MARKET HIGHLIGHTS - Bursa Malaysia Berhadbursa.listedcompany.com/newsroom/BursaBytes_4Q09.pdf · brokers to connect their clients directly to Bursa Malaysia’s trading ... there

Issue 4 Vol 1 Jan 2010

www.bursamalaysia.com

NOTE FROM THE EDITOR

Bursa Malaysia Ushers in First Foreign Listings, and saw the Biggest Listing in SEA This YearMARKET HIGHLIGHTS

Over the past years, significant efforts have been put into internationalising the Malaysian market to create greater global relevance for both issuers and investors. With reforms such as the deregulation of the FIC guidelines and the restructuring of the boards earlier this year, Bursa Malaysia’s aim to attract foreign listings has already begun to show results.

Bursa Malaysia welcomed its first foreign listings with Xingquan International Sports Holdings Limited, followed later by Multi Sports Holdings Limited and XiDeLang Holdings Limited.

In November, Bursa Malaysia also saw South East Asia’s biggest listing to date, with Maxis Berhad, on the Main Market - a move that is set to create a more vibrant and dynamic capital market. It signifies that the Malaysian capital market continues to be relevant and attractive to large companies.

Overall, there were a total of 14 listings on the Exchange this year. With a balanced post listing obligation regime, a robust

regulatory framework, as well as investor friendly market approach, we look forward to attracting more interest from global and larger market issuers to list on Bursa Malaysia as their listing destination.

YABhg Tun Dzaiddin presenting a listing plaque to the Chairman of Maxis, YM Raja Tan Sri Arshad Raja Tun Uda and witnessed by the MOF II,

YB Dato’ Seri Ahmad Husni Mohamad Hanadzlah

Welcome to our fourth quarter edition of Bursa Bytes, our wrap up issue for 2009 – an interesting year that saw many changes taking place in the financial world as a result of the global financial crisis. Throughout the year, Bursa Malaysia also embraced the spirit of change, having introduced a series of progressive measures to improve accessibility and efficiency in our markets.

The last quarter saw us achieving very meaningful milestones that are highlighted in this issue of Bursa Bytes. Our commitment to building Islamic Markets has yielded positive results as Bursa Malaysia topped the world’s exchanges in terms of value of sukuk programme listings in 2009, recording a total of RM17.6 billion. The positive response from market participants has underscored Malaysia’s position as a hub for Islamic Finance and Investment.

Also, in November, the Exchange launched Direct Market Access (DMA) for equities. The new technology reduces latency significantly and provides investors with more efficient access to Bursa Malaysia. In addition, DMA has the ability to support algorithmic trading, a phenomenon which has led to a transformation in trading across the United States and in Europe.

Additionally, as a result of our efforts over the past year, in the final quarter of the year we bagged four awards. These included two awards from the Minority Shareholder Watchdog Group (MSWG)’s Corporate Governance Index 2009 Overall Excellence Award and Best Governance and Transparency Index; the Futures & Options World (FOW) Awards 2009’s Best Innovation by An Exchange under the category of Customer Service for South and Southeast Asia and Australasia for our Direct Market Access (DMA) for derivatives trading; and the Kuala Lumpur Islamic Finance Forum (KLIFF)’s Islamic Finance Awards 2009’s Most Outstanding Islamic Finance Product for Bursa Suq Al-Sila’.

We certainly hope that this issue of Bursa Bytes will be able to illustrate the momentum that we have been keeping at the Exchange while at the same time informing you on the latest happenings.

We would like to take this opportunity to wish all of our readers a happy new year! For more information on our activities and initiatives, please log on to our website.

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ISLAMIC MARKETS

QATAr-BAhrAIn roAdShow

In the spirit of the new brand of the Malaysia International Islamic Financial Centre ( MIFC ) initiative “Shaping Islamic Finance Together”, a high-level regulator and banking delegation successfully completed a roadshow to Qatar and Bahrain in October 2009. Bursa Malaysia participated in the said roadshow covering sessions with regulators as well as in forums introducing Bursa Suq Al-Sila’ to the banking fraternity in both countries.

The aim of the roadshow was to promote Malaysia as an international hub for Islamic Finance and gateway to ASEAN. The roadshow was also aimed at fostering bilateral ties and cross border cooperation with the two countries, which are both established Islamic Finance markets.

SUkUk LISTIngS

Bursa Malaysia topped the world’s exchanges in terms of value of sukuk programme listings in 2009, recording a total of USD17.6 billion. Since its inaugural sukuk listing in August 2009, the Exchange listed 12 sukuk by end of December 2009 which contributed towards this development.

The first sukuk listing on Bursa Malaysia was registered in August 2009 with the inaugural US Dollar (USD) listing led by Petroliam Nasional Bhd (PETRONAS) Al-Ijarah Sukuk and Ringgit Malaysia (RM) listing by Cagamas MBS Bhd (Cagamas MBS) Islamic papers.

Bursa Malaysia was also accorded the honour of hosting its inaugural foreign sukuk listing for GE Capital’s 5-year USD500 million sukuk Al Ijarah on 30 November 2009.

krX-BUrSA MALAYSIA ISLAMIc cApITAL MArkET conFErEncE

Later in the year, the Korea Exchange and Bursa Malaysia hosted their first jointly organised Islamic Capital Market Conference in Seoul on 19 November 2009, to tap into the rapidly growing Islamic capital market in Korea. Islamic Finance is gaining acceptance in Korea and the government is making legislation to accommodate the industry.

About 180 Koreans attended the one day conference which was sponsored by the Korean financial regulator, the Financial Supervisory Commission (FSC) supported by the MIFC, the Securities Commission, International Centre for Education in Islamic Finance (INCEIF), RHB Islamic Bank, KFH Research House and Citigroup.

A number of Korean companies have expressed interest in issuing sukuk once changes in the laws come through by year end, which will provide promising opportunities for Malaysia as a premier global sukuk centre.

MIFc’S TrIp To AUSTrALIA

Bursa Malaysia also participated in MIFC’s roundtable regulator session in Sydney in December 2009 as well as a panel session with market players in the promotion of the MIFC initiative focusing on sukuk origination and listing.

BUrSA SUQ AL-SILA ’AwArd

Less than two months after its launch, Bursa Suq Al-Sila’, the world’s first Shari’ah compliant commodity trading platform, was awarded the Most Outstanding Islamic Finance Product by the Kuala Lumpur Islamic Finance Forum in its Islamic Finance Awards 2009. The platform’s viability was quickly demonstrated with cross-border trades being performed by several Islamic financial institutions.

Dato’ Yusli addressing participants at the KRX-Bursa Malaysia Islamic Capital Market Conference

The six-day visit to Qatar and Bahrain was led by Deputy Governor of BNM, Dato’ Mohd. Razif Abd. Kadir, under the patronage of HRH Raja Dr. Nazrin Shah, Financial Ambassador of the MIFC and Crown Prince of Perak

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DIRECT MARKET ACCESS

The announcement of the launch of Direct Market Access (DMA) for Equities on 9 November 2009 was a significant moment, marking the culmination of years of dedication to place the Exchange on par with its international competitors.

DMA is designed to enhance trading efficiency and accessibility, allowing market participants to enjoy greater control over their orders. It is a key development as it provides investors with “sponsored access,” allowing brokers to connect their clients directly to Bursa Malaysia’s trading system, without going through a brokers’ trading infrastructure.

In simpler terms, when an investor keys in an order via his broker, there is no manual intervention – the system routes the order directly to the Exchange after a process of checks and validations carried out by the DMA Gateway, which is hosted by the Exchange.

Initial phases

Bursa Malaysia’s journey towards DMA began in 2006, when it was decided that investing in DMA was fundamental to being competitive in our technology driven industry.

Since we understood the DMA implementation would have to be rolled out over a period of time, Bursa Malaysia took the first step in the larger DMA project by launching the ECOS gateway. The gateway, an enhancement of our Winscore System launched back in 1995, was developed to improve internet trading via our equity and derivative brokers.

The ECOS gateway enables Winscore to accept orders via the globally accepted Financial Information Exchange (FIX) messaging protocol. As a result, latency is reduced and more than 20 participating organisations are now using it for internet trading and inter-broking.

Launching dMA

In April 2008, Bursa Malaysia launched DMA Sponsored Access for derivatives, the first exchange in Asia to offer this service. The response from the investment community has been positive, with approximately 30% of all derivatives trading now being executed via DMA.

DMA derivatives was further endorsed when it was named Best Innovation by an Exchange by the Futures & Options World (FOW) Awards 2009 under the category of Customer Service, South and Southeast Asia and Australasia. This award recognised excellence in products and services innovation which have proved beneficial to the derivatives market.

Now Bursa Malaysia provides a complete DMA infrastructure for both the equities and derivatives markets.

The benefits of DMA:

Significantly reduces the time for orders to be sent and • matched from the previous average of three (3) seconds per transaction to a fraction of a second.

It is able to support algorithmic and block trading which • allows institutional investors greater control through using pre-determined order conditions.

Provides greater access to international investors • as Bursa Malaysia allows ‘Sponsored Access’ for institutional investors.

Enables market participants to connect their own trading • front-end to the FIX DMA Gateway.

Allows market participants to install their own servers in the Exchange’s data centre through the co-location hosting service where faster order management can be processed and there is lower latency when trading.

Broker order Management System (oMS)

DMA enables our Trading Participants to choose their own DMA OMS. This OMS can be developed in-house or as an off-the-shelf solution.

Please note that both solutions need to be approved by the Exchange.

how do our brokers manage their risk?The DMA Gateway, hosted at the Exchange and shared by our members contains pre-trade risk filters feature. This enables our members to manage client risk in real-time.

BUrSA MALAYSIA IMpLEMEnTS dMA For EQUITIES

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REGULATION

ForUM on FrS 139 ThEMEd “ThE chALLEngES oF IMpLEMEnTIng FrS 139”

Bursa Malaysia, in collaboration with established audit firms organised a series of forums on the Financial Reporting Standard 139 (FRS 139) to address the challenges associated with the implementation of the standard which came into effect on 1 January 2010.

The forums were organised as an initiative by Bursa Malaysia to assist and encourage companies to take the necessary steps to adequately prepare themselves in meeting the requirements of FRS 139 with respect to the preparation of financial statements for their respective companies.

Themed ‘The Challenges of Implementing FRS 139’, each forum was opened by Bursa Malaysia’s Chief Regulatory Officer who briefed the audience on the objectives of FRS139 and gave an overview of some of the issues that will arise from the implementation of the new standard. In total, three forums were held.

cApITAL AdEQUAcY rEQUIrEMEnTS & IMpLEMEnTATIon oF cEnTrALISEd ArMAdA

One of the initiatives undertaken by Bursa Malaysia in the 4th quarter of 2009 was the enhancements made in respect of the Capital Adequacy Requirements (CAR) and the implementation of the “Centralised ARMADA” system.

Enhancement to cAr

The changes made to the CAR relate to the computation of counterparty risk where such computation is now no longer based on the value of the securities at its closing price on a market day (mark to market value), but instead is based on the value of the contract for sale or purchase less the mark to market value (mark to market difference).

This mark to market difference is similar to unrealised gains or losses attributed when marking the contract against the market value at the close of the day. This will enable brokers

to identify and manage default risk more effectively and realistically as the settlement date draws near.

This is in line with international best practice which takes into account of the changes to the value of the underlying securities when making provision for computation of counterparty risk.

Implementation to centralised ArMAdA

An enhanced version of Automated Risk Management And Decision Making System (ARMADA) referred to as the “Centralised ARMADA” system was implemented which provides a more accurate means to measure the financial position of the brokers against market conditions thus enabling much quicker response time.

The rule amendments on the above enhancements took effect on 5 October 2009. For more details, please click here.

on-MArkET MArrIEd TrAnSAcTIon (oMMT) Another initiative undertaken by Bursa Malaysia in the fourth quarter of 2009 was the implementation of a facility to enable an On-Market Married Transaction (OMMT). An OMMT is a transaction where a broker matches a buy order to a sell order of the same price and quantity, by simultaneously entering and executing the buy and sell orders into Bursa Malaysia’s trading system between two clients of that broker or the broker and its client.

By executing an OMMT, a broker may fulfill a client’s order en-block without impacting the market because the order is not matched through the order book. However, unlike OTC trades, shares traded through an OMMT are counted as part of the on-market volume.

With the implementation of OMMT, Direct Business Transactions will no longer be accepted by Bursa Malaysia Securities Clearing Sdn Bhd to be cleared and settled as novated contracts.

Audit Committee Chairmen listening carefully to the presentation

Mr. Thong Foo Vung from KPMG explaining to the audience the implementation challenges of FRS 139

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REGULATION

The rule amendments for the implementation of the OMMT framework took effect on 26 October 2009. Further details can be found at R/R 15 of 2009 of Participating Organisations’ circular and rule amendments of Rules of Bursa Malaysia Securities Clearing.

oThEr rULE chAngE InITIATIVES

Expansion of Categories of Persons Who May Verify and Attest Securities Account Opening documents

With effect from 21 October 2009, Bursa Malaysia has expanded the categories of persons allowed to verify and to attest the signing of the client’s relevant securities account opening documentation. The categories of persons will now include authorised officers of a licensed bank or an Islamic Bank where the client holds an account. This will provide greater flexibility and ease for clients by enabling them to have their documentation verified by the new category of persons.

Further details can be found at R/R 16 of 2009 of Participating Organisations’ circular or rule amendments of Rules of Bursa Malaysia Depository.

commission Sharing Between Brokers and remisiers / dealer representatives

Effective 26 October 2009, Bursa Malaysia has liberalised the restriction on commission sharing between brokers and remisiers or dealer representatives. Remisiers or dealer representatives will receive at least 40% in commission of the brokerage charged by brokers to the clients introduced by that remisier or dealer representatives. With this initiative, Bursa Malaysia aims to achieve greater participation and growth of dealer representatives in the market.

Further details can be found here.

Enhancing Flexibility in doing Business

Effective 18 November 2009, the Rules of Bursa Malaysia Derivatives Bhd have been amended to provide Trading Participants’ (TP) with greater flexibility in doing business for their clients. The amendments are made in a move towards a less prescriptive approach in our rules.

For more details on the above rule amendments, kindly click here.

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SECURITIES

SECURITIES MARKET SNAPSHOT 4Q09

Foreign ownership Based on Market Value

SEcUrITIES MArkET As at 31 dec 2009

As at 31 dec 2008

FBMKLCI 1,273 877Market Capitalisation (RM billion) 999 664No. of PLCs 960 977No. of Listed REITs 12 13No. of Listed Call Warrants 137 48No. of Central Depository System (CDS) Accounts (million) 4 4No. of Securities Immobilised in CDS (billion shares) 457 414No. of Companies in CDS* 1,179 1,165* The number of companies in CDS comprises both listed and de-listed companies whose shares are being maintained in the CDS

4Q09 4Q08No. of Rights & Bonus Issues Credited into CDS 10 9No. of ROD Produced 3,515 3,853No. of New CDS Accounts Opened 60,242 32,456Daily Average Trading Volume – OMT & DBT (million shares) 915 610Daily Average Trading Volume – OMT (million shares) 844 562Daily Average Trading Value – OMT & DBT (RM million) 1,210 907Daily Average Trading Value – OMT (RM million) 1,099 854No. of New Listed Call Warrants 47 11No. of IPOs (including REITs) 8 5Total Fund Raised (RM billion) 14 0.18No. of Trading Days 63 60No. of Delisted Companies 5 9

For more market information, click on the following:

M ✽ arket StatisticCMDF - Bursa ✽Malaysia Research Scheme (CBRS)Listed Companie ✽ sTrading Participant by ✽Category of Investor

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SECURITIES

Market Velocity

FTSE Bursa Malaysia Index SeriesInformation Package:-

We also offer a wide range of products and services for our investing public. To learn more, kindly click on the following:

Investor ✽ InformationHistorical Informatio ✽ nBursa Statio ✽ n

8 | BursaBytes

DERIVATIVES

Volume (Total Market, FkLI, Fcpo)

open Interest (Total Market, FkLI, Fcpo)

Cir. No. 35/2009 Revised EFP ProceduresBursa Malaysia Derivatives Berhad has revised the Exchange for Physical (EFP) procedures which took effect from 16 October

Market demography (FkLI)

Market demography (Fcpo)

Cir. No. 38/2009 Amendments to RulesBursa Malaysia Derivatives Berhad has amended the Rules of Bursa Malaysia Derivatives to provide Trading Participants greater flexibility in relation to carrying on their business.

Summary of Circular IssuedDERIVATIVES MARKET SNAPSHOT 4Q09

Only the major circulars are featured above. To access circulars relating to regulatory issues, please click here. For other circulars, please click here.

Category 2007 2008 Oct 09

Nov 09

Dec 09

Foreign InstitutionsDomestic InstitutionsForeign RetailDomestic RetailLocalsProprietary

42%2%0%41%15%0%

37%2%0%46%15%0%

28%2%0%51%19%0%

28%3%0%50%19%0%

38%2%0%

45%15%0%

TOTAL 100% 100% 100% 100% 100%

Category 2007 2008 Oct 09

Nov 09

Dec 09

Foreign InstitutionsDomestic InstitutionsForeign RetailDomestic RetailLocalsProprietary

18%22%1%34%25%0%

20%15%1%38%27%0%

22%16%0%27%35%

0

19%16%0%27%38%0%

16%27%0%

24%33%0%

TOTAL 100% 100% 100% 100% 100%

STrATEgIc pArTnErShIp - cME groUp

Bursa Malaysia recently entered into a strategic partnership with the CME Group on 17 September 2009. It is a landmark initiative that will facilitate the development of the Malaysian Derivatives market.

The strategic partnership involves three collaborative aspects which include equity participation, technology partnership and licensing of Crude Palm Oil futures (FCPO) prices.

1. Equity participationThe CME Group has acquired 25% equity interest in Bursa Malaysia Derivatives Berhad (BMD). The new shareholding structure is as follows:

2. Technology partnershipCME will provide their GLOBEX services to BMD. All existing and future BMD products will be listed on CME’s GLOBEX trading platform. This will provide access to an established global distribution network.

3. Licensing of FCPO pricesBursa Malaysia Derivatives will license the FCPO settlement prices to the CME Group. This will strengthen Malaysia’s position as the global price benchmark for Crude Palm Oil.

FAQs/UPDATES

BUrSAMALAYSIA

cMEgroUp

BUrSA MALAYSIA

dErIVATIVES

75% 25%

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DERIVATIVES

Click here for more information about Bursa Malaysia’s derivatives products.

Benefits of Partnership• Establish global distribution channels• Access to high liquidity traders and market makers• Knowledge and skills transfer• Human capital development• Access to market best practices

Moving Forward

All BMD products will be listed on GLOBEX and will be accessible to anyone connected to the GLOBEX trading platform. Moreover all BMD products shall be cleared through BMD’s clearing participants. BMD’s trading participants will be connected directly to GLOBEX and will be able to trade CME’s products provided they have a clearing relationship with a CME Futures Comission Merchant (FCM) and subject to regulatory approvals.

INVESTING FOR BEGINNERS. LET US GUIDE YOU!Clueless about investing in the stock market? The answers to all your queries is just one click away, Investing in Bursa Malaysia.

Disclaimer: Bursa Malaysia does not make any recommendation or endorsement regarding any securities or derivatives products identified in this newsletter. Please seek the advice of professionals, as appropriate, in respect of the evaluation of any specific securities or derivatives product, index, report, opinion, advice or other content.

Whilst Bursa Malaysia endeavours to ensure that the contents in this newsletter are accurate, correct or have been obtained from sources believed by Bursa Malaysia to be accurate and reliable, please take notice that all information is provided on an “as is” basis without warranties of any kind and Bursa Malaysia hereby disclaims all express, implied and statutory warranties of any kind to the recipient of this newsletter and/or any third party.

In no event shall Bursa Malaysia be liable for any claim, howsoever arising, out of or in relation to this newsletter to the recipient of this newsletter and/or to any other third party.

Should you have any feedback or comments, kindly contact : [email protected]

For more derivatives information, click on the following:

Product ✽ sVolume & Open ✽InterestMarket Demograph ✽ yCircular ✽ s