5% of normal rate (24%)for the period of four years as
from the date of listing in the LSX;
5. Exempting capital gains tax of individual and institutional investors;
6. Exempting dividend tax of listed companies;
7. Extending the ratio of foreign investors holding limited in listed companies;
8. LSX has been changed trading limitation from 1 hsare to 100 shares per a trading lot;
9. LSCO had issued The Regulation on Non-Prefunded for securities subscription which will allow institutional investors
to place their buy orders without placing full amount of deposit;
10. LSX has a plan to extend the daily close trading time from 11:30 AM to 13:30 PM in the near future.
11 Malaysia ASCM To profile our PLCs and elevate the Malaysian Capital Market internationally, the industry has been entering a collaboration
arrangement between Bursa Malaysia and Saudi Stock Exchange in order to develop cross border activities in capital market
development. The two Exchanges will set off collaborative discussions towards enhancing financial and economic linkages
between Malaysia and Saudi Arabia in the Islamic market, which will enable both exchanges to share knowledge and
expertise, open the door for people development, and explore future opportunities. The collaboration with Tadawul is also
expected to facilitate cross border development in the Islamic financial markets and to further strengthen our global presence
which will create and provide an environment that will enable global industry players to take advantage of the innovation
and expertise that emanate from Malaysia's Islamic finance marketplace.
In an effort to invigorate the activities on Bursa Malaysia and simultaneously attract investments by foreigners and locals,
the stock market will be further liberalised and measures adopted to increase efficiency. In this respect, the government
commits to undertake the following :
Foreigners will be allowed to set up wholly owned companies which undertake corporate finance and financial
planning activities in Malaysia. This represents a liberalisation from the present requirement of at least 30% local
shareholding in such companies.
12 Mongolia MASD Need to develop long-term strategy and advocate with the policy makers. Currently, it may be said that the market is
not very friendly to the investors.
13 Myanmar SECM There have still been challenges for foreign investors to trade at YSX even after amending the Myanmar Companies Act.
The New Companies Act would enable foreign investors to hold a Myanmar company's shares with the ratio up to a
certain percentage. This means some Joint Venture companies could become Myanmar Companies. However, business
operations of Myanmar Companies with foreign shareholders may still be under some restrictions of relevant regulations
and commercial practices. That could keep foreign investors away from Myanmar.
14 Nepal SEBON Mutual Fund Regulation, 2067 has provided for the authority to launch mutual funds schemes for the companies owned by
Non Residential Nepalese (NRNs). To invest in the securities market the Government has theoretically accepted the
investment of NRNs and policy formulation regarding this issue is underway.
15 Singapore SAS ASEAN Link is an intra-ASEAN connectivity platform to create greater ASEAN investment mobility amongst investors.
This would increase the efficiency of trading, paying and transferring of securities as well as market data distribution.
Investors can trade securities through their local broking partners just like how you would Thai securities.
ASEAN Link connects the exchanges systems in ASEAN, using an Inter-Connected Exchange Hub as the gateway in
order routing and market data distribution.
ASEAN Link is a collaboration of seven exchange markets from Indonesia, Malaysia, Philippines, Singapore, Thailand,
Ho Chi Minh and Hanoi. The collaboration aims to promote the development of ASEAN as an asset class by streamlining
ASEAN access, introducing cross-border harmonization and creating ASEAN centric products. The ASEAN Link
collaboration will bring greater investment opportunities to more people as well as bring greater liquidity to collaboration
members.
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Measures to Invite Foreign Investment (De-regulation, Promotion Activities, etc.)
SGX has also expanded membership on the securities market to foreign based brokers abroad. These brokers, regarded as
remote trading members will observe their home rules and trade only for foreign investors. This is another means to
attract cross border investments and expand the pool of international participation. It will allow foreign investors to deal
into the Singapore markets with greater convenience and ease, which will lead to increased liquidity in the Singapore
market.
16 Sri Lanka SECSL The following investor forums were organized in partnership with the CSE;
The Mumbai investor forum - 21st Feb 2013
Two investor forums in Dubai, United Arab Emirates (UAE)
Investor forum for Sri Lankan Diaspora - 1st June 2013
Investor forum for Fund Managers based in Dubai - 3rd June 2013
The Hong Kong investor forum - 9th September 2013
Singapore investor forum -21st January 2014
The London investor forum - 30th May 2014
The New York investor forum - 4th September 2014
The New York investor forum – 19th October 2017
The SEC in collaboration with the CSE hosted the Capital Market Conference on 9th October 2014.
Enabled relaxation of restrictions placed on foreign investments in unit trusts that invested in Government
securities through a Gazette Notice dated 18th August 2011.
17 Taiwan TSA Tax treaties are also known as Agreements for the Avoidance of Double Taxation and the Prevention of Fiscal Evasion with
respect to Taxes on Income (abbreviated as ADTAs). In order to reduce barriers to international investment, trade and
cultural exchanges, countries enter into treaties in a reciprocal way with the aim of achieving the aforesaid goals by reducing
double taxation, preventing tax evasion and encouraging cross border trade and investment.
http://www.mof.gov.tw/Eng/Detail/Index?nodeid=264&pid=57796#1.%20Brief%20Introduction%20to%20Tax%20Treati
es
18 Thailand1 ASCO The stock market stakeholders have joined hands with the broker members as well as overseas partners to host the SET
Roadshows in major cities around the world throughout the year. In the events, hundreds of meetings were arranged,
presenting Thai listed companies’ strengths and the Thai economy’s potential growth.
SET also provided new trading system – SET Connect – to strengthen the capability to accommodate the expected market
and business growth in both trading volume and value. It can also support new financial products in a speedier manner and
is capable of handling multi-currency trading through the “FIX Protocol” which allows more convenient linkage with other
securities markets. In addition, SET announced its linkage with the Bursa Malaysia and Singapore Stock Exchange through
the ASEAN Trading Link on October 15, 2012. This allows a single access point for investors. The stock exchanges in
seven ASEAN countries announced the launch of an upgraded website www.aseanexchanges.org, where information related
to ASEAN stock exchanges, share prices and analyses were consolidated at one place.
19 Thailand 2 ThaiBMA Euroclear accepted the following Thai securities in the Euroclear Bank: SOE bonds, corporate bonds, shares, and
warrants. The effective date was December 11, 2015.
20 Turkey TCMA N/A
21 Uzbekistan CSM Art. 4 of Resolution of the President of Uzbekistan “On additional measures on attraction of foreign investors to joint-stock
companies” dated December 21, 2015 #PR-2454 envisages extension of the allowed share of foreign investors on joint-
stock companies, from 15 to 33 percent of the authorized capital, tax privileges for corporate income, property, infrastructure
and development of social infrastructure, a single tax payment, as well as mandatory contributions to the Republican Road
Fund. It is also granted to enterprises with foreign investment by the Decree of the President of Uzbekistan dated April 11,
2005 #PD-3594, depending on the volume of foreign investments made.
Also, according to Art. 5 of the Resolution, it is expected that the following shall be exempted:
income of foreign investors in the form of dividends on shares owned by them in joint-stock companies from taxation
for the period until January 1, 2020;
joint-stock companies with foreign investments from payment of state levies during making a claim to the courts on
violation of their rights and legitimate interests, followed by its refund from a party found guilty by an appropriate
court decision.
In 2016, the Korea exchange (KRX) implemented an IT Complex for trading in exchange for shares of 25 percent minus 1
stock at RSE “Toshkent”.
22 Vietnam1 VASB - To develop the legal framework to eliminate obstacles to foreign investment with 2015 Law on Enterprises and
Law on Investment (with effect from July 2015) and the government Decree No.60/2015/ND-CP on foreign
ownership in public companies (with effect from 1st September 2015):
The number of prohibited or restricted sectors was significantly reduced from 51 businesses to only 6 and
the number of conditional businesses was also reduced from the previous 386 to 267.
Allowing foreign investors to own up to 100% in public companies; to make unlimited investment in
government bonds, bonds guaranteed by the government, municipal bonds and corporate bonds. Foreign
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Organization
Measures to Invite Foreign Investment (De-regulation, Promotion Activities, etc.)
investors may also invest without restrictions in securities investment fund certificates, shares of securities
investment companies, non-voting shares of public companies, derivatives securities.
Reducing red tape in the foreign investment approval process and investment process: enterprises do not
have to list their line of businesses in business license registration
Bringing corporate governance rules closer to international standards: to establish a more transparent
environment where corporate information will be more easily available to potential investors. All
companies are required to make general corporate information publicly available. The new Law on
Enterprises has aligned the board decision making rules to international standards with the required
majority for carrying ordinary and special resolutions reduced to 51% and 65% from the previous 65%
and 75% respectively.
Regarding the restructuring of the commodity base, Decree 60 supplements provisions on (i) covered
warrants; (ii) real estate investment funds; (iii) overseas offering and listing of fund certificates
- To apply internationally accepted accounting standards
- To improve the depth and openness of the market: market capitalization, liquidity, numbers of large cap companies,
capital control in order to be upgraded to a developing market from the current status of a frontier market.
- To accelerate the SOEs equitization process in order to offers more choices of large cap companies
23 Vietnam2 VBMA - Develop derivative markets for hedging: VND/FX option, bond future (planned for 2017)
- Exempt withholding tax on interest income for Government bond investments by foreign investors.
- Roadshow, PR, marketing trip to have an open dialogue with Foreign Investors.