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▪ Capital markets are where savings and investments are channelled
between capital provider (surplus unit) and capital raiser ( deficit
unit).
▪ Capital provider - individual or institutions with capital to lend or
invest
▪ Capital raiser – companies or government
 CAPITAL
MARKET

EQUITY MARKET BOND MARKET

Preferred stock Government bond
Common stock Corporate bond
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 Companies Act 1965
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SIA 1983
• Replacement of SIA 1973
• Provides better control and supervision of the securities industry

SICDA 1991
• Give authority to the stock broking companies to provide CDS facilities to investors and to
ensure proper operation of this system

Securities Commission Act 1993

• Established the Securities Commission Malaysia that will streamline the legislation and
regulatory framework of the capital market
Securities Commission (SC)

Companies Commission of Malaysia

Bursa Malaysia Securities Berhad

Licensing Officer – Ministry of Finance (MOF)

Foreign Investment Committee (FIC)

Establish on March 1, 1993, under the Securities Commission Act 1993

To rationalise and streamline the legislation and regulatory framework of Malaysia capital market

Mission: promote and maintain fair, efficient, secure and transparent securities and futures market and to facilitate the orderly development of an
innovative and competitive capital market
Functions:

i. Advise the Minister of Finance

ii. Regulate all matters relating to securities and futures contracts

iii. Approving corporate bond issues

iv. Supervising and monitoring the activities of any exchange, clearing house and central depository

v. Promote and encourage proper conduct of members

vi. License and supervise licensed persons in the capital market

vii. Regulate takeover and mergers matters

viii. Encourage R&D to ensure products varieties and enhancement

ix. Consider and reform of law in the capital market

Previously known as Kuala Lumpur Stock Exchange (KLSE)

Incorporated on Dec 14, 1976, under Companies Act 1965

Self-regulatory organization with its own Memorandum and Articles of Association – to govern and
conduct

Functions:

• i. Provides a marketplace for transaction of securities

• ii. Provides a mechanism for determining the price of securities
• iii. Provides information on security price and volume of transaction
• iv. Provide a mechanism for raising funds by companies through issuing rights, warrants
and loan stocks
• v. Provide a mechanism for listing of new securities
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¨ the market in which new issues of securities are sold to the public

¨ A company issue a new share for the first time to the market.

¨ Allows a company or government to raise initial capital or additional fund to expand their operation or business

¨ Usually done by company issuing prospectus through underwriting stock broking company

¨ Embraces issues of debentures, preference share and notes as well as the equity securities of listed companies.

¨ Several ways used by companies to issue new shares:

1)Initial Public Offering (IPO)

2) Private Placement

3) Rights Offering

4) Sale shares to own employees

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A firm that act as middleman/intermediary
between the investor and the capital raiser
(company).

The consultant to the corporate clients on matters

pertaining to the sales of new securities and
funds arising.

Also acts as underwriters on the new issues of

shares (to guarantee the subscription of the new
shares issued by the company) - Received
underwriting commission
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Place where companies and
government can raise funds by issuing
private or government debt securities.

Bond- A long-term fixed income

security in which the issuer has agreed
to pay income payments for a specified
period and to repay the principal at
maturity to the bondholder.
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▪ The positions can be :

▪ Investors, supervisory body, lead or co-

arranger, underwriter, guarantors, principle
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dealers, trustee, registrar, authorised
▪ depository institutions, or paying agents.

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Act as intermediaries in the financial
▪ systems to provide facilities for investors to
invest or become investors to maximise
▪ return.
▪ Corporate bonds – Issued by
corporations/ companies
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▪ • Prices fluctuation
• Difficulty in determining
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the intrinsic value

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