Greater flow of funds in 2015

Greater flow of funds in 2015
Business & Markets 2013
Written by Lee Wen Ai of theedgemalaysia.com
Friday, 15 March 2013 09:19


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KUALA LUMPUR: The Securities Commission (SC) is preparing the platform for 2015 when the Asean capital markets are liberalised to pave the way for greater cross-border flow of funds.

SC chairman Datuk Ranjit Ajit Singh said the liberalisation of the Asean capital markets would create both opportunities and challenges for Malaysia as local funds and companies can tap into the regional markets while at the same time local investors can have exposure to markets in the region.

“The integrated capital markets will also provide companies more choices, with more investors located in Thailand, Indonesia and other markets. It will be easier for investors to have exposure into other Asean countries,” he said at a press conference to present the SC’s 2012 annual report.

For instance under the liberalised capital market scenario, local unit trusts can tap funds outside Malaysia compared to the present scenario where it has to depend on feeder funds. Likewise, companies can also avail their debt papers to investors in the region.

Regional funds and companies can also access Malaysian investors.

Ranjit said to ensure Malaysia benefits from the liberalisation, the SC has worked on improving its regulatory and disclosure standards.

Towards this end, the Malaysian capital markets were subjected to a Financial Sector Assessment Programme (FSAP) last year when the International Monetary Fund (IMF) and World Bank undertook an intense assessment.

The result was out last month and the Malaysian capital markets emerged with a score of 92%, the highest rating among countries that recently underwent a similar assessment.

Ranjit said he believed investors would eventually put money into a country that has the highest regulatory and disclosure standards.

“The independent assessment acknowledges the strong regulatory regime in Malaysia which has validated the SC’s approach to regulation that is appropriately benchmarked to global standards,” he said.

Last year, the SC also announced initiatives to set up several new platforms to cater to investors, among them being the mercantile exchange and a market for unlisted companies.

SC executive director for strategy and development Goh Ching Yin said they expected to finalise the framework for a market platform for unlisted shares by the end of this year while the proposal for a mercantile exchange will be finalised by the end of the second quarter.

“Currently, the SC is in the midst of finalising a conceptual framework that will be suitable for the unlisted market platform,” he said.

“The request for proposals will go out by the middle of this year to invite potential developers to submit proposals that will meet the requirement that we envisage.”
On the progress of the mercantile exchange, SC executive director of corporate finance and investment Eugene Wong said since last July, the SC had been working with stakeholders and the ministry of finance on the kind of mercantile exchange they want to set up.

“Setting up the mercantile exchange is very different from launching a business trust framework or a product,” he said.

“It requires a lot more consideration because of implications of setting up a new exchange. Therefore we will engage very widely and look at the experiences of other jurisdictions where they have succeeded.”

The objective of the mercantile exchange is to provide local investors with a platform to trade on commodities including precious metals such as gold.
To a question on when Malaysia will see the listing of a business trust since the guidelines are out, Ranjit said discussions are currently being held and he believes some submissions would be made this year.

Wong said they are already getting feedback from potential issuers and advisors. “The establishment of a business trust rests on a number of factors like pricing and yields,” he added.