Securities Commission is a general term used for a government department or agency responsible for financial regulation of securities products within a particular country. Its powers and responsibilities vary greatly from country to country, but generally cover the setting of rules as well as enforcing them for financial intermediaries and stock exchanges. The Securities Commission Malaysia (SC), is responsible for the regulation and development of capital markets in Malaysia. Established on 1 March 1993 under the Securities Commission Act 1993, it is a self-funding statutory body with investigative and enforcement powers. It reports to the Minister of Finance and its accounts are tabled in Parliament annually. The SC's many regulatory functions include: * Supervising exchanges, clearing houses and central depositories; * Registering authority for prospectuses of corporations other than unlisted recreational clubs; * Approving authority for corporate bond issues;
* Regulating all matters relating to securities and futures contracts; * Regulating the take-over and mergers of companies
* Regulating all matters relating to unit trust schemes; * Licensing and supervising all licensed persons;
* Encouraging self-regulation; and
* Ensuring proper conduct of market institutions and licensed persons. The SC's objective, as stated in its mission statement, is to promote and maintain fair, efficient, secure and transparent securities and futures markets and to facilitate the overall development of an innovative and competitive capital market. MALAYSIA CAPITAL MARKET
A capital market is a market for securities (debt or equity), where business enterprises (companies) and governments can raise long-term funds. It is defined as a market in which money is provided for periods longer than a year, as the raising of short-term funds takes place on other markets such as the money market). The capital market includes the stock market (equity securities) and the bond market (debt). Financial regulators, such as Securities Commission Malaysia (SC) oversee the capital markets in their designated jurisdictions to ensure that investors are protected against fraud, among other duties Capital markets may be classified as primary markets and secondary markets. In primary markets, new stock or bond issues are sold to investors via a mechanism known as underwriting. In the secondary markets, existing securities are sold and bought among investors or traders, usually on a securities exchange, over-the-counter, or elsewhere.
Role of Securities Commission in Malaysian Capital Market
The main role of securities commission is to regulate the Malaysian capital market by implementing Capital Markets and Services Act 2007(CMSA). This Act repeals the Securities Industry Act 1983 (SIA) and Futures Industry Act 1993(FIA). The CMSA which takes effect on 28 September 2007 introduces a single licensing regime for capital market intermediaries. Under this new regime, a capital market intermediary will only need one license to carry on business in any one or more of the following regulated activities such as dealing in securities, trading in futures contracts, fund management, advising on corporate finance, investment advice and financial planning. Licensing ensures an adequate level of investor protection, including the provision of sufficient safeguards to protect investors from default by market intermediaries or problems arising from the insolvency of such intermediaries. More importantly, it instills confidence among investors that the organizations and people they deal with will treat them fairly and are efficient, honest and financially sound. Through its authority to issue licenses, the SC regulates the market by ascertaining the fitness and propriety of companies and individuals applying for licenses. In considering whether an applicant is fit and proper to hold a license, the...