1

(Compiled as of December 3, 2018)

9th COMPARATIVE ANALYSIS OF ASIAN SECURITIES REGULATORS & SROs

AND

MARKET CHARACTERISTICS

(Data and information provided by participating organizations of the 14th 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 14th 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. ESG/SDGs and the Securities Market

VI – 1. Government and/or Industry Initiatives to Promote ESG/SDGs Investment

VI – 2. Status of ESG/SDGs-related Market

VI. Challenges of Securities and Capital Market

VII – 1. Major Recent Incidents and/or Challenges in Securities and Capital Markets as a Whole

VII – 2. Specific Challenges in Equity Market

VII – 3. Specific Challenges in Bond Market

VII – 4. Specific Measures Introduced / Implemented for the Securities Market

VII – 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 Government

Regulator

Established by the Securities and Exchange

Commission Act (1993)

3 Cambodia Securities and Exchange Commission 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 Kazakhstan Astana International Financial Centre AIFC Government

Regulator

Established in accordance with the Constitutional

Statute of the Republic of Kazakhstan on the Astana

International Financial Center (No. 438-V ZRK of 7

December, 2015)

10 Korea Korea Financial Investment Association KOFIA SRO & Industry

Association

Established pursuant to Financial Investment

Services and Capital Markets Act

11 Laos Lao Securities Commission Office LSCO Government

Regulator

Established by Securities Law on Securities

No.21/NA (10 December 2012)

12 Malaysia Association of Stockbroking Companies

Malaysia

ASCM Industry Association Established by The Societies Act in Malaysia

13 Mongolia Mongolian Association of Securities

Dealers

MASD SRO & Industry

Association

Established by Securities Market Law of Mongolia

14 Myanmar Securities and Exchange Commission of

Myanmar

SECM Government

Regulator

Established by Securities Exchange Law

15 Nepal Securities Board of Nepal SEBON Government

Regulator

Established by Securities Act (2006)

16 Philippines Philippine Association of Securities

Brokers and Dealers, Inc.

(The Philippine Stock Exchange, Inc.)

PASBDI

(PSE)

SRO Established by the Securities Regulation Code

17 Singapore Securities Association of Singapore SAS Industry Association

Spontaneously established

18 Taiwan Taiwan Securities Association TSA SRO & Industry

Association

Established by Commercial Group Act; Securities

and Exchange Act

19 Thailand The 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 Vietnam 1 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 Vietnam 2 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 23 Membership Fee (As of 29 August 2018)

- 41 Banks

- 50 Non-Banks

- 23 Asset Management Groups (buy-side)

2 Bangladesh BSEC 164 (First Class: 94,

Others: 70)

Other Resources (Own

Resources)

Stock Exchanges: 2

Central Depository: 1

TREC Holders of Dhaka Stock Exchanges Ltd.: 250

TREC Holders of Chittagong Stock Exchanges Ltd.: 148

3 Cambodia SECC 145 Government’s Budget,

Other Resources (Fee

from granting licenses,

from public offering,

from securities

transactions and

revenues from other

operations under the

competency of the

SECC)

- 6 Security underwriters

- 3 Security brokers

- 1 Security dealers

- 2 Investment advisors

- 4 Central counter parties

- 13 Derivative brokers

- 4 Cash settlement agents

- 3 Registrar agents, Transfer agents, Paying agents

- 1 Bondholder representative

- 8 Audit firms and external audits providing professional

service in the securities sector

- 4 Valuation companies providing service in the securities

sector

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 15 Membership Fee and

Other Resources

(advertisement &

sponsorship income)

850 Stock Brokers Members (Regular)

6 India 2 BBF 8 Membership Fee and

Other Resources

(newsletter

advertisements, training

income, sponsorship of

events organized)

825 : Consists of members being members of Stock Exchanges-BSE

(Bombay Stock Exchange) / NSE (National Stock Exchange of India

Limited), Commodity Exchanges -MCX (Multi Commodity

Exchange) / NCDEX (National Commodity and Derivatives

Exchange) and Depository Participants of depositories- Central

Depository Services (CDSL) / National Securities Depository Limited

(NSDL).

7 Indonesia APEI 5 Membership Fee and

Other Resources

(Sponsorship from

SROs,

Training/Courses Fee)

115 (108 Stock Exchange Members ad 7 Non Stock Exchange

Members)

8 Japan JSDA 362 (as of August 28,

2018)

Membership Fee,

Fees for Examination

and Training Courses

(As of March 31, 2018)

264 Regular Members consisting of securities companies including 10

foreign securities companies

209 Special Members consisting of 184 banks, 11 insurance

companies and 14 other financial institutions

6 Specified Business Members

9 Kazakhstan AIFC 200-250 Government’s Budget The official launch of Astana International Financial Center was on 5

July 2018. Currently there are 49 registered entities, 1 authorized firm,

1 ancillary service provider, 12 recognized non-AIFC members

10 Korea KOFIA (As of August 14,

2018)

221

Membership Fee and

Other Resources

(Examination fees for

financial certifications

and revenues from

textbook sales)

(As of June 20, 2018)

268 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.

24 Special members which include general administration companies,

fund assessment companies, Korea Securities Depository etc.

11 Laos LSCO 50

(As of 19 June 2018)

Government’s Budget

and Membership Fee

(As of 19 June 2018)

Securities Exchange (Lao Securities Exchange LSX) 1

Securities Firms 4

Listed Companies 7

Audit Firms 4

Custodian Bank 1

Credit Rating Agencies 1

Asset Valuation Company 3

4

No. Market Name of

Organization

No. of Full Time

Staff

Funding Source Number of Member Firms (by Business Category)

12 Malaysia ASCM 3 Membership Fee and

Other Resources

(Income from fixed

deposits and training)

(As of July 2018)

13 local securities firms (non-investment bank)

4 foreign ownership securities firms

10 investment banks

13 Mongolia MASD 3 Membership Fee and

Other Resources

(International or

government programs)

As of Q1 2018

47 member firms which include 1 asset management company, 43

securities firms of which 17 firms acquire investment advisory

licenses and 25 acquire underwriting licenses in addition to securities

brokerage and dealing licenses.

14 Myanmar SECM 54 Government’s Budget N/A

15 Nepal SEBON 52 Membership Fee and

Other Resources

(Registration fees,

License fees, Securities

transaction fees)

(As of July 31, 2018)

1 Stock Exchange, 1 CDS Company, 50 Broker companies, 25

Merchant Bankers, 70 Depository Participants, 7 Fund managers, 2

Credit Rating Agencies.

16 Philippines PASBDI

(PSE)

127 Other Resources

(Revenues from

operation as a stock

exchange)

143 Trading Participants, of which 131 are active members. Out of the

131 active Trading Participants, 6 are brokers and 125 and Broker

Dealers. Out of 131 active Trading Participants, there are 10 foreign

Trading Participants while 121 are local Trading Participants.

17 Singapore SAS 2 Membership Fee and

Other Resources

(Training Fees)

16 Member Firms – 10 local stockbroking firms & 6 OTC/exchange-

traded product providers

18 Taiwan TSA 45 Membership Fee TSA has 134 members consisting of 75 securities firms and 59 financial

institutions operating securities businesses in Taiwan.

19 Thailand ThaiBMA 60 full-time staff

(As of July 25, 2018)

Membership Fee and

Other Resources (Bond

Registration Fees, Bond

Information Service

Subscription Fees,

Training Course Fees)

(As of July 25, 2018)

There are 54 member firms which consist of

- 48 Ordinary members including 14 Thai commercial banks, 6

foreign commercial banks and 28 securities companies that

have debt trading licenses (dealers)

- 4 Extraordinary members which are all securities companies

that have inter-dealer broker licenses (IDB)

- 2 Association Members, who are securities companies with a

monthly average trading value of less than 100 million baht in

the past year

20 Turkey TCMA 28 Membership Fee 80 brokerage firms, 44 banks, 53 portfolio management companies, 9

securities investment trusts, 33 real estate investment trusts and 7

venture capital investment trusts - a total of 226. (as of June 2018)

21 Uzbekistan CSM 93 (as of September

2018)

Government’s Budget 14 regional divisions

22 Vietnam 1 VASB Less than 100 Membership Fee, Other

Resources (Operating

revenues)

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 37 banks, 9 securities firms, 6 fund

management companies, 9 other financial insurance companies, 1 law

firm and 1 audit company)

5

II. Regulatory Framework of the Securities Markets of Each Jurisdiction

No. Market Name of

Organization

Major Laws, Rules or Practices in the Securities Markets of Each Jurisdiction

1 Asian Region ASIFMA Recent Regulatory Issues

Basel Committee on Banking Supervision (BCBS) post-crisis reforms:

o Capital floors: The BCBS has proposed capital floors for credit exposures. The floors represent the

lowest amount of capital a bank can hold against certain exposures, regardless of a bank’s internal

calculations of risk. On 7 December 2017, the BCBS agreed on an aggregate output floor to ensure that

banks’ risk-weighted assets (RWAs) generated by internal models are no lower than 72.5% of RWAs as

calculated by the Basel III framework’s standardised approaches.

o Fundamental Review of the Trading Book (FRTB): The FRTB will replace the current market risk

measures, and as per the calibration from the original January 2016 framework, banks would have to

hold between 1.5 and 2.1 times more capital (depending on internal models approval). The BCBS

announced in December 2017 that FRTB implementation should be delayed from 2019 to 2022.

o Standardised approach for counter-party credit risk (SA-CCR): SA-CCR will be used more broadly

in the Basel III capital framework than was originally designed, including the leverage ratio, clearing

exposures and the output floor. Banks and regulators have not yet assessed its overall impact across the

different requirements using real portfolio data. The BCBS has not formally announced a review of the

SA-CCR framework.

o Leverage ratio: The BCBS has introduced a leverage ratio to further limit the leverage (or conversely

raise the amount of capital) global systemically important banks (G-SIBs) hold. The leverage ratio G-

SIB buffer must be met with Tier 1 capital and is set at 50% of a G-SIB's risk-weighted higher-loss

absorbency requirements. The implementation date for the existing exposure definition (based on the

January 2014 definition of the leverage ratio exposure measure) is 1 January 2018. The revised

exposure definition implementation is 1 January 2022. The G-SIB buffer is 1 January 2022.

o Interest rate risk in the banking book (IRRBB): IRRBB, finalised by the BCBS in April 2016, refers

to the risk to a bank’s capital and earnings arising from adverse movement in interest rates. The

standards set out supervisory expectations for banks’ identification, measurement and monitoring of

IRRBB. The deadline for IRRBB implementation is set for 1 January 2018.

o Net stable funding ratio (NSFR): The NSFR seeks to reduce banks’ longer-term funding risk by

requiring banks to fund their assets and off-balance sheet activities with more stable sources of funding

(e.g., long-term wholesale funding and holding more customer deposits rather than short-term wholesale

funding) that are less vulnerable to shocks. The NSFR standard will become effective by 1 January 2018

and must be reported on a quarterly basis.

Cybersecurity and data protection: CPS 234 Prudential Standard on Information Security (Australia),

Cybersecurity Law (China), Personal Data (Privacy) Ordinance (Hong Kong), Cybersecurity Fortification

Initiative (Hong Kong), Cybersecurity Bill (Singapore), Personal Data Protection Act (Singapore), Personal Data

Protection Bill, 2018 (India), Regulation PP82/2012 (Indonesia), Personal Data Protection Act (Malaysia), Law

on Cybersecurity (Vietnam)

Recovery and resolution: Financial Institutions (Resolution) Ordinance (Hong Kong), Total loss absorbing

capacity requirements in Hong Kong (Hong Kong), Financial Resolution Deposit Insurance Bill, 2017 (India),

Proposed Enhancements to Resolution Regime (Singapore)

2 Bangladesh BSEC The Securities and Exchange Ordinance, 1969

Securities and Exchange Rules,1987

Securities and Exchange Commission Act, 1993

Credit Rating Companies Rules, 1996.

Margin Rules, 1999

Securities and Exchange Commission (Stock Dealer, Stock Broker, Authorized Representative) Rules, 2000

Securities and Exchange Commission (Issue of Capital) Rules, 2001

Securities and Exchange Commission (Public Issue) Rules, 2006

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

6

No. Market Name of

Organization

Major Laws, Rules or Practices in the Securities Markets of Each Jurisdiction

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 Indian Capital Markets are regulated and monitored by the Ministry of Finance, The Securities and Exchange Board

of India and The Reserve Bank of India.

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 Ministry of Finance regulates through the Department of Economic Affairs - Capital Markets Division. The division

is responsible for formulating the policies related to the orderly growth and development of the securities markets (i.e.

share, debt and derivatives) as well as protecting the interest of the investors.

In particular, it is responsible for institutional reforms in the securities markets, building regulatory and market institutions,

strengthening investor protection mechanism, and providing efficient legislative framework for securities markets.

The Division administers legislations and rules made under the

Depositories Act, 1996,

Securities Contracts (Regulation) Act, 1956 and

Securities and Exchange Board of India (SEBI) Act, 1992.

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 can achieve 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 into rules relating to “customer management and internal management by association

members”, “employees and sales representatives of association members”, “advertising”, “personal information

protection”, “code of ethics”, or “stocks/bonds/foreign products/securitized products/derivatives”.

9 Kazakhstan AIFC Constitutional Statute of the Republic of Kazakhstan on the AIFC, AIFC financial services framework regulations,

prudential rules for investment firms, authorised market institution rules, anti-money laundering, counterterrorist financing

and sanctions rules, etc.

10 Korea KOFIA Financial Investment Services and Capital Markets Act (Hereinafter referred to as the “FSCMA”)

11 Laos LSCO From 2016 to 2017, we amended and drafted more regulations based on our supervision on capital market sectors. There

are currently 51 pieces of legislation—all relevant legislation is as below.

1. Law on Securities

2. Decree on Securities and Securities Exchange

3. Regulation on Management Computer System in SECO

4. Guideline on Securities Code

5. Decision on Information Disclosure Regulation

6. Decision on Information and Technology System of Securities Companies

7. Regulation on Reporting

8. Guideline on the Licensing Structure of Securities Companies

9. Decree on Organization and Operation of Lao Securities Commission

10. Regulation on Supervision of Share Trading on Internet

11. Regulation on Organization and Operation of Securities Companies

12. Decision on Organization and Operation of Lao Securities Commission Office

13. Notification on Implementation of International Financial Reporting System (IFRS)

14. Notification on Fundraising by Securities Issuance and Listing Abroad

15. Regulation on Inspection of Securities Activities

16. Regulation on Supervision of Securities Professional

17. Guideline on Implementation of Regulation on Capital Adequacy of Securities Companies

18. Regulation on Reporting and Disclosure

19. Regulation on Custodian Banks

7

No. Market Name of

Organization

Major Laws, Rules or Practices in the Securities Markets of Each Jurisdiction

20. Decision on fees for Cross-Border Offer for Sale of Corporate Bond

21. Regulation on Corporate Bonds Issuance

22. Guideline on Creation and Amendment Legislation of Securities Supervisory Authority

23. Decision on Accounting and Auditing of Securities Activities (Amend)

24. Regulation on Stock Issuance (Amend)

25. Regulation on Supervision of Securities Exchange (Amend)

26. Decision on Increase in Proportion of Share Holding by Foreign Investor in EDL-Gen

27. Decision on Appointing the LSC as a National Numbering Agency of Laos

28. Regulation on Approval of Foreign Credit Rating Agencies

29. Regulation on Approval of Asset Valuation Company

30. Regulation on Representative Trading Account in Securities Exchange in Lao PDR

31. Regulation on Management of Share Trading of Foreign Investors in Lao PDR (Amend)

32. Regulation on Provision of Additional Information relating to Sources of Registered Capital, Shareholder

Structure and Beneficiaries of Securities Companies

33. Guideline on Implementation of Shareholders’ Meeting of Listed Companies (Amend)

34. Regulation on Reporting and Disclosure for Securities Exchange

35. Regulation on Capital Adequacy of Securities Companies (Amend)

36. Notification on Approval of Company Name List that can raise fund from public and be listed

37. Notification on company name list approved by LSCO to implement in securities areas

38. Decision on Issuance of Corporate Bonds Abroad (New)

39. Decision on Related Parties Transaction (New)

40. Decision on Board of Directors of Listed Companies (New)

41. Decision on Transfer of Listed Shares (Amend)

42. Decision on Non-Prefunded

43. Decision on Income and Expand Management of LSCO

44. Decision on Inspection in LSCO

45. Decision on purchase of LSCO

46. Notification on Monitor, Inspect and Due Diligent about Source of Fund to Buy Shares in Lao Capital Market

47. Notice on Business Operation of Securities Companies

48. Decision on trading fee net and transferring listed share

49. Decision on share price net of companies to be listed

50. Guideline on suspicious indicators of anti-money laundering of securities companies

51. Guideline on channel utilization for appeal or request in securities areas

12 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;

8

No. Market Name of

Organization

Major Laws, Rules or Practices in the Securities Markets of Each Jurisdiction

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;

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.

13 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.).

14 Myanmar SECM Securities Exchange Law (2013)

Securities Exchange Rules (2015)

9

15 Nepal SEBON LAW:

Securities Act, 2006

Commodities Act, 2017

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

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

16 Philippines PASBDI

(PSE)

The main laws affecting the securities market are the Securities Regulation Code (Republic Act No. 8799), 2015 Revised

Implementing Rules and Regulations of the Securities Regulation Code, Corporation Code of the Philippines (Batas

Pambansa Blg. 68), rules and issuances of the Securities and Exchange Commission, The Philippine Stock Exchange, Inc.

(PSE), and the Capital Markets Integrity Corporation.

17 Singapore SAS

Financial Supervision of Capital Markets

SGX serves as a frontline regulator for the markets and clearing houses in Singapore. It works closely with the Monetary

Authority of Singapore (MAS) and Commercial Affairs Department (CAD) to develop and enforce rules and regulations

for a rigorous and enduring marketplace.

Under the MAS, financial supervision is mainly undertaken by these Departments: Capital Markets Intermediaries,

Corporate Finance & Consumer, Markets Policy & Infrastructure and Enforcement.

Capital Markets Intermediaries Departments (CMI) I, II and III

The 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.

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 has 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

10

Securities and Futures Act with the Commercial Affairs Department, and provides assistance to overseas regulators under

the International Organisation of Securities Commissions (IOSCO)’s 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.

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.

Legislation in Singapore: Member Companies are governed by the following:

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

Singapore Exchange Regulation (SGX RegCo) was set up last year as a wholly-owned subsidiary of SGX that undertakes

all frontline regulatory functions on behalf of SGX and its regulated subsidiaries.

Governed by an independent board of directors separate from that of SGX, SGX RegCo will be responsible for policy

making in the areas of Listing, Trading, Depository and Clearing Rules, supervision of companies and issuers, its Member

firms and their trading representatives and the monitoring of trading activities in SGX markets.

SGX is a Self-Regulatory Organisation. In addition to its for-profit commercial objectives as a listed company, SGX

has regulatory obligations and a public interest duty as a market regulator. Rigorous regulatory standards ensure that

SGX satisfies its statutory obligations to operate fair, orderly and transparent markets and safe and efficient clearing

houses.

SGX is regulated by the MAS in the performance of its role as a front-line regulator and operator of the securities and

derivatives markets.

18 Taiwan TSA 1. Securities and Exchange Act;

2. Securities and Exchange Act Enforcement Rules.

19 Thailand 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”

22 Vietnam 1 VASB - Enterprise Law No. 68/2014 / QH13 passed by the National Assembly of the Socialist Republic of Vietnam on 26

November 2014 and its guiding documents;

- The Law on Securities No. 70/2006 / QH11 passed by the National Assembly of the Socialist Republic of Vietnam

on 29 June 2006 and its guiding documents;

- Law on Amendment on Addition to a Number of Articles from the Law of Securities passed by the Socialist

Republic of Vietnam on November 24, 2010;

11

- Decree No. 58/2012 / ND-CP of July 20, 2012, detailing and guiding the implementation of the Law on Securities;

- Decree No. 60/2015 / ND-CP of June 26, 2015, amending and supplementing a number of articles from the

Government's Decree No. 58/2012 / ND-CP in July 20, 2012, detailing and guiding the implementation of the Law

on Securities;

- Decree No. 90/2011 / ND-CP dated October 14, 2011 of the Government on issuance of corporate bonds;

- Decree No. 71/2017 / ND-CP of June 6, 2017 of the Government guiding corporate governance applicable to public

companies;

- Circular No. 210/2012 / TT-BTC dated 30 November 2012 of the Ministry of Finance guiding the establishment

and operation of securities companies;

- Circular No. 155/2015 / TT-BTC dated 06 October 2015 of the Ministry of Finance guiding disclosure of

information on the securities market;

- The Ministry of Finance's Circular No. 162/2015 / TT-BTC of October 26, 2015, guiding the offering of securities

to the public, the offering of shares for swap, issuance of additional shares, sale of treasury shares and public

offerings;

- Decree No. 639 / QD-SGDHN promulgating the Regulation on listing securities on the Hanoi Stock Exchange

issued by the General Director of Hanoi Stock Exchange on 13 October 2016;

- Decree No. 958 / QĐ-SGDHN on amending and supplementing the Regulation on listing securities on Hanoi Stock

Exchange issued by the General Director of Hanoi Stock Exchange on 24 November 2017;

- Decree No. 78 / QD-SGDHN promulgating the Regulation on organization and management of the securities

trading market of unlisted public companies on the Hanoi Stock Exchange by the General Director of Hanoi Stock

Exchange issued on 05 February 2016;

- Decree No. 346 / QD-SGDHCM issued by the General Director of the Ho Chi Minh Stock Exchange on the

issuance of the Regulation on listing of securities on Ho Chi Minh City Stock Exchange dated 23 August 2016;

- Decree No. 196 / QD-VSD promulgating the Regulation on securities registration and ownership transfer by the

General Director of Vietnam Securities Depository dated 29 September 2017;

- 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

12

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 Bangladesh Securities and Exchange Commission is empowered to make rules as per power conferred to it by the

parliament.

Power to make rules (act 24): “The Commission may, by notification in the Official Gazette, make rules for carrying out

the purposes of Securities and Exchange Commission Act, 1993.”

The Bangladesh Securities and Exchange Commission prepares draft rules, and the proposed rules are then published in at

least two Bangla and one English widely-circulated daily newspapers of the country inviting opinions, suggestions or

objections thereon from all concerned and at least two weeks’ time is given for submitting such opinions, suggestions, or

objections.

After completion of all other formalities, the rules are published by notification in the Official Gazette.

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 BBF Our executive committee consists of a professional CEO & COO along with all office bearers. All major rule making

functions are discussed and debated by the Governing Board. Implementation is ensured by the executive committee.

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 regulate the conduct

of our member firms.

9 Kazakhstan AIFC There is a special jurisdiction within the framework of the Constitution of the Republic of Kazakhstan formed on the AIFC

territory. This jurisdiction comes with its own commercial and civil law, reproduced in accordance with the English

Common Law and in case of uncertainty, referring to the original source in English Common Law. The main institution for

resolving disputes between AIFC participants is the independent AIFC Court. Within this framework, there are qualified

judges with practical experience in countries with jurisdiction over English Common Law, which is not included in the

Judicial system of the Republic of Kazakhstan. In addition, within the framework of arbitration agreements, an Arbitration

has been set up to resolve possible disputes.

10 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.

As an advocate for the development of the Korean capital market and financial investment industry, KOFIA examines

various regulations in need of enhancement, and proposes opinions and solutions to the government, supervisory

authorities, and lawmakers.

To this end, KOFIA actively engages in networking with the financial investment industry, academia, and research

institutes over current issues, and organizes councils and task forces with CEOs and professionals from member firms.

Such efforts allow industry concerns to be more effectively reflected in financial policies.

13

No. Market Name of

Organization

Major Rule-Making Functions

Throughout 2017, KOFIA worked on multiple fronts to advance the capital market. Support was provided for regulatory

revisions as well as for the designation and licensing process of investment banks, in order to facilitate the businesses of

mega investment banks. Furthermore, KOFIA assisted in legal amendment procedures and the introduction of new fund

products, aiming to promote publicly offered funds. KOFIA also improved the business environment for hedge funds and

provided support, fostering a ground conducive for their growth.

11 Laos LSCO The Law on Securities prescribes the principles, rules and measures regarding the management, monitoring and inspection

of operation of securities activities to ensure the efficiency, fairness, and transparency of such activities. A main provision

in the Law introduced the legal authority for LSCO in formulating and amending laws and regulations for the supervision

of securities business activities including securities issuance, issuing companies, securities exchanges and securities

intermediaries (i.e. securities firms, custodian banks, audit firms, asset management companies, credit rating agencies, asset

valuation companies and securities association), securities practitioners and investigation, inspection, and dispute

resolution.

12 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.

13 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.

14 Myanmar SECM SECM issues notifications, regulations and procedures to ensure the fairness and transparency of the Myanmar capital

market. Moreover, it has the authority to

- Give licenses to securities companies and permission to the Stock Exchange

- Conduct On site/Off site monitoring

- Impose administrative action (e.g. Imposing penalties, revoking licenses, removing directors of securities

companies)

- Give approval of securities issuances to the public

- Monitor daily market activities, collect transaction data and conduct data analysis

- Conduct investigations of trading participants to make sure they are not violating laws and regulations enacted by

SECM

15 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

16 Philippines PASBDI

(PSE)

The PSE was granted its self-regulatory organization status by the Securities and Exchange Commission (SEC) in June

1998. As a self-regulatory organization (“SRO”), the PSE can issue, implement, and enforce its own rules and regulations,

particularly those relating to monitoring market conditions and trading activities, listing of securities by corporations,

suspension and delisting of listed issues, imposing of sanctions on listed companies and Trading Participants, and

monitoring compliance of listed companies with its continuing listing obligations. Among such rules being enforced and

monitored by the PSE are the Revised Listing Rules, the Revised Disclosure Rules and the Revised Trading Rules.

Further, the Securities Regulation Code empowers the SEC to supervise and monitor the activities of the PSE.

17 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. An example would be the drafting of a new guide by the Monetary Authority of

Singapore to promote fairness, ethics, accountability and transparency (FEAT Guide) in the use of artificial intelligence and

data analytics in the Singapore financial sector. The association was approached by MAS to provide industry feedback.

18 Taiwan TSA There are Regulations Governing Securities Firms, which are prescribed by the government. TSA also establishes and

enforces self-regulatory rules for the engagement by members in the underwriting, dealing, and brokerage of securities,

and any other business approved for operation in Taiwan.

14

19 Thailand 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 a 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 of the results

- Engage in financial literacy activities

21 Uzbekistan CSM According to Art. 55 of Law “On securities market”, CSM carries out the following tasks:

implements the state policy in the field of formation, development, control and regulation of the securities market;

licenses professional activity in the 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.

15

22 Vietnam 1 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 Vietnam 2 VBMA VBMA’s charter and code of conduct regulate the corporate governance of our association and conduct of the member

firms.

VBMA performs the following functions as an association of debt market professionals in Vietnam:

- A high-standard debt market professionals community

- 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 has been designed with a view to assisting VBMA members in

standardizing and improving their back-office operations relating to debt market transactions.

16

III –2. Qualification System for Market Professionals

No. Market Name of

Organization

Qualification System for Market Professionals

1 Asian Region ASIFMA N/A

2 Bangladesh BSEC *For Authorized Representatives

To obtain an Authorized Representative Registration Certificate from Bangladesh Securities and Exchange Commission

(BSEC), a person must fulfill the following criteria:

1. Not be less than 21 years of age

2. Have education qualification of Higher Secondary School Certificate or equivalent

3. Have participated in the mandatory training organized by BSEC and the Exchange

4. Not be adjudicated as an insolvent

5. Not be a person of unsound mind

6. Not be convicted by a competent court of an offence involving moral turpitude

7. Not received punishment from the BSEC or Stock Exchange

*For Traders

To be a Trader, a person must get an Authorized Representative Registration Certificate at first as per the above criteria—

after which he must fulfill the following conditions to obtain a Trader Certificate from the Stock Exchange:

1. Graduation from any recognized university from Bangladesh or abroad

2. Must possess the “Fit and Proper” criteria as may be prescribed by the Exchange/BSEC from time to time

3. Any other qualification as may be notified by the Exchange as necessary

*For Compliance Authorities

To become a Compliance Authority, a person must filfill the following criteria:

1. Must be at least a graduate

He/she will be either a CEO or a member of the Board of Directors of the company.

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 the

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 the 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 The market regulator, Securities and Exchange Board of India (SEBI), has set up the National Institute of Securities Markets

(NISM). To participate in the capital market, Members are required to take certificates to enter into the capital market in

accordance with the eligibility criteria mentioned by the NISM.

6 India 2 BBF A license is granted by SEBI to an applicant who satisfies all the eligibility Criteria laid out by it. Once granted a certificate

of registration, the stockbroker has to ensure his dealers and staff members obtain the necessary certification before being

enabled to start business.

The Securities and Exchange Board of India (SEBI) has set up a National Institute of Securities Markets (NISM) for

teaching and training intermediaries in securities markets and promoting research which is entrusted with issuing various

certifications for the Capital Markets.

The National Strategy of Financial Education is being incubated at NISM through the ‘National Center for Financial

Education (NCFE).

17

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.

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 2017 is shown in the

following table.

Examination Examinees Pass Rate

Class-1 Sales Representative 62,381 45.6%

Class-2 Sales Representative 21,683 51.6%

Special Member's Class-1 Sales Representative 10,540 29.1%

Special Member's Class-2 Sales Representative 17,554 42.9%

Total 112,158

9 Kazakhstan AIFC The AFSA is an integrated regulator of the AIFC and will register and incorporate entities that carry out financial services

activities and non-financial services activities. AFSA will provide guidance and review prior to processing applications

submitted by applicants who wish to establish a legal entity in AIFC in compliance with AIFC Rules and Regulations.

10 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 120,053

Certified Securities Investment Advisor 85,025

Certified Derivatives Investment Advisor 69,990

Certified Investment Advisory Officer 12,704

Certified Investment Manager 15,105

Certified Research Analyst 1,021

Certified Financial Risk Manager 220

Credit Rating Agent 204

Total 304,322

11 Laos LSCO In accordance with the Law on Securities, and based as well on the specific regulations and decisions under that legislation,

LSCO shall consider and issue the license of securities business and securities business activities including securities

exchange, securities firms, securities professional, listed companies, auditors; and provide approval for credit rating

agencies, custodian banks, asset valuation companies, asset management companies, if their conditions meet the

requirements set forth by law and regulations.

18

12 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.

13 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

(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 the 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.

14 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. SECM plans to organize another exam in August 2018. 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

Total 106 77

15 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; but a foreign citizen can also be director or chief executive with the approval of the

government.

16 Philippines PASBDI

(PSE)

The Securities Regulation Code (“SRC”) requires registration with the SEC of Salesmen and Associated Persons who are

employees of the Trading Participants. The registration requirements can be found in Rule 28.1.5 “Registration of Salesmen

and Associated Persons of Broker Dealers” of the 2015 Securities Regulation Code Implementing Rules and Regulations

(2015 SRC IRR) and Sec. 28.1 of the Securities Regulation Code.

Section 28.1 of the SRC provides that “[n]o person shall engage in the business of buying or selling securities in the

Philippines as a broker or dealer, or act as a salesman, or an associated person of any broker or dealer unless registered as

such with the Commission.”

17 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”.

Effective from January 1, 2019, SFA-appointed TRs must fulfil 9 hours of CPD training while FAA-appointed TRs must

fulfil 6 hours annually. The number of CPD hours will gradually increase. MAS keeps a public registry of the licensed

TRs.

19

18 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 the 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. The 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.

19 Thailand 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

in 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 Vietnam 1 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

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.

20

For securities business practitioners, according to the Government's Decree No. 86/2016 / ND-CP on July 1, 2004, which

defines the conditions of securities investment and trading (Clause 2, Article 20, Chapter VI): "Persons who possess one of

the three types of securities practice certificates as prescribed in Clause 1 of this Article and have professional certificates

of derivatives and derivative securities are licensed to operate in derivative securities field in securities business

organizations. "

The exams are held and certificates are granted by the Securities Research and Training Center under the State Securities

Commission (SSC).

23 Vietnam 2 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 would be required to attend this training course.

21

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 Initially, they must participate in the mandatory training organized by the BSEC and Exchanges. Afterwards, they must

participate in different trainings at various times on multiple topics organized by the Stock Exchanges. Moreover, they

must participate in the trainings organized internally by their respective firms.

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 Every intermediary has its own set up and requirement for training to its employees.

6 India 2 BBF Every intermediary firm has the responsibility to provide sufficient internal training to the staff on rules/guidelines.

A few institutes do have capital market training which can be taken to enhance specific skill sets of employees.

A few of the institutes that cater to specific short term certificate courses in topics of interest are: the BSE Training

Institute, NISM , and NSE.

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, the 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. The JSDA

also conducts additional training courses as necessary in response to amendments of laws and regulations and institutional

reforms.

The JSDA’s Major Work Plans for 2017–2018 identified “improving intermediaries’ functions and credibility” as one of its

six pillars. To achieve this objective, the JSDA set out the following three basic policies when planning training courses for

association members in fiscal 2017: 1) promote professional ethics to improve credibility and conduct programs focusing

on compliance with laws and regulations, 2) conduct practical programs through a variety of channels, and 3) be prepared

to respond rapidly and with agility to important issues such as revisions of laws and regulations.

Based on the annual plan and basic policies, the JSDA continued to hold seminars focusing on the development of an

“ethical” mindset and on compliance with laws and regulations. In addition, in response to the needs of changing tides, the

JSDA held training courses on self-regulation, including those focusing on measures related to customer-oriented business

conduct, to improve the content of the training courses.

To enhance compliance procedures and internal training systems at member firms, the JSDA distributes training materials,

including seminar DVDs, for use in internal training courses, and has recently begun making seminar videos available

online as well. Moreover, it dispatches officers and employees to serve as lecturers at in-house training sessions of member

firms. During fiscal 2017, officers and employees of the JSDA held 20 sessions at member firms.

Training Courses in Fiscal 2017

1. Training Courses Based on Self-regulation

- Seminars for company representatives

- Training seminars for executives

- Joint training seminars for internal administration supervisors and assistant supervisors

- Training seminars for internal administrators

- Training seminars for sales managers

- Joint training seminars for sales managers and internal administration supervisors

2. Training Courses Focusing on Ethics and Compliance

- Basic compliance seminars

- Compliance practice seminars

- Compliance seminars for sales staff

- Risk management seminars

- Corporate ethics seminars

3. Training Courses on Other Topics

- Securities business basic seminars

- Securities business practice seminars

22

9 Kazakhstan AIFC In order to make and maintain AIFC’s competitive edge as a financial center over the longer term, on the 29th of August

2016 with the Board of Directors of AIFC Authorities approval the AIFC Governor initiated the establishment of the Bureau

for Continuing Professional Development AIFC as a structural unit within AIFC Authorities.

The Bureau’s role is to bring international standards, adopting best practices and developing skills based programs for local

professional development segments via providing opportunities for professional development and raising competencies for

local professionals in finance, investment and financial services sectors.

In particular:

Providing education and training opportunities for professionals of the AIFC eco-system;

Creating a critical mass of internationally certified professionals in financial services and supporting sectors for AIFC

participants and beyond;

Developing and implementing professional qualification standards and continuing professional development programs for

the AIFC eco-system;

Supporting AIFC’s entrepreneurship activities by introducing a start-up HR platform focused on outsourcing services for

the global financial system;

Providing educational content related to AIFC services for prospective retail and SME clients by creating effective

Investment Literacy Programs; and

Contributing to the development of Kazakhstan’s professional education sector.

Training and education activities of the Bureau for CPD are mainly directed towards AIFC eco-system (AIFC bodies, AIFC

registered participants including both regulated and unregulated, AIFC service receivers and providers from/to AIFC bodies

and participants).

10 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.

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

2017 3,771 35,898 939 59,461 100,069

Note: * Refresher, skill-building and preliminary education courses offered to help financial investment professionals acquire and maintain

their certification and specialties.

11 Laos LSCO According to the Regulation on Supervision of Securities Professionals, a person having a securities practitioners license is

required to attend the securities training program, which is organized by LSCO or Securities Exchange from time-to-time.

The program includes laws and regulations of Lao, capital market lessons and lessons on the code of ethics. Every year (1-

2 times a year), they must attend the training to update and refresh their knowledge on securities sectors. Also,

employees/sales representatives of securities companies may participate in the trainings that are available in four companies.

Additionally, LSCO and LSX cooperate with other internal and international organizations to organize the trainings and

seminars regularly and representatives from securities companies are invited to learn about the relevant topics.

12 Malaysia ASCM CMSRL holders are required on an annual basis to attend industry related training conducted by either SIDC, a training

centre established by SC, or any approved training providers, and are given certain number of Continuing Professional

Education 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 industry-related developments in terms of regulation, guidance and the technical aspects of the industry standard.

The SC is currently reviewing the CPE framework to accept non-structured, in house and online training etc. subject to a

cap for recognized CPE hours.

23

13 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

2017 162 145

July 1, 2018 147 133

Total 2023 1693

14 Myanmar SECM Securities Exchange Rules require securities companies to ensure that their officers or staff provide fair and good faith

service. To meet this requirement, all securities companies shall establish proper training policy. SECM checks their training

materials, internal control policy and operational manuals to provide guidelines and suggestions for further development.

15 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 provides training to its employees inside and outside of the country.

16 Philippines PASBDI

(PSE)

Prior to the taking of examination for purposes of registration as a Salesman, applicants thereto are required to undergo

seminars conducted by the SEC. Likewise, the PSE conducts, on a regular basis, a Certified Securities Specialist Course

offered to anyone interested, including employees of securities companies.

17 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 and trading framework for

trading representatives.

TRs are leaving this industry as the market is not as vibrant as before. Many TRs are lamenting that the commission is

inadequate for survival. To encourage more to join the industry, to build a pipeline of professionals, several initiatives were

organized to reach out to tertiary students and career switchers. These include having trading competitions and simulation

games with Investment Clubs of universities and polytechnics.

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. From 2015 to 2017, some 7,000 retail clients had participated and

gleaned investment skills and knowledge through such workshops.

18 Taiwan TSA 1. Qualification exams for securities professionals:

In accordance with the regulations and under commission of TSA, the “Securities and Futures Institute (SFI)” administers

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/sales 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.

19 Thailand ThaiBMA ThaiBMA is 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.

24

22 Vietnam 1 VASB Employees/Sales Representative of a securities company needs to obtain the Securities Professional Certificates. In order

to obtain such certificate, they are required to participate in a number of training courses (as listed below) and pass the final

examinations conducted by the SSC or one of the training establishments at universities approved by the SSC.

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

23 Vietnam 2 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 of training 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

25

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 The Bangladesh Securities and Exchange Commission conducts the following inspection, enquiry/investigation:

1. Conducts Regular Inspection of Market Intermediaries

2. Conducts Special Inspection of specific issues

3. Conducts Enquiry/Investigation of specific cases

In addition to this, Stock Exchanges conduct the following inspections:

1. Securities Firms Inspection or Audit

Stock Exchanges inspect the top 30 TREC holder companies at least once a year and the remaining at least once every

two years.

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 Exchanges (National Stock Exchange and Bombay Stock Exchange) inspect intermediaries’ offices from time to time and

the SEBI also do additional inspection, on the basis of criteria decided upon by the regulator.

6 India 2 BBF The Securities Firms are subject to :

1. Internal Audit: Compulsory monthly internal audits are done to provide independent assurance that an

organization's risk management, governance and internal control processes are operating effectively.

2. Exchanges conduct inspections at least once in 3 years to check for any irregularities.

3. SEBI regulates the working of stock brokers, carries out inspections of the books and records of stock brokers to

verify compliance by the broking outfit.

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 to avoid disciplinary action.

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.

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 on-site

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 Kazakhstan AIFC As part of its conduct as business regulator, AFSA supervises firms and their employees to maintain individual and

institutional integrity and high standards of conduct. As a prudential regulator, AFSA’s mandate is to ensure that Centre

Participants are financially sound and to reduce institutional and systemic financial risk that may result from adverse

economic shocks and/or financial disruption.

Centre Participants whose conduct falls outside the standards expected by the AFSA may be subject to enhanced supervision

by the Conduct and Prudential teams or to Enforcement action.

AFSA will undertake financial sector surveillance as part of its supervisory function. This will include identification of risk

factors and unstable trends in order to promote financial stability, monitoring the prudential health of Centre Participants

and assessing, monitoring and mitigating prudential risks across the full spectrum of financial services licensed by AFSA.

10 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.

11 Laos LSCO LSCO is given the authority to supervise, monitor and inspect securities firms in areas including their securities business

operations, financial statements, utilization of their registered capital and other related activities to ensure their compliance

with law and regulations for market efficiency, transparency and fairness as well as to ensure market stability, and to protect

the rights and interests of investors. LSCO shall conduct 2 types of inspections including on-site and off-site inspection.

On-site inspection comprises general inspection, inspection by notice and ad-hoc inspection.

26

12 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.

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 purposes.

13 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.

14 Myanmar SECM SECM conducts the inspection for the operation and the audit firms audit the financial statements of the securities firms

once a year.

15 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.

16 Philippines PASBDI

(PSE)

The Capital Markets Integrity Corporation (CMIC) is a wholly-owned subsidiary of the PSE. The primary purpose of CMIC

is to function as an independent audit, surveillance and compliance unit directly under the supervision of the SEC. CMIC

has the jurisdiction to investigate and resolve: (1) all violations of the Securities Laws, including the CMIC Rules, by

Trading Participants, and; (2) trading related irregularities and unusual trading activities involving issuers. In May 2012,

the CMIC launched the Total Market Surveillance (TMS) system. TMS is equipped with tools that analyze critical elements

of the surveillance process, and provides a robust monitoring and warning mechanism. It is designed to safeguard the

integrity of the stock market from fraud, manipulation, and breaches of marketplace rules.

17 Singapore SAS The MAS and SGX carry out regular inspection checks on all licensed financial institutions (MAS) or registered members

(SGX).

27

18 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.

19 Thailand ThaiBMA ThaiBMA acts as a front line regulator to detect unfair trading practices by using a Market Surveillance System for detecting

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. and (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 the solidarity among the Association members, and 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 regarding its proposal on principles regarding commissions and fees charged by members

•Evaluate complaints against its members and inform CMB of 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 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.

28

III –5. Disciplinary Action and Measures Against Misconduct

No. Market Name of

Organization

Disciplinary Action and Measures against Misconduct

1 Asian Region ASIFMA N/A

2 Bangladesh BSEC Bangladesh Securities and Exchange Commission is a quasi-judicial body having enforcement power over civil matters

such as suspension, cancellation of registration certificates, imposition of financial penalties, etc.

For criminal matters, BSEC is empowered to file criminal cases with the appropriate court without needing any approval

from the Attorney-General’s office.

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 provision 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 revocation of 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 In case of any misconduct, various disciplinary actions are prescribed by the Exchanges that include monetary penalties as

well as suspension of trading activity of a member.

6 India 2 BBF The Stock Exchanges have mandatory committees i.e. Disciplinary Action Committee , Investor Grievance Committee,

Defaulter Committee which proposes action based on the nature of Non-compliance of the member broker.

In case of misconducts, disciplinary action measures range from

Warning Letter,

Impose Monetary penalties,

Suspension of Membership,

Expulsion of Member.

In case of a fraud, 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 FIEA. 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.

29

No. Market Name of

Organization

Disciplinary Action and Measures against Misconduct

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 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 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 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 Kazakhstan AIFC In cases where AFSA's supervision fails to ensure Centre Participants meet the required standards, AFSA has powers to

detect, restrain and, if necessary, sanction conduct that falls outside the standards expected by AFSA in order to preserve

the integrity of the AIFC. Any such steps will be taken in accordance with the procedures set out in the legislation.

10 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

11 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

30

12 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:

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

31

13 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.

MASD has a special Disciplinary Board within its structure which overlooks the quality of member firms’ services as well

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.

14 Myanmar SECM Disciplinary action consists of various penalties including fines and revocation of trade representative license and business

license. 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.

15 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.

16 Philippines PASBDI

(PSE)

Violations of CMIC Rules are classified into minor, major, and grave violations. Offenses or violations falling under each

category are enumerated under said rules. The penalties are as follows:

Minor violations are penalized with a written reprimand for the first offense, and a fine of at least P10,000.00 (US$187.40)

but not more than P50,000.00 (US$937.03) for the second and succeeding offenses.

Major violations are penalized with a fine of at least P10,000.00 (US$187.40) but not more than P30,000.00 (US$562.21)

for the 1st offense, a fine of at least P30,000.00 (US$562.21) but not more than P50,000.00 (US$937.03) for the 2nd offense,

a fine of at least P50,000.00 (US$937.03) but not more than P75,000 (US$1,405.54) for the 3rd offense, and a fine of at

least P75,000.00 (US$1,405.54) for the 4th and subsequent violations.

Grave violations are penalized with a written reprimand and fine of at least P25,000.00 (US$468.51) not to exceed

P200,000.00 (US$3,748.12) for the 1st offense, denial of the exercise of the trading right and access to the facilities and

systems of the PSE for the 2nd offense, and prohibition from entry to or employment in or having any kind of commercial

association with the PSE or any other TP, for the 3rd and subsequent offense.

17 Singapore SAS MAS

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.

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.

32

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 Disciplinary Committee will investigate any alleged contravention of rules. If found guilty, TRs face reprimand,

fines, orders to attend educational programs, suspension, or even expulsion. SGX launched the Trade Surveillance

Handbooks as part of its collaborative initiatives with member companies to detect and stop market misconduct, foster

good trading practices and maintain a fair, orderly, and transparent marketplace.

18 Taiwan TSA If any member fails to perform any obligations, the TSA may, through resolution of the directory board, request correction,

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.

19 Thailand 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 that 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 that 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.

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;

non-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.

33

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 Vietnam 1 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 Vietnam 2 VBMA Same as the above.

34

III –6. Dispute Resolution System between Securities Firms and Customers

No. Market Name of

Organization

Dispute Resolution between Securities Firms and Customers

1 Asian Region ASIFMA N/A

2 Bangladesh BSEC Stock Exchanges have their own dispute resolution system, a panel of judges of the Exchanges provide verdicts with

respect to disputes after the hearings.

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 in November 2011, with the main purpose of resolving

disputes between securities firms/financial institutions and their customers in Hong Kong. All regulated financial

institutions are required (by SFC) to join FDRS as members, and all claims up to HKD 1,000,000 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 Through Arbitration, disputes between securities firms and investors can be resolved.

6 India 2 BBF It is mandatory for the Broking company to put the Grievance ID on their website & contract Notes.

The Aggrieved Customer generally writes his or her complaint to the Member on his or her designated ID for grievances.

In case the Broking company does not respond the customer can send the complaint to the respective exchange where the

trade has taken place.

The customer can escalate his or her complaint for Arbitration at the Stock Exchange or at SEBI's complaints redress system

(SCORES).

Unresolved complaints or unfavorable verdicts have a right to go to Indian Courts based on merit.

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 Kazakhstan AIFC The International Arbitration Centre (“IAC”) provides an independent, economical and expeditious alternative to court

litigation, operating to the highest international standards to resolve civil and commercial disputes in the AIFC.

The IAC has its own panel of outstanding international arbitrators and mediators who are greatly experienced, independent,

impartial and of the highest integrity.

The IAC offers parties maximum choice and flexibility in choosing the rules and procedures they wish to use for the solution

of their disputes at the IAC.

Parties may agree for the IAC to:

1. Administer their arbitration according to the IAC Arbitration and Mediation Rules. These rules include

procedures for expedited arbitrations, the appointment of emergency arbitrators, and resolution of

investment treaty disputes.

2. Administer their arbitration according to UNCITRAL Arbitration Rules or ad hoc arbitration rules.

3. Administer mediations according to the IAC Arbitration and Mediation Rules or ad hoc mediation rules.

4. Provide other forms of alternative dispute resolution.

The IAC provides fundholding for arbitrators’ fees and the holding and disbursing of advances paid to cover the reasonable

costs of the IAC's own services and facilities.

The IAC is an appointment authority, offering the appointment of arbitrators and mediators from its panel, for arbitrations

and mediations conducted at the IAC or elsewhere.

Arbitration awards of the IAC are enforceable in the Republic of Kazakhstan as Orders of the AIFC Court, supported by a

robust enforcement system. They are also enforceable internationally under the New York Convention.

The IAC will provide permanent state of the art administrative facilities, including first class IT, conference, meeting, and

hearing rooms at “IAC Chambers” which will be located at the IAC EXPO-2017Astana premises.

The procedures and standards at the IAC seek to follow international best practice and will be familiar to users of arbitration

and mediation services in major financial centres around the world.

10 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.

35

No. Market Name of

Organization

Dispute Resolution between Securities Firms and Customers

11 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

12 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

13 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;

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.

14 Myanmar SECM SECM urges securities companies to set up clear internal policies for customer disputes and complaint handling procedures.

15 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.

16 Philippines PASBDI

(PSE)

The PSE, through CMIC, has an Investigation and Enforcement Department (“IED”). IED primarily conducts the necessary

investigation and/or inquiry to determine any possible violation of the SRC, its Implementing Rules and Regulations, the

rules and regulations of the PSE, the CMIC Rules, and other securities laws. IED receives complaints from investors and

other market participants in connection with any alleged rule violation committed by the TP and issuers of the PSE. In

resolving matters filed with and endorsed to it, and upon proper determination of rule violation, IED may impose sanctions,

execute penalties, and initiate the publication of the relative disciplinary actions, in accordance with the pertinent securities

laws. Apart from the investigation, inquiry and resolution of the foregoing matters, IED also handles the cases elevated to

or appealed to the SEC, the regular courts, and other judicial and quasi-judicial bodies. With the concurrence of the other

CMIC’s core departments, IED facilitates the takeover of an insolvent or failed TP. Consequently, IED validates and settles

the claims of a failed TP’s clients relative to the takeover. Finally, IED is authorized to act upon any legal matter that may

be within the express jurisdiction of CMIC and has been properly forwarded to it by other CMIC core departments, the

Exchange, the SEC, and/or the market participants.

17 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.

36

No. Market Name of

Organization

Dispute Resolution between Securities Firms and Customers

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.

18 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.

19 Thailand ThaiBMA In cases 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 undergo arbitration, 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 Vietnam 1 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 Vietnam 2 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.

37

III –7. Investor Education Activities

No. Market Name of

Organization

Investor Education Activities

1 Asian Region ASIFMA N/A

2 Bangladesh BSEC Investor education activities are given top priority by Bangladesh Securities and Exchange Commission. BSEC has

launched a nation-wide Financial Literacy Program in January 2017, which was inaugurated by the Honorable Prime

Minister of Bangladesh.

The Financial Literacy Department of the Commission has been conducting various programs in collaboration with the

Exchanges and other institutions of the capital market on a continued basis.

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 MOUs 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 received 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 SEBI and the Exchanges conduct various seminars and programs for educating market participants.

Apart from that, various organizations such as ANMI also educate its members through various events, seminars and

conferences which are organized time to time for its members to update them on changes to the market environment.

6 India 2 BBF For investor education, BBF has conducted more than 1200 Investor Awareness Programs in last 5 years and trained more

than 52000 participants across various sections of society.

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.

38

No. Market Name of

Organization

Investor Education Activities

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).

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 In March 2018, in response to public consultations on the draft proposal for the Ministry of Education, Culture, Sports,

Science and Technology’s revised school curriculum guidelines for high schools, the JSDA submitted comments to the

Ministry requesting more specific information to be included in the content of financial/securities education programs in

civics and home economics classes.

For the new curriculum guidelines of junior high schools, the JSDA prepared materials covering the areas of the new

guidelines that are closely related to financial and economic education, with the aim that textbook companies may refer to

these materials when editing their textbooks based on the updated guidelines. The JSDA also held seminars for textbook

companies to enhance how they communicate necessary information to students.

Further, the JSDA held a series of lectures, the “First Time Asset Management Lectures”, in coordination with the Financial

Services Agency (FSA) and other related organizations, for inexperienced or beginner investors to learn the importance of

life and money planning and to increase their awareness of the features of financial products, the DC pension system, and

NISA. These seminars were held at 66 venues and attracted 6,679 people.

With respect to school education, the JSDA dispatched its staff as lecturers to 141 elementary schools, junior high schools,

and high schools to conduct a total of 297 classes as Saturday educational activities, as well as to 121 universities and their

career centers to conduct a total of 220 classes on financial literacy.

Moreover, in order to promote the proliferation and deepening of knowledge regarding securities/finance, the JSDA

conducts a host of interactive programs for the faculty and instructors of various elementary, junior high, and high schools.

39

No. Market Name of

Organization

Investor Education Activities

In 2017, this was held three times in three different cities, with a total of 139 participants.

In October 2017, a series of nationwide events on “Securities Investment Day” were held by the Securities Knowledge

Proliferation Project (JSDA, Japan Exchange Group, including Tokyo Stock Exchange and Osaka Exchange, Nagoya Stock

Exchange, Fukuoka Stock Exchange, Sapporo Stock Exchange, Investment Trusts Association of Japan, and Association

of Nagoya Stock Exchange Trading Participants). “Securities Investment Day” events were held at 29 venues and attracted

2,662 people. This year’s “Securities Investment Day” also served as the JSDA’s contribution to World Investor Week

(WIW), a global campaign initiated by IOSCO C8.

Elected as the Chair of International Forum for Investor Education (IFIE) in June 2017, the JSDA also actively participates

in the operations and meetings of the IFIE. One of its regional Chapters, the Asia Chapter Meeting, was held in November

2017 concurrently with the ASF AGM, and was chaired by the JSDA. The IFIE annual meeting and IFIE-IOSCO 10th

Anniversary Global Conference were held in Tokyo in April 2018, hosted by the JSDA. The conference addressed emergent

trends, including the growing popularity of cryptocurrencies and ICOs, current demographic challenges, and the

development of FinTech.

9 Kazakhstan AIFC The AIFC Bureau for Continuing Professional Development provides a preparatory course for CFA® LEVEL I exam,

preparation for the FRM® Part I and Part II exams, affordable and high-quality training courses for the ACCA exams, etc.

10 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,

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 12,362 visitors during the year 2017.

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.

11 Laos LSCO We have educated and shared with the public securities experiences via a variety of ways including training and educating

via newspapers, broadcasting through the national radio and television, on-site education at schools, hospitals, institutes

and government organizations, etc. We regularly organize training for Ministries, companies, and so on. Also, we currently

have our own television program which is broadcasted once a week. In addition, we have cooperated with international

securities organizations and securities commissions from other countries to organize the trainings and seminars on this

sector at least 2 times (with three to four topics) a year.

12 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.

SC’s investor education initiatives include its annual flagship event, InvestSmart, to create awareness and educate investors.

InvestSmart 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.

40

No. Market Name of

Organization

Investor Education Activities

Bursa Malaysia has established Bursa Marketplace web portal, a place where everyone is welcome to learn, try and apply

and kick-start the investing journey. Bursa has also organised Shariah Investing Fair 2018 in July 2018 to promote and

create awareness on Shariah investing.

Invest Malaysia Kuala Lumpur (IMKL) is Bursa Malaysia's flagship event organised annually for the global investing

audience. The IMKL platform showcases the diversity of Malaysia's capital market and introduces key multinational

companies and global champions that are set to drive economic growth within the ASEAN marketplace. For this year,

IMKL was held on 23rd and 24th January 2018. The objectives of IMKL are:

To provide an annual platform for regulators and policy makers to promote the Malaysian agenda

– announcements of key developments in the Malaysian capital market.

To attract local and international investors by showcasing premier public listed companies (PLCs) and providing an

avenue for engagements with the owners/senior management of these PLCs.

To offer institutional investors an avenue to network with policy makers and industry leaders to facilitate their

investment decisions.

To increase the visibility of Malaysia in the international investment community via international media

coverage/partnerships

13 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.

14 Myanmar SECM Investor education activities include: monthly education seminars disseminated to the general public across Myanmar in

collaboration with YSX and securities firms.

Yearly Expo for investors in collaboration with YSX, securities firms and public listed companies.

15 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 programs and some other programs; and

Training program for economic journalists, teachers and students in different aspects of securities market.

16 Philippines PASBDI

(PSE)

Conducts weekly seminars for professionals, sectors, companies, and various organizations, which was participated in

2017 by 2,929 individuals

Participates in expositions and exhibits

Accommodates Exchange visits

Conducts company visits for retail investors

Conducts short course on stock market investments

Conducts webinars and in 2017, a total of 13 webinars were conducted with an average of 483 attendees per session with

topics such as Stock Market 101, Exchange Traded Funds, Fundamental Analysis, Portfolio Management, and Personal

Finance

Conducts the PSE Certified Securities Specialist Course, together with partner education institutions such as the De La

Salle-College of Saint Benilde and Ateneo Center for Continuing Education

Conducts market education campaigns through social media such as Facebook and Twitter, television, radio appearances,

and the PSE Academy website

In 2017,the PSE also held roadshows in Davao and Iloilo with a total of 814 and 1,129 participants, respectively

Held its first Broker Expo concept during roadshows where broker firms were invited to set up booths to introduce

themselves and to initiate account openings by prospective clients

Co-organized with DBP-Daiwa Capital Markets Philippines, Inc. the 5th Philippine Corporate Day in Tokyo, Japan in

January 2017 garnering eight PSE- listed companies and top Japanese fund managers

17 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.

Other than IBF, SGX Academy is another training avenue for trading representatives and investors

Investment fairs and seminars – these are conducted on a regular basis by member firms, sometimes with SGX and

exhibition providers

41

No. Market Name of

Organization

Investor Education Activities

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.

18 Taiwan TSA To promote financial literacy and the in-depth understanding of accurate investment knowledge, we planned a series of

lectures and promotional activities. Activities held in 2014 included the following:

Promotional Activities: Financial Literacy Program – Community College Investing for the Future; Financial

Literacy Program – Financial Management on Campus; Community College and Campus Lectures; Financial

Literacy Program for College Students; Mediation Seminar; and Central and Southern Taiwan Lectures on

Futures and Options.

Subsidies for personal investment and financial literacy knowledge classes hosted by non-finance faculty in

tertiary education institutes

19 Thailand 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.

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 Vietnam 1 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 Vietnam 2 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

The VBMA also organizes basic and advanced training for members

42

IV. Market Structures

IV – 1. Breakdown of Financial Assets held by Household Account

No. Market Name of

Organization

Breakdown of Household Financial Assets

1 Asian Region ASIFMA N/A

2 Bangladesh BSEC N/A

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 Financial Assets held by households:

- Fixed Bank Deposits

- Investment in Equity Shares & Mutual Funds

- Investment in Gold and Properties.

6 India 2 BBF 77% in Real Estate

7% Durable Goods.(Transportation , Business equipment

11% Gold & Precious Metals

5% Financial Assets & Retirement Account (3.5% Equity)

7 Indonesia APEI N/A

8 Japan JSDA The composition of household financial assets as of FY 2017 end was as follows.

Composition of Financial Assets of Households

FY2015 FY2016 FY2017

FY2017

(Amount)

(¥ trillion)

Financial assets of households 1,751.9 1,784.5 1,829.0 1,829.0

Cash and deposits 52.4% 52.6% 52.5% 960.5

Debt securities 1.4% 1.4% 1.3% 23.3

Shares & other equities 9.6% 10.0% 10.9% 198.7

Investment trust beneficiary

certificates

4.2% 4.0% 4.0% 73.2

Insurance, pension and

standardized guarantees

29.6% 29.1% 28.5% 522.1

Others 2.8% 2.9% 2.8% 51.2

(Note) Data released on June 27, 2018

(Source) Bank of Japan

9 Kazakhstan AIFC N/A

10 Korea KOFIA The breakdown (%) of financial assets of households at the end of 2017 is as follows: (data from the Bank of Korea)

cash and deposit 43.1

insurance and pension reserve 31.8

bonds 4.2

Stocks & funds 17.4

etc. 0.5

43

11 Laos LSCO Amount: Billion USD

2013 2014 2015 2016 2017

Net Foreign Asset 271.10 217.11 -383.92 -1,356.81 -935.50

Net Domestic Asset 4,760.06 6,083.01 7,608.39 9,368.79 9,368.79

Monetary Base 5,031.15 6,300.08 7,244.43 8,011.98 8,991.85

Cash in circulation 781.42 760.58 707.97 666.38 799.29

Source: The Bank of the Lao PDR

In 2017, the deposits showed a growth of 11.54% in total compared with last year, which includes the increase of LAK

Deposits with 7.47% and Foreign Currency Deposits with 15.3%.

Source: The Bank of the Lao PDR

12 Malaysia ASCM

Source: Risk Developments and Assessment of Financial Stability in 2017 Report by Bank Negara Malaysia

https://www.bnm.gov.my/files/publication/fsps/en/2017/cp01.pdf

13 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.

14 Myanmar SECM N/A

15 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.

16 Philippines PASBDI

(PSE)

The total investor accounts amounted to 868,810 as of 2017 which include traditional and online accounts, an increase of

12.4% from 773,187 accounts in 2016. Of the total investor accounts, 96.9 percent were retail accounts (841,532 accounts)

while the remaining 3.1 percent were institutional accounts (27,278 accounts).

44

17 Singapore SAS Singapore Household Balance Sheet

Yearly, millions S$

Variables 2014 2015 2016 2017 2018 Q1

Household Net Worth 1.46 1.5 1.58 1.69 1.76

I. Assets 1.74 1.80 1.89 2.00 2.09

Financial Assets 0.92 0.90 1.03 1.12 1.17

Residential Property Assets 0.82 0.83 0.85 0.88 0.92

II. Liabilities 0.28 0.30 0.31 0.32 0.33

Mortage Loans 0.21 0.22 0.23 0.24 0.24

Personal Loans 0.07 0.08 0.08 0.08 0.08

Currency & Deposits 0.34 0.36 0.38 0.41 0.42

Shares & Securities 0.17 0.17 0.17 0.18 0.19

Listed Shares 0.09 0.08 0.08 0.09 0.10

Unlisted Shares 0.03 0.03 0.02 0.02 0.02

Unit Trusts & Investment Funds 0.05 0.05 0.06 0.07 0.07

Life Insurance 0.13 0.14 0.15 0.17 0.18

Central Provident Fund 0.27 0.29 0.32 0.35 0.37

Pension Funds 0.01 0.01 0.02 0.02 0.02

18 Taiwan TSA

Year Item

Assets

(Land evaluated

at announced

land current

value)

Assets

(Based on final

ownership, note 1)

Amount

(100 Million

NT$)

Amount

(100

Million

NT$)

Composition

(%)

2015 1、Net Non-financial Assets 509,290 37.70

2015 Real Estate 471,405 34.90

2015 Households’ Equipment 37,885 2.80

2015 2、Net Financial Assets 841,468 62.30

2015 (1)Net Foreign Financial Assets 63,718 4.72

2015 (2)Net Domestic Financial Assets (A-B) 777,750 57.58

2015 (2)-1 Net Domestic Financial Assets

(excludes Insurance and Pension Fund Reserves) 578,094 42.80

2015 Domestic Financial Assets (A) 921,607 68.23

2015 Cash and Demand Deposits 128,377 9.50

2015 Time Deposits & Foreign Currency Deposits 159,731 11.83

2015 Portfolio 368,621 27.29

2015 Life Insurance and Pension Fund Reserves 199,656 14.78

2015 Other Domestic Financial Assets 65,221 4.83

2015 Less: Domestic Financial Liabilities(B) 143,858 10.65

2015 Loans 139,221 10.31

2015 Other Domestic Financial Liabilities 4,637 0.34

2015 3、Net Worth 1,350,75

8 100.00

2015 3-1、Net Worth

(excludes Life Insurance and Pension Fund Reserves)

1,151,10

2 –

Note：1. Land in residential, industrial & commercial areas is re-evaluated based on current market price.

The redistribution of net worth of non-financial enterprises and financial enterprises sectors are based on

final ownership. 2. Portfolio consist of government securities, domestic corporate bonds, bank debentures,

mutual funds, shares and other equities. 3. Other domestic financial assets include 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

45

19 Thailand ThaiBMA

Source: (1) ThaiBMA, (2) Association of Investment Management Companies

20 Turkey TCMA Financial Assets of Households

2016/03 2016/09 2017/03 2017/09 2018/03 2018/03 (Bn. $)

Cash 4% 6% 6% 6% 5% 15.1

TL Deposits 48% 50% 46% 47% 47% 149.7

FX Deposits 30% 27% 30% 29% 29% 91.4

Equities 5% 5% 5% 5% 5% 17.3

Mutual Funds 4% 4% 4% 3% 4% 11.2

Pension Funds 6% 6% 6% 6% 6% 20.1

Bonds/Bills-Eurobonds 2% 2% 2% 2% 2% 6.6

Precious Metals 1% 1% 2% 2% 2% 5.8

Repo 0% 0% 0% 0% 0% 0.2

Total 100% 100% 100% 100% 100% 317.4

Source: Central Bank of the Republic of Turkey

21 Uzbekistan CSM Breakdown of Financial Assets held by Household Account (as of May 1, 2018)*:

№ Indicator Amount

1 Number of registered joint-stock companies, (units) 609

1.1 Number of state owned joint-stock companies, (units) 180

1.2 Number of joint-stock companies with a share of business (economic) associations, (units) 306

1.3 Number of joint-stock companies excluding shares of State and economic associations, (units) 162

2 Placed authorized capital, including:

2.1 Shares owned by the State (billion UZS) 45 215,67

2.2 Shares owned by business (economic) associations (billion UZS) 3 277,23

2.3 Shares not owned by the State and business (economic) associations (billion UZS) 5 966,32

3 Shares in the process of placement (have a term for placement)

3.1 The volume of shares to be placed to the State (billion UZS) 630,12

*Information provided by “Central securities depository”, a state enterprise

22 Vietnam 1 VASB N/A

23 Vietnam 2 VBMA N/A

46

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 In Bangladesh, we have 2 stock exchanges: Dhaka Stock Exchange and Chittagong Stock Exchange.

Dhaka Stock Exchange Ltd.: Foreign investors’ trading last year (July 2017-July 2018) was 0.0092%, or USD

1466146745

Chittagong Stock Exchange Ltd.: Share of foreign investors in the stock trading on the exchange in FY2017-2018 is

1.52%.

3 Cambodia SECC The share of foreign investors trading in the stock exchange of Cambodia is 32% for 2018 Q2.

4 Hong Kong HKSA A) Local investors included

B) Local investors excluded

47

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 The fDi Report 2018 reveals that greenfield capital investment decreased by 15.2% to $662.6bn, while the number of FDI

projects declined by 1.1% to 13,200.

Key FDI trends spotted include:

◦The US reclaimed its top spot from India, recording $87.4bn of announced FDI in 2017.

◦FDI into western Europe increased 4% by number of projects and 13% by capital investment.

◦FDI into the UK declined across all three indicators, project numbers (-10%), capital investment (-5%) and jobs created (-

11%).

◦China regained its FDI crown in Asia-Pacific, accounting for 26% of capital investment in the region.

◦Poland continued to rise as a key destination for FDI, with the number of FDI projects increasing 25% and capital

investment increasing 49%.

Source: http://report.fdiintelligence.com/

6 India 2 BBF Foreign Investors as of 31.7.2018 have invested $1277 billion in the Equity market since inception.

India figures in the Top 10 countries in the world receiving Most FDI flows in 2017.

7 Indonesia APEI In terms of investors, securities ownership registered in KSEI experienced sustained growth over the last three years. After

the decline in 2015 due to the weakening of the Indonesian and global stock exchange, ownership of the Indonesian and

global stock exchange, ownership of Foreign and Local investors for Rupiah denominated securities continued to increase,

achieving Rp4,423.07 trillion in 2017.

In 2017, the portion of local ownership in securities registered in KSEI increased from 51.77% to 54.50%. Meanwhile, the

portion of foreign ownership in securities registered in KSEI decreased from 48.23% to 45.50%.

Source: KSEI Annual Report 2017

8 Japan JSDA Market Shares by Type of Investor (market value basis)

Market share

2014 2015 2016 2017

Individuals 17.3% 17.5% 17.1% 17.0%

Governments 0.2% 0.1% 0.1% 0.4%

Financial institutions 15.7% 16.1% 16.2% 16.0%

Pension trusts 1.8% 1.5% 1.3% 1.2%

Investment trusts 4.8% 5.6% 6.3% 7.2%

Insurance companies 5.0% 4.7% 4.6% 4.3%

Business corporations 21.3% 22.6% 22.1% 21.8%

Foreigners 31.7% 29.8% 30.1% 30.2%

Securities firms 2.2% 2.1% 2.2% 2.0%

(Source) Tokyo Stock Exchange

9 Kazakhstan AIFC N/A

48

No. Market Name of

Organization

Share of Foreign Investors in the Stock Trading on the Exchange

10 Korea KOFIA From Jan.1 to Dec.31, 2017 (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 261,485.15 1905.13 261,485.15 1905.14 - -

Foreign 17,257.61 403.23 17,450.93 411.39 191.32 8.16

% 6.66% 21.17% 6.67% 21.59% - -

11 Laos LSCO Source: Lao Securities Exchange (As of 04 July 2018)

12 Malaysia ASCM Year

2013 2014 2015 2016 2017

Foreign

Investors (%)

26 23 27 27 22

Domestic

Investors (%)

74 77 73 73 78

13 Mongolia MASD As illustrated in the chart below, in 2011 foreign investors played a significant role in the Mongolian capital market;

however, by 2015 the percentage of foreign investors dropped significantly. However, foreign investors’ trade has been

increasing slowly since 2015.

The bar chart below demonstrates the value of market capitalization in the Mongolian Stock Exchange from 2015 to June

2018. The Mongolian stock exchange capitalazation increased notably from 2016 to 2017.

Top 20 index:

During the reporting period, the average performance of the TOP-20 index was 19692 points. Consequently, the TOP-20

index has increased greatly in 2017.

49

No. Market Name of

Organization

Share of Foreign Investors in the Stock Trading on the Exchange

Government bond turnover usually plays a paramount role in the Mongolian capital market as the participants are mainly

mega-banks. As of June 2018, stock turnover has been at its highest figure.

14 Myanmar SECM Currently, foreign investors are not allowed in the Myanmar market. However, they are expected to be allowed in the near

future.

15 Nepal SEBON The Nepalese capital market has not yet been opened to foreign investors but homework is underway for policy making.

16 Philippines PASBDI

(PSE)

In 2017, of the total investor accounts, 1.7% comprised foreign accounts (14,441 accounts).

17 Singapore SAS N/A

18 Taiwan TSA USD 207 billion

19 Thailand ThaiBMA

Source: SET

20 Turkey TCMA Foreign Investors

Year

% in Free

Float Mcap

% in Trading

Volume

2013 62.5% 17.6%

2014 63.8% 19.7%

2015 62.4% 21.9%

2016 63.4% 21.3%

2017 65.4% 22.8%

2018/06 62.4% 32.0%

21 Uzbekistan CSM It is not possible to determine the total number of foreign investors and their shares.

22 Vietnam 1 VASB

50

No. Market Name of

Organization

Share of Foreign Investors in the Stock Trading on the Exchange

23 Vietnam 2 VBMA Share of Foreign Investors buy (by value): 20.48% (Jan-June)

Share of Foreign Investors sell (by value): 16.48% (Jan-June)

*Figures from the Ho Chi Minh City Stock Exchange (HOSE)

51

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 The share of foreign investors in the bond trading on Exchange/OTC market in the FY2017-18 is 0%.

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 N/A

6 India 2 BBF Foreign Investors as of 31.7.2018 have invested $550 billion in the debt market since inception.

7 Indonesia APEI Corporate Bond Trading

Throughout 2017, the volume of transactions of Corporate Conventional and Corporate Sukuk in Rupiah denomination

amounted to Rp325.13 trillion, an increase of 4.94% from Rp224.32 trillion in 2016. Transaction frequency reached 30,476

times, an increase of 24.91% from 24.398 times in 2016. While average daily transaction volume in 2017 amounted to

Rp1.35 trillion, an increase of 49.15% from Ro904.51 billion in 2016.

Aside from the Rupiah denomination, there was a single US Dollar denominated transaction, which amounted to

USD1.50 million in 2017, a decline of 81.20% from USD 7.98 million in 2016. Transaction frequency was three times, a

decline of 57.14% from a frequency of seven times in 2016. Meanwhile, the average daily transaction value throughout

2017 was USD0.006 million, a decrease of 80.65% from USD0.032 million.

Trading of Government Bonds

Throughout 2017, the transaction volume of Government Bonds including SBSN, ORI and Retail Sukuk in Rupiah

denomination amounted to Rp3,842.40 trillion, an increase of 5.12% from Rp3,655.21 trillion in 2016. Transaction

frequency reached 214,617 times or an increase of 0.53% from 213,491 times in 2016. Meanwhile the average daily

transaction volume in 2017 was Rp15.94 trillion, an increase of 8.17% from Rp14.74 trillion in 2016.

Source: IDX Annual Report 2017

8 Japan JSDA Bond Trading Volume by Sector (2017)

*Note: “Others” includes Bank of Japan, government-related organizations (e.g. Government Pension Investment Fund),

etc.

9 Kazakhstan AIFC N/A

10 Korea KOFIA 1. OTC Trading by Investor Type

Investors that trade bonds on the OTC market in Korea are mostly domestic institutional investors. A breakdown of trading

volume by investor type demonstrates that securities companies make up the largest share with 60%, followed by asset

managers, banks, insurers and funds/mutual aid associations. Domestic institutional investors are responsible for more than

95% of the trading.

In 2017, the trading volume of securities companies, funds/mutual aid associations and foreign investors inched up by

1.3%pts, 0.4%pt, and 0.2%pt, respectively, while that of banks, asset managers and insurers edged down by 0.2%pt,

1.0%pt, 0.3%pt, respectively.

52

No. Market Name of

Organization

Share of Foreign Investors in the Bond Trading on Exchange/OTC Market

2. Net Bond Purchases by Foreign Investors

Foreigners, on net, bought USD 1.13bn in 2017, a USD 34mn or 2.9% drop from a year ago. They net purchased USD

0.82tn of KTBs, a decline of USD 43mn or 4.8% from the previous year. Figures remained mostly unchanged for MSBs.

11 Laos LSCO N/A

12 Malaysia ASCM

53

13 Mongolia MASD In the first half of 2018, the shares of 220 companies worth USD 42.71 million were traded on the Mongolian Stock

Exchange. The shares of the primary market and secondary market were exactly 26.5% and 73.5%, respectively. At the

same time, government bonds worth USD 23.35 million were traded in the secondary markets.

Securities trading /2018.06.01-2018.06.30/

Securities type Traded value

(million USD)

Equity Primary market 11.32

Secondary market 31.39

Government bond Primary market

Secondary market 23.35

Corporate bond Primary market

Secondary market 0.51

The line graph given shows the percentage of government bond coupons on six types of bonds.

14 Myanmar SECM Currently, foreign investors are not allowed in the Myanmar market. However, they are expected to be allowed in the near

future.

15 Nepal SEBON There is no provision allowing foreign investment in the market of Nepal.

16 Philippines PASBDI

(PSE)

N/A

17 Singapore SAS N/A

18 Taiwan TSA N/A

19 Thailand ThaiBMA

Source: ThaiBMA

20 Turkey TCMA As of July 2018, foreign investors’ share in government bond holdings is 17% whereas this share is 4% for corporate bonds.

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 Vietnam 1 VASB

23 Vietnam 2 VBMA Share of Foreign Investors in the Bond Trading Market (by volume): 4.65% (Jan-June)

*Figures from the Hanoi Stock Exchange (HNX)

54

IV –4. Settlement and Clearing Systems for Securities Transactions (for Stocks, Bond, Derivatives Respectively)

No. Market Name of

Organization

Settlement and Clearing Systems for Securities Transactions

1 Asian Region ASIFMA N/A

2 Bangladesh BSEC Currently, in Bangladesh, we do not have a vibrant bond & OTC market. Therefore, the trading figures in these two markets

are insignificant.

We also still do not have any separate clearing company for settlement and clearing. However, the process is underway to

create a separate clearing company with shareholdings from DSE, CSE, and other financial institutions. Once this is formed,

this company will take over the clearing functions of the stock exchanges.

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, the 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 Clearing corporation (National Securities Clearing Corporation Limited (NSCCL) & Indian Clearing Corporation Limited

(ICCL) carries out clearing and settlement functions as per the settlement cycles provided in the settlement schedule.

The clearing function of the clearing corporation is designed to work out

a) what members are due to deliver and

b) what members are due to receive on the settlement date.

Settlement is a two way process which involves transfer of funds and securities on the settlement date. Thus the process

of Clearing is done by the Clearing Corporation only.

Clearing Corporations (CC)follows a T+2 rolling settlement cycle. For all trades executed on the T day, CC determines

the cumulative obligations of each member on the T+1 day and electronically transfers the data to Clearing Members

(CMs). All trades concluded during a particular trading date are settled on a designated settlement day i.e. T+2 day. In

case of short deliveries on the T+2 day in the normal segment, CC conducts a buy –in auction on the T+2 day itself and

the settlement for the same is completed on the T+3 day. For arriving at the settlement day all intervening holidays, which

include bank holidays, Exchange holidays, Saturdays and Sundays are excluded.

BSE: http://www.bseindia.com/bse_slb/clearingandsettlement.aspx?expandable=2

NSE: https://www.nseindia.com/products/content/equities/equities/clearing_settlement.htm

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.

55

No. Market Name of

Organization

Settlement and Clearing Systems for Securities Transactions

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.

9 Kazakhstan AIFC N/A

10 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.

11 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.

56

No. Market Name of

Organization

Settlement and Clearing Systems for Securities Transactions

12 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. Central Matching

Facility (CMF) in which the settlement via book-entry transfer of securities could be expedited through files transfers. In

Malaysia, the settlement period for securities transaction is T+3 and Bursa is looking into T+2 implementation in 2018.

Meanwhile, 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 bonds and unlisted corporate debt securities are settled and cleared at the Central Bank’s Real Time Electronic

Transfer of Funds and Securities (RENTAS) settlement system.

13 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 establishing 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.

57

No. Market Name of

Organization

Settlement and Clearing Systems for Securities Transactions

With regard to primary market bond trading, no settlement banks are involved and the settlement is done through a

prefunded T+0 system.

14 Myanmar SECM Settlement Cycle for Stocks:

Share transactions at YSX is settled in three business days and this settlement cycle is called as “T+3 settlement (trade date

plus three business days)”. Settlement arising from the share transactions is conducted between YSX and securities

companies (“SCs”) through the designated process in transfer institutions.

Clearing Process

Central Counter Party

- 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 SC and replaces claims and obligations between SCs into ones between

each SC and YSX in a scheme of novation.

Netting

YSX offsets claims and obligations between YSX and SCs in a netting process on a multilateral basis and reduces settlement

risks associated with stock trading.

58

No. Market Name of

Organization

Settlement and Clearing Systems for Securities Transactions

Transfer instruction

After the netting process with fixing the amounts of securities and funds to be delivered from/to SCs, YSX gives transfer

instructions to the transfer institutions for settlement procedure on T+2 day after stock trading.

Settlement Process

Transfer institutions

- YSX is the transfer institution for securities settlement and a fund settlement bank, KBZ Bank Ltd., is a transfer

institution for fund settlement.

- Securities and fund settlement are conducted via account transfer, book-entry transfer, between YSX and each

securities company in the transfer institutions.

DVP settlement

- To prevent a loss of principal, DVP (Delivery Versus Payment) settlement is introduced in the settlement scheme.

- Shares are delivered on the condition that the corresponding cash payment is completed in case of a net buyer

securities company while cash payment are received on the condition that the corresponding shares are delivered

in case of a net seller securities company.

Securities settlement

- Share certificates of listed companies become invalid when a company gets list on YSX and shareholders

information is registered as electronic data in YSX and SCs ICT system (“script less” or “dematerialization

scheme”).

- Share transfer arising from stock trading at YSX is conducted through a process of increasing or decreasing of the

number of shares registered in YSX and SCs ICT system on T+3 day.

Fund settlement

Cash payment arising from stock trading at YSX is conducted between settlement bank account between YSX and SCs with

a fund settlement bank on T+3 day.

15 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.

16 Philippines PASBDI

(PSE)

For Equities

The Securities Clearing Corporation of the Philippines (SCCP), a wholly-owned subsidiary of the PSE and under the

regulatory supervision of the SEC, serves as a clearing and settlement agency for all trades executed in the Exchange

through the Central Clearing and Central Settlement system. SCCP is responsible for establishing the cash and securities

liabilities and entitlements of its Clearing Members, synchronizing the settlement of funds and the transfer of securities

based on the Delivery-versus-Payment Model 3 or Multilateral Net Settlement; guaranteeing the settlement of trades in the

event of a trading participant’s trade default in order to ensure the finality and irrevocability of all Exchange trades through

its Fails Management procedures; implementing appropriate risk management measures in order to mitigate risks inherent

in the clearing and settlement of Exchange trades and the maintenance and administration of the Clearing and Trade

Guarantee Fund.

17 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.

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.

59

No. Market Name of

Organization

Settlement and Clearing Systems for Securities Transactions

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.

18 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

include: (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.

19 Thailand ThaiBMA 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.

Bond

Clearing and settlement of government bonds are done via DVP and on a 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

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+3.

20 Turkey TCMA 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 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.

60

No. Market Name of

Organization

Settlement and Clearing Systems for Securities Transactions

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. But 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.

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 Vietnam 1 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.

23 Vietnam 2 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 the 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.

61

IV-4.1 Settlement Cycles

No. Market Name of

Organization

Settlement Cycles

1 Asian Region ASIFMA N/A

2 Bangladesh BSEC Group: A, B, G, N, Z

Settlement: T+0 (securities) & T+1 (funds)

Clearing: T+2 (A, B, G, N) & T+9 (Z)

3 Cambodia SECC T+2 for securities

4 Hong Kong HKSA N/A

5 India 1 ANMI NSE, Equities:

T+2 rolling settlement

BSE

6 India 2 BBF Same as above.

7 Indonesia APEI At the moment still using T+3, plan to execute the T+2 by the end of November 2018.

8 Japan JSDA In Japan, the settlement period for listed bonds is T+3, and settlement for listed JGBs contracted as of April 23, 2012 and

afterwards takes place in T+2. For over-the-counter transactions, with the objective of mitigating settlement risks,

improving liquidity, safety, and efficiency of government bond markets and short-term financial markets, as well as

maintaining and strengthening the international competitiveness of Japanese markets, the JGB settlement cycle was

shortened to T+1 for trades conducted on and after March 1, 2018.

Currently, the settlement cycle for shares is T+3. However, as a result of the deliberations of the Working Group on

Shortening Stock Settlement Cycle, the delivery date in regular transactions for shares will change to T+2. This change is

scheduled to take effect sometime after the consecutive non-business days in July 2019.

9 Kazakhstan AIFC N/A

10 Korea KOFIA Stocks T+2,

Bonds T+1

11 Laos LSCO Stocks: T+2

12 Malaysia ASCM Stocks (including Exchange Traded Bonds): T+3

Bonds (OTC): T+2

13 Mongolia MASD Secondary Market: T+1

Primary Market: T+0 (mostly government bonds)

14 Myanmar SECM DVP settlement for stocks by Yangon Stock Exchange: T+3

DVP settlement for bonds by CBM-NET at the Central Bank of Myanmar: T+2

15 Nepal SEBON Stocks T+3

62

No. Market Name of

Organization

Settlement Cycles

16 Philippines PASBDI

(PSE)

For Equities: T+3 (trading day + 3 working days)

17 Singapore SAS Cash Trades T+3

(Discussions underway to shorten the cycle to T+2 by end 2018)

18 Taiwan TSA Stocks T+2, Bonds T~T+2

19 Thailand ThaiBMA Stocks T+3; Bonds T+2 (vary depending on agreement); Derivatives T+3

20 Turkey TCMA Takasbank central clearing and settlement operations are in compliance with CPMI-IOSCO (Committee on Payments and

Market Infrastructures - International Organization of Securities Commissions) principles. Delivery Versus Payment

model 3 multilateral settlement is applied. Settlement cycle is T+2 for equities, varies from T+0 to T+90 for fixed income

and T+3 for physical settlement of derivatives contracts.

21 Uzbekistan CSM N/A

22 Vietnam 1 VASB The settlement period for stock transactions is T+2; for bond transactions it is T+1.

23 Vietnam 2 VBMA Stocks T+2; Bonds T+2 to T+4

63

IV –5. Current Status of Off-Exchange Transactions (including PTS, ATS, MTF, etc.)

No. Market Name of

Organization

Current Status of Off-Exchange Transactions

1 Asian Region ASIFMA N/A

2 Bangladesh BSEC PTS, ATS, MTF are not available in Bangladesh Capital Market. However, transfer of securities by the securities holders

in the following circumstances are allowed outside the trading system of the Exchange: (a) Transfer of securities by way

of gift among the family members i.e. spouse, son, daughter, father, mother, brother and sister; (b) Transfer of securities

for execution of a Court order; (c) Acquisition of securities in consideration of other than cash; and (d) Transfer of shares

in case of confiscation/loan default.

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 Very few transactions.

6 India 2 BBF Off-Exchange transactions would be less than 1%, or negligible.

Such transactions take place directly between the two parties who give direct instructions to the depositories to conduct

the transactions. These transactions mainly take place in case of an open offer or takeover of a company. Such

transactions do not require reporting to the exchange. In case the off-exchange transaction is executed through a

registered stockbroker on a principal-to-principal basis, the stockbroker must report such transactions to the Exchanges.

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

9 Kazakhstan AIFC N/A

64

10 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. As of the end of 2017, a total of 119 companies (89 designated companies, 30

registered companies) were participating in the K-OTC market, posting a market capitalization of KRW 14.15tn.

Meanwhile, the average daily trading volume and turnover for the K-OTCBB market was 931 thousand shares and KRW

1.09bn, respectively, throughout the year 2017.

[ Current Status of Companies Participating in the K-OTC Market ]

(Unit: number of companies)

Category 2014 2015 2016 2017

No. of companies 117 128 138 119

New

registration/designation 74 30 16 6

Cancelled

registration/designation 9 19 6 25

Market capitalization

(USD bn) 11.04 9.65 9.30 12.3

※ Statistics before August 25, 2014 are from the Freeboard Market, the previous version to the K-OTC

※ The number of companies and market capitalization are end-of-year figures, while the number of newly joined and

deregistered companies are counted throughout the year.

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 (currently “KBond”) in April 2010.

As of the end of July 2018, 319 institutions and 6,957 individuals were registered with KBond.

11 Laos LSCO N/A

12 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.

13 Mongolia MASD There are no off-exchange trade transactions in Mongolia currently.

14 Myanmar SECM N/A

15 Nepal SEBON SEBON has approved the Over-the-Counter bylaws of the Stock Exhcnage. Hence, the facility for the trading is there;

however, the trading is limited in the Over-the-Counter market.

16 Philippines PASBDI

(PSE)

N/A

17 Singapore SAS N/A

18 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.

65

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.

19 Thailand 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.

21 Uzbekistan CSM mln. UZS

Market Securities For 6 months of 2017 For 6 months of 2018 Change (%)

Volume Amount Volume Amount Volume Amount

Primary

Stocks 11 655 754,9 143 4 487 959,6 3 940 38,5 2 755,2

Bonds 0.0 0 0.0 0 0.0 0.0

In total: 11 655 754,9 143 4 487 959,6 3 940 38,5 2 755,2

Secondary

Stocks 88 911,7 4 006 755 497,3 5 128 849,7 128,0

Bonds 13,2 3 66 104,8 3 0.0 0.0

In total: 88 924,9 4 009 821 602,1 5 131 923,9 128,0

Stock market, total 11 744 666,6 4 149 5 243 456,9 9 068 44,6 218,6

Total: 11 744 679,8 4 152 5 309 561,7 9 071 45,2 218,5

22 Vietnam 1 VASB

23 Vietnam 2 VBMA N/A

82.70%

17.30%

On Exchange Off Exchange

66

IV –6. Share of On-line Trading

No. Market Name of

Organization

Share of On-line Trading

1 Asian Region ASIFMA N/A

2 Bangladesh BSEC As per our current practices, no offline trading takes place.

3 Cambodia SECC Cambodia Securities Exchanges (CSX) just launched a Mobile Trading System (MTS) for Equities Securities Trading on

19th June, 2018.

4 Hong Kong HKSA

5 India 1 ANMI N/A

6 India 2 BBF As the open outcry system does not exist, all transactions in India take place online through the exchanges. Brokers are

connected to the exchanges through leased line or V-SAT. The members in turn extend connectivity to trading terminals

across India through computer-to-computer links (CTCL) again through V-SAT connectivity or through leased lines. The

dealer using his computer link directly executes transactions on the exchange. Besides this, Brokers are permitted to offer

internet or Mobile based trading to their clients. This has encouraged a lot of youth to trade online.

Modes of trading BSE NSE

Non Algo 43.48 32.28

Smart Order Routing 3.15 1.78

Internet based trading 6.63 15.38

Mobile 3.84 6.10

Co-location 31.9 28.48

Algo trading 7.05 15.03

Fow-Now 3.89 0.00

Direct Market Access 0.06 0.94

Figures are in % as of March 2018

67

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 Number of Securities Companies Providing Internet Transactions

(Unit: companies)

Total

Member

Firms

Handling

Internet

Transactions

Not Handling Internet Transactions

Making

Preparations

Studying

Plans

Having No

Plans

Mar. 31, '16 253 66 26.1% 187 73.9% 5 2.0% 2 0.8% 180 71.1%

Sep. 30, '16 257 71 27.6% 186 72.4% 1 0.4% 6 2.3% 179 69.6%

Mar. 31, '17 257 70 27.2% 187 72.8% 2 0.8% 7 2.7% 178 69.3%

Sep. 30, '17 260 72 27.7% 188 72.3% 1 0.4% 9 3.5% 178 68.5%

Mar. 31, '18 260 73 28.1% 187 71.9% 2 0.8% 9 3.5% 176 67.7%

Transaction Value

(Unit: billions of yen)

Stock Transactions

Internet Transactions

Transaction

Value

(c)

Percentage

Cash

Transactions

(a)

Margin

Transactions

(b)

{(a)＋

(b)}/(c)

Oct. '14 to Mar. '15 58,568.7 112,533.9 738,538.5 23.2%

Apr. '15 to Sep. '15 62,061.6 121,001.0 793,596.7 23.1%

Oct. '15 to Mar. '16 46,511.0 104,143.6 742,942.8 20.3%

Apr. '16 to Sep. '16 37,844.6 97,215.7 656,188.0 20.6%

Oct. '16 to Mar. '17 46,726.1 91,723.2 677,414.4 20.4%

Apr. '17 to Sep. '17 48,437.9 94,723.4 694,964.5 20.6%

Oct. '17 to Mar. '18 61,302.6 119,167.5 853,606.3 21.1%

9 Kazakhstan AIFC N/A

10 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

11 Laos LSCO To facilitate online investor trading services especially for foreign investors who not live in Lao PDR, LSCO had issued

the Regulation on Home Trading System (HTS) in July 2013 for online trading. This system has been officially operated

by the Lao Securities Exchange (LSX) since November 2013.

12 Malaysia ASCM Bursa Malaysia does not publish statistics on online transactions traded on the Exchange. However, it is understood that

approximately 27.8% of securities traded are online trades in 2017.

13 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.

68

14 Myanmar SECM N/A

15 Nepal SEBON An internet-based online trading system is being developed. Currently, trading is fully automated and is provided on the

intranet platform of Nepal Stock Exchange.

16 Philippines PASBDI

(PSE)

In 2017, online accounts surged by 28.5 percent from 2016. Out of the total investor accounts in 2017, 388,864 are online

accounts.

17 Singapore SAS This information is not available from SGX.

18 Taiwan TSA In July 2018, online trading accounted for 62.25% of total transactions and 60.08% of the total trading value.

19 Thailand ThaiBMA 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.

20 Turkey TCMA Stock Trading Volume by Dep. (USD) 2014 2015 2016 2017 2018/03 2018/03

Domestic Sales 19% 16% 15% 14% 15% 35,464,148,676

Branch, Bank Br., Rep. Office 30% 29% 22% 21% 20% 47,238,199,825

Branches 9% 13% 18% 18% 18% 41,835,463,277

Bank Branches 17% 12% 2% 2% 2% 3,909,674,642

Representative Offices 4% 4% 2% 1% 1% 1,493,061,906

Internet 24% 26% 33% 42% 46% 108,604,176,481

Call Center 0% 0% 0% 0% 0% 439,613,796

Mutual Funds 0% 0% - - - -

Portfolio Management 0% 0% 0% 0% 0% 299,381,099

Proprietary Trading 7% 6% 6% 4% 4% 8,750,303,971

International Sales 20% 22% 24% 19% 16% 36,981,691,997

TOTAL 20% 22% 24% 19% 16% 237,777,515,845

Futures Trad. Vol. by Dep. (USD) 2014 2015 2016 2017 2018/03 2018/03

Domestic Sales 11% 10% 14% 12% 12% 17,778,869,097

Branch, Bank Br., Rep. Office 25% 29% 27% 29% 29% 40,833,387,682

Branches 12% 17% 24% 25% 25% 36,179,124,115

Bank Branches 11% 11% 2% 3% 2% 2,407,348,277

Representative Offices 2% 1% 1% 2% 2% 2,246,915,289

Internet 34% 33% 30% 29% 28% 39,966,741,209

Call Center 0% 0% 0% 0% 0% 81,017,802

Mutual Funds 1% 0% - - - -

Portfolio Management 0% 0% 0% 0% 0% 337,473,847

Proprietary Trading 6% 3% 5% 8% 10% 14,985,920,897

International Sales 24% 25% 23% 22% 20% 29,044,983,591

TOTAL 100% 100% 100% 100% 100% 143,028,394,124

* Banks’ transactions excluded. BIST Istanbul OTC figures only. Banks’ futures trading volume make up 3% of all

transactions volume.

Lever. FX Trad. Vol. by Dep. (USD) 2014 2015 2016 2017 2018/03 2018/03

Domestic Sales 19% 17% 14% 17% 16% 70,362,287,648

Branch, Bank Br., Rep. Office 2% 0% 1% 7% 8% 35,663,692,565

Branches 1% 0% 1% 7% 8% 34,422,384,169

Bank Branches 1% 0% 0% 0% 0% 1,241,308,396

Representative Offices 0% 0% 0% 0% 0%

Internet 35% 39% 41% 30% 30% 131,867,470,204

Call Center 0% 0% 0% 0% 0% 78,387

Mutual Funds 0% 0% - - - -

Portfolio Management 0% 0% 0% 0% 0%

Proprietary Trading 43% 44% 44% 45% 45% 194,813,458,485

International Sales 0% 0% 0% 0% 0%

TOTAL 100% 100% 100% 100% 100% 432,706,987,289

21 Uzbekistan CSM In 2016, Korea exchange (KRX) implemented an IT Complex for trading, which allowed for 100% online trading on the

securities market.

22 Vietnam 1 VASB N/A

23 Vietnam 2 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.

69

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 Both stock exchanges (DSE and CSE) have their investor protection fund with subscriptions from TREC Holders.

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 N/A

6 India 2 BBF Clearing Corporation or the Exchange Maintains a Settlement Guarantee Fund. Each member contributes to the

Settlement Guarantee Fund. This fund is Utilized when a member defaults to meet his settlement Obligations.

Investor Protection Fund (IPF) is set up by the Stock Exchange in accordance with the guidelines issued by the Ministry

of Finance for retail investor protection, in order to compensate the claims of investors against the members of exchanges

(brokers) who have defaulted or failed to pay. The investor can ask for the compensation if a member (broker) of the

National Stock Exchange (NSE) or Bombay Stock Exchange (BSE) fails to pay the due money for the investments made.

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 Kazakhstan AIFC N/A

10 Korea KOFIA N/A

11 Laos LSCO In December 2015, LSX had improved its trading mechanism by changing from Call Auction trading method to Continuous

Auction in line with daily price change limit ±10%. of a previous day’s closing price to ensure price stability and reduce

the impact of price fluctuation to protect domestic investors.

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.

12 Malaysia ASCM Pursuant to the Capital Markets and Services (Amendment) Act 2012 (CMSA Amendment Act 2012), the establishment of

the Capital Market Compensation Fund came into effect from 28 December 2012 under Part IV of the Capital Markets and

Services Act 2007 (CMSA) to provide recourse and compensation to protect investors' interest.

In addition, under the Capital Markets and Services (Dispute Resolution) Regulations 2010, the Securities Industry Dispute

Resolution Center (SIDREC) was established to resolve monetary disputes between investors and capital market

intermediaries registered as its members including securities brokers.

13 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.

14 Myanmar SECM 2.5% of the annual net profits of trading participants have to be put aside for investor protection.

15 Nepal SEBON There is a provision for an investor protection fund in our Act but it is still in the process of being implemented.

16 Philippines PASBDI

(PSE)

The Securities Investor Protection Fund (SIPF), administered by the Securities Investors Protection Fund Inc., is contributed

to by member brokers of the PSE. It was created to protect investors against losses in case of fraud, failure or insolvency

of a member broker/dealer. Each member contributes an initial fee of P20,000.00 (US$374.81) plus a monthly due

equivalent to 1/1,000 of one percent of its gross monthly volume. The fund is available only to customers of securities firms

who are forced to liquidate.

17 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 $60 million in net assets as at FY

2017.

Protection on Clearing House & Clearing Members (for Equities)

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. 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.

70

No. Market Name of

Organization

Existence of Investor Protection Fund

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

layer (if any).

18 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.

19 Thailand 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 143,604 (~$ 30,000) for the year

2018.

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 Vietnam 1 VASB There is no Investor Protection Fund.

23 Vietnam 2 VBMA N/A

71

VI. ESG/SDGs and the Securities Market

VI –1. Government and/or Industry Initiatives to Promote ESG/SDGs Investment

No. Market Name of

Organization

Government and/or Industry Initiatives to Promote ESG/SDGs Investment

1 Asian Region ASIFMA N/A

2 Bangladesh BSEC N/A

3 Cambodia SECC N/A

4 Hong Kong HKSA N/A

5 India 1 ANMI N/A

6 India 2 BBF India is among the few countries in the world to have introduced a carbon tax.

India, which hopes to reduce its emissions intensity by 33-35 per cent by 2030 (from 2005 levels) and to make 40 per cent

of its population rely on renewable energy in order to meet its Nationally Determined Contribution (NDC) goals, must

rely on external funds to finance this green transition.

India’s ambitious NDCs and Sustainable Development Goals (SDGs) are estimated to cost USD 2.5 trillion and $8.9

trillion, respectively, by 2030.

A few of the Industry Initiatives are as below:

Improved sexual and reproductive health in adolescents by Tata Steel

Waste management initiative by SBI

Hybrid electric buses by Tata Motors.

7 Indonesia APEI N/A

8 Japan JSDA Government Initiatives

In response to the increased salience of the UN SDGs across the globe, the Japanese government announced the creation of

the Sustainable Development Goals (SDGs) Promotion Headquarters on May 20, 2016.

In its second meeting on December 22, 2016, the SDGs Promotion Headquarters approved the guidelines for Japan’s

implementation of the SDGs, which included eight priority tasks and 140 measures. Japan’s progress in meeting these

guidelines was reported to the UN in July 2017.

The third meeting, held on June 9, 2017, led to the creation of the “Japan SDGs Award”, which recognizes the pioneering

initiatives implemented by companies and organizations of the private sector to encourage SDG-related activities.

Most recently, the Ministry of the Environment (MoE) began undertaking initiatives directly related to the SDGs, which

are briefly listed below.

1. Formulation of the Japanese Green Bond Guidelines (2017)

Underlines practical requirements in line with ICMA’s Green Bond Principles to secure the greenness of

bonds

2. Launching Green Bond Issuance Model Creation Projects

Outlines case examples of green bond issuance to share information about eligible green bond projects

among issuers

3. Administering Subsidies for Green Bond Issuance

Covering costs of up to 50 million yen (per issuance) for external reviews and consulting for structuring

green bonds

4. Setting up a High Level Meeting on ESG Finance

In 2018, the High Level Meeting released a set of recommendations, entitled “Toward becoming a big

power in ESG finance”

On top of this, the Japan Financial Services Agency (JFSA) also released the Japanese versions of the Stewardship Code

and Corporate Governance Code in 2015, which encouraged listed companies and institutional investors to seek sustainable

corporate growth and increased corporate value over the mid- to long-term. In June 2018, the Corporate Governance Code

was revised, in which it was clarified that the scope of non-financial information subject to accurate disclosure includes

explanations related to ESG factors.

Industry Initiatives

A large number of institutional investors have begun ESG investment. Most notably, the Japanese Government Pension

Investment Fund, GPIF, became a signatory of the Principles of Responsible Investment (PRI) and committed to incorporate

ESG issues into investment analysis and decision-making processes. The GPIF also selected 3 ESG indices for Japanese

equities and started passive investment tracking those indices, which will account for 3% (about 1 trillion yen) of its

Japanese equity portfolio. Two cover all of the environmental, social, and governance factors, and one index focuses on

gender diversity among social factors.

JSDA Initiatives

The JSDA has tried, for its part, to promote ESG/SDGs investment through many awareness-raising campaigns. It has

established a Council and Subcommittees for promoting the SDGs, and through it, has deliberated on ways that the securities

industry can contribute to the project of the UN SDGs. It has also released a Declaration in Support of the SDGs on March

22, 2018, vowing its commitment to contribute to the sustainable growth of the securities industry.

72

9 Kazakhstan AIFC Sustainable economic growth presupposes economic growth taking into account the ecological and social components. The

ecological component is extremely important for the development of Kazakhstan. The economy of Kazakhstan depends on

the extraction of minerals, which are the traditional sources of energy. Renewable energy technologies were the main theme

of EXPO-2017. On the basis of AIFC, using the unique infrastructure of EXPO-2017, attention will be paid to supporting

renewable energy technologies; AIFC will become a platform for investing in environmental projects. AIFC should be open

to launch Green finance programs, in particular, the issuance of Green Bonds.

10 Korea KOFIA 1. (Increased awareness) The awareness of the importance of sustainable finance is being raised on top of political and

social demand for sound corporate culture, such as transparent corporate governance and management.

1-1 (Market expansion) The NPS (National Pension Service) expressed its commitment to expand SRI by prescribing

provisions for ESG-related considerations and disclosures in the National Pension Act. Such effort is expected to bolster

the market for sustainable finance in Korea.

1-2 The NPS plans to establish ‘Guidelines for Responsible Investment’ and increase the size of entrusted amount for

responsible investment up to 30% (as of March 2018, the ratio lies at 11.5%) of the total entrusted amount for domestic

equity investment (USD 5.2bn as of 2018).

1-3 The issuance of green bonds is also forecasted to increase with the paradigm shift in energy policies towards an active

response to climate change.

2 (Increased information disclosure) Policies related to the disclosure of ESG information will continue to be introduced

with increasing investor demand for ESG information in order to evaluate whether the company complies with relevant

SRI standards.

2-1 There will be increased publication of sustainability reports that describe how companies reflect ESG in their

business.

2-2 Aiming to promote sustainability of listed companies in Korea, the Korea Corporate Governance Service (KCGS) has

evaluated ESG factors related to social responsibility and environmental management to issue grades since 2011.

* Evaluation result of 733 companies in 2017: A+ 5, A 38, B+ 116, below B 574

2-3 In March 2017, the KRX introduced the disclosure system for corporate governance to strengthen transparency of

corporate management.

11 Laos LSCO The 8th Five Year National Socio-Economic Development Plan of Lao PDR has prioritized SDGs as the focal centre to be

counted in the development of social, culture, economic, and environment protection. This includes the objective to create

income sustainability for the population, to focus on water power electricity development, to promote and encourage

handmade products, and to develop the tourism that is friendly to the environment. For the projects related to investment,

particularly FDI, the government has prioritized infrastructure projects such as road construction. As LSCO are involving

the ASEAN Integration, the intention to develop market sustainability and to promote green finance including green bonds

is essential. The Lao PDR also works hard to develop markets, including capital markets, to be more sustainable. By doing

so, our regulatory framework is set forth to not only supervise and regulate the market participants, but also to make them

operate in the capital markets with their necessary qualifications, keeping in mind certain conditions and sustainability.

12 Malaysia ASCM Launched at the historic United Nations (UN) Summit in New York in 2016, the SDGs were ratified by 193 UN member

states as a common framework for countries, businesses and civil society to focus their efforts on transforming the world

by 2030. For Malaysia, the SDGs align to and build on the sustainable development agenda already set in motion by the

Eleventh Malaysia Plan 2016-2020, which seeks to ensure that no section of society is left behind in nation development.

As an initial step in Bursa's journey to contribute to the SDGs, Bursa has looked at the five goals put forward by the

Sustainable Stock Exchanges Initiative as relevant for stock exchanges to support:

- Gender equality

- Decent work and economic growth

- Responsible consumption and production

- Climate Action

- Partnership for the goals

In October 2015, Bursa Malaysia launched a new Sustainability Framework, comprising amendments to the Listing

Requirements and the issuance of a Sustainable Reporting Guide and Toolkit.

This mandates all listed companies to publish sustainability reports in stages over a three-year period. Those with a

market capitalisation over MYR2 billion (US$500 million) were required to disclose a sustainability statement in their

annual report issued for the financial year ended 31 December 2016. All other listed companies are required to do the

same by 2018. Bursa’s required sustainability statement refers to the management of material economic, environmental

and social (EES) risks and opportunities of their business.

73

13 Mongolia MASD INDICATORS FOR MONGOLIAN SUSTAINABLE DEVELOPMENT VISION 2030

The following 20 key results indicators will be used to assess the performance and implementation of Mongolian

Sustainable Development Vision 2030

№ Indicator Measuring unit Base level Target level (2030)

1 Annual average economic growth Percent 7.8 6.61

2 Gross national income per capita USD 4166 17500

3 Human development index Rank 90 70

4 Life expectancy Years 69.57 78

5 Poverty rate Percent 21.6 0

6 Global competitiveness index Rank 104 70

7 Doing business index Rank 56 40

8 Environmental performance index Rank 111 90

9 Share of the population with social insurance

coverage in the total economically active

population

Percent 84.4 99

10 Gini coefficient of inequality Score 36.5 30.0

11 Infant mortality ratio per 1,000 live births Ratio 15.1 8

12 Maternal mortality ratio per 100,000 live

births

Ratio 30.6 15

13 Number of students in a class at high school

(national average)

Number 27.3 20

14 Area of the land with disease free status for

international trade certified by The World

Animal Health Organization

Percent 0 60

15 Area of desertified land Percent 78.2 68

16 Area of specially protected land Percent 17.4 30

17 Number of foreign tourists traveling in

Mongolia

Million Person 0.392 2.0

18 The share of the households using reliable

electricity

Percent 89 100

19 The share of the processing sector exports in

total exports

Percent 17 50

20 Share of main fuel products supplied from

domestic production

Percent 0 100

Establish sound development of finance and financial market system that would help promote stable economic

growth; increase the role of nonbank financial institutions in the financial markets; and stabilize the different

financial institutions: commercial banks, stock exchange and insurance companies.

Phase I - (2016-2020): Improve the regulations of financial market, increase the share of the stock exchange to 10 percent,

reduce the share of commercial banks to 90 percent, and increase the share of insurance market in the financial market.

Phase II - (2021-2025): Further improve the regulations of financial market, increase the share of stock exchange to 12

percent, reduce the share of savings invested in commercial banks to 86 percent, and further increase the share of insurance

market in the financial market.

Phase III - (2026-2030): Continue to improve the regulations of financial markets, increase the share of stock exchange to

16 percent, reduce the share of commercial banks to 82 percent, and continue to increase the share of insurance market in

the financial market.

Establish Development Finance system, and improve and implement a proper foreign and domestic debt system.

Phase I - (2018-2020): Establish a sound development finance system, restructure and settle debts without adversely

affecting the economy and the balance of payments, ensure that the foreign debt is less than 58.6 percent of the Gross

Domestic Product, and maintain proper debt and other financial thresholds.

Phase II - (2021-2025): Strengthen the development finance system, develop a sound debt management system, implement

proper foreign debt management, strictly comply with debt ceilings, and ensure that foreign debt is less than 50 percent of

the Gross Domestic Product.

Phase III - (2026-2030): Strictly comply with debt ceilings, and ensure that the foreign debt is less than 40 percent of the

Gross Domestic Product.

14 Myanmar SECM Public companies are encouraged to implement good environmental and social practices. Public companies are also

expected to secure Good Corporate Governance before they apply for permission of their IPOs.

15 Nepal SEBON a. In our capital market, a company wanting to issue shares which uses local resources has to issue 5% of total

capital to the local people

b. Industries can only operate after submission of acceptable EIA (Environmental Impact Assessment) Report

for environmental safety

c. Government of Nepal promotes hydroelectricity projects for renewable energy which helps to protect the

environment and promotes sustainable development. Its current contribution is 9.7% and growing.

16 Philippines PASBDI

(PSE)

With respect to green bond issuance, the SEC recently approved its Guidelines on the Issuance of Green Bonds under the

ASEAN Green Bonds Standards in the Philippines.

74

17 Singapore SAS Singapore is the first SE Asian country to start carbon pricing at US$3.63 (S$5) per tonne of emissions from 2019 to

2023, with the intention to raise it to between S$10 and $15 per tonne by 2030. According to World Bank, this carbon tax

rate is lower than most countries. The global average is US$21.50 per tonne of emissions, France charges US$33, Nordic

countries charge between US$25 (Denmark) and US$126 (Sweden). Last year, eight central banks including MAS, Bank

of England, Deutsche Bundesbank, People’s Bank of China, decided to establish a network for greening the financial

system.

At the industry level, SGX and World Bank launched an education partnership to raise investor awareness for bonds that

achieve a positive social impact. Its inaugural forum “Understanding Bond Investments and Quality Products with a

Social Purpose” was held for discerning investors looking to make a social and environmental impact through their

investments.

A series of sustainability education and awareness workshops supported by MAS were held by SGX to guide listed

companies on practical and relevant know-how on sustainability reporting.

SAS, together with SGX, held a roundtable with research heads to deliberate on sustainability and with WWF for SAS

members to understand sustainability ESG considerations when servicing clients.

18 Taiwan TSA 1. Taiwan was the first Asian market to implement mandatory GRI G4 CSR reporting in 2015. CSR reports include

ESG data that enables shareholders to view items beyond financial information.

2. TSE hosts seminars to promote ESG factors in investment to attract corporations’ and institutional investors'

attention on Responsible Investment, and works to promote the idea of integrating sustainability considerations

into investment decisions.

19 Thailand ThaiBMA SEC encourages the issuance of green bonds and social bonds; however, as they are new to the local markets, the cost to

issuers in meeting the currently established international criteria discourages the issuers to issue green bonds, compared to

plain vanilla bonds. Nevertheless, ThaiBMA and SEC are trying to promote ESG/SDGs bond issuances via seminars.

20 Turkey TCMA N/A

21 Uzbekistan CSM Currently, Uzbekistan is paying special attention to improve the quality of life of people in cities and villages considering

the 17 aspirational global goals. On the other hand, the private sector is also actively participating in initiatives to promote

SDGs related projects throughout whole country.

22 Vietnam 1 VASB N/A

23 Vietnam 2 VBMA Decision 1191/QĐ-TTg issued on August 2017 on the roadway to develop the bond market between 2017 and 2020

mentioned the plan to develop policies on green bonds.

75

VI –2. Status of ESG/SDGs-related Market

No. Market Name of

Organization

Status of ESG/SDGs-related Market

1 Asian Region ASIFMA N/A

2 Bangladesh BSEC N/A

3 Cambodia SECC N/A

4 Hong Kong HKSA Green bond issuance

Hong Kong Financial Secretary Paul Chan Mo-po said the government expects to issue the first batch of green bonds in

this fiscal year, which will be used to fund “green public works” projects.

Highlights of the Scheme:

(a). The borrowing ceiling has been set at HK$100 billion

(b). The pilot scheme is to last for three years

(c). The budget in February proposed. A company can apply for the grant for up to two bond issuances.

(d). In May 2018, the Hong Kong Monetary Authority published guidelines on the proposed grant of HK$2.5 million

for first time corporate bond issuers in Hong Kong

SDGs index

Data not available.

ESG ratings

Effective from the 2016 financial year, the Listing Rules require issuers to publish Environmental, Social and Governance

(“ESG”) reports under the Guide, each Aspect requires general disclosures on a “Comply or Explain” basis on the issuer’s

policies

The ESG Review analyzed the disclosures made by 4003 randomly selected issuers (“Sample Issuers”) across the industries

set out in the Hang Seng Industries Classification System.

76

No. Market Name of

Organization

Status of ESG/SDGs-related Market

77

No. Market Name of

Organization

Status of ESG/SDGs-related Market

Investment funds with ESG/SDGs consideration

Not available in Hong Kong

5 India 1 ANMI N/A

6 India 2 BBF Bombay Stock Exchange and National Stock Exchange also have ESG indices which can help investors screen such

companies.

The MSCI India ESG Leaders Index is a capitalization weighted index that provides exposure to companies with high

Environmental, Social and Governance (ESG) performance relative to their sector peers.

Yes Bank has raised over Rs 1,000 crore by floating green infra bonds and Exim Bank has obtained $500 million through

the issue of green dollar bonds. The Reserve Bank of India has included renewable energy project financing as a part of

priority sector lending category in July 2015.

7 Indonesia APEI N/A

78

8 Japan JSDA Sustainable investment in Japan is still of limited scale compared to that of Europe and the United States, but has been

steadily increasing.

The number of signatory institutions of the “Principles of Responsible Investment” (PRI), which can be identified as

institutional investors who are active in sustainable investment, is increasing globally and their assets under management

are also significantly growing.

Number of PRI signatory institutions and assets under management in Japan

Source: Japan Sustainable Investment Survey 2017 (JSIF)

For social bonds, the Japan International Cooperation Agency (JICA) has issued social bonds in accordance with the Social

Bond Principles since 2016. Due to the rise of awareness of ESG investment, both green and social bonds were very popular

amongst Japanese asset owners, and the issuance of these bonds on the supply-side scarcely meet the overwhelming

demand.

9 Kazakhstan AIFC N/A

10 Korea KOFIA 1. (Overview) The market for Korea’s SRI (Social Responsible Investment)* is valued at approx. USD 6.1bn, with public

pension funds taking the majority share (93.6%). (as of 2016)

* The total estimated amount of SRI form public pension funds + publicly offered funds + Korea Post : USD 6.8bn in

2012 → USD 7.1bn in 2013 → USD 7.3tn in 2014 → USD 6.8bn in 2015 → USD 6.1bn in 2016.

1-1 The proportion of publicly offered funds in the SRI market is currently on a decline.

* The respective share of public pension funds and publicly offered funds were 57.3% and 42.7% in 2011, which changed

to 93.6% and 5.3% in 2016.

2. (Pension fund investment) The National Pension Service (NPS), Teacher’s Pension, Government Employees Pension

Service, Korea Post and Korean Teachers’ Credit Union are the domestic pensions funds that manage part of their funds in

a socially responsible manner.

- Their SRI exposures are 1.1%, 0.6%, 1.0%, 0.1% and 0.2%, respectively (as of the end of 2017).

79

<SRI of Major Pension Funds in Korea> (Unit : USD 1bn)

2015 2016 2017

SRI Size 6.26 5.87 6.30

Total AUM Size 572.90 619.46 683.23

SRI Exposure 1.1% 0.9% 0.9%

* Source: Korea Sustainability Investing Forum

3. (Fund market) The size* of publicly offered SRI funds recorded USD 360mn with 47 funds, which is a mere 0.16% of

the total AUM of public funds (USD 223 bn) (as of Jul. 2018).

* The size is on a decline: USD 2.32bn in 2011 → USD 1.35bn in 2013 → USD 0.59bn in 2015

3-1 There have been consistent outflows of capital due to the poor performance* of SRI funds.

* The YTD average return for SRI funds recorded –7.16%, similar to the return of domestic equity funds (-7.80%).

3-2 As for SRI ETFs, the market is valued at USD 91.7mn with 6 products.

<Current state of SRI ETFs>

Name of

ETF Benchmark index

Establishment

date

AUM

(USD

1mn)

Return since

establishmen

t

ARIRANG ESG

LEADING

COMPANY

WISE ESG LEADING

COMPANY INDEX ’17.08.29 19.6 -6.28%

HIGH FOCUS ESG

LEADERS ESG LEADERS 150 INDEX ’17.12.12 28.7 -0.17%

TIGER MSCI

KOREA ESG

UNIVERSAL

MSCI KOREA ESG

UNIVERSAL INDEX ’18.02.06 8.3 -5.13%

TIGER MSCI

KOREA ESG

LEADERS

MSCI KOREA COUNTRY ESG

LEADERS CAPPED INDEX ’18.02.06 8.1 -3.40%

KODEX MSCI

KOREA ESG

UNIVERSAL

MSCI KOREA ESG

UNIVERSAL CAPPED INDEX ’18.02.06 20.8 -4.95%

KB STAR ESG SRI KRX ESG SRI ’18.02.06 6.2 -3.46%

3-3 The Korea Exchange (KRX) determines the ESG-related index. However, the index is not widely used due to low

interest.

4. (Bond issuance) The Korea Eximbank was the first Asian financial institution to issue a green bond in 2013, while

Hyundai Capital was the first private company to do so in 2016.

<Issuance of ESG bonds in the Korean Paper market since 2018 >

Issuer Type Issuance period Issued amount

Korea Eximbank Green bond March USD 400mn

K Water Water bond May USD 300mn

Korea Hydro & Nuclear Power Green bond July USD 600mn

Industrial Bank of Korea Social bond Planned USD 500mn

Korea East-West Power Green bond Planned USD 500mn

11 Laos LSCO However, the LSCO currently does not have a clear plan on sustainability development in terms of green bonds, as at

present, there is no green bond issued in Lao PDR. For ratings on ESG/SDGs in the capital market, we also do have a plan

yet, but we fully engage in surveys and join sessions or trainings regarding this topic, some of which are organized by

international organizations namely ADB or WB. We fully support international organizations in providing information

about our jurisdiction.

Apart from that, The Bank of Lao PDR (BoL) has been involved in green finance development, and representatives from

BoL and LSCO have regularly attended the meetings on green finance development in the ASEAN Integration.

12 Malaysia ASCM In December 2014, Bursa Malaysia and FTSE launched an Environmental, Social and Governance (ESG) index i.e.

FTSE4Good Bursa Malaysia Index for the Malaysian market to:

support investors in making ESG investments in Malaysian listed companies;

increase the profile and exposure of companies with leading ESG practices;

encourage best practice disclosure; and

support the transition to a lower carbon and more sustainable economy.

80

The FTSE4Good Bursa Malaysia Index constituents are selected from the top 200 Malaysian stocks in the FTSE Bursa

Malaysia EMAS Index, screened in accordance with the transparent and defined Environmental, Social and Governance

(ESG) criteria. The index has been designed to identify Malaysian companies with recognised corporate responsibility

practices, expanding the range of the benchmarks of the FTSE Bursa Malaysia Index Series for the Malaysian Markets.

Criteria: To be included in the index, companies need to meet a variety of ESG inclusion criteria. The criteria are

consistent with the global ESG model that FTSE has developed and draw strongly from leading global disclosure

frameworks such as the Global Reporting Initiative (GRI) and Carbon Disclosure Project (CDP).

Corporate Transparency: Assessments are based on publicly available data sources and therefore companies are

encouraged to ensure that high quality data and information is provided publicly on their ESG practices and performance.

Index Governance: Index governance is aligned with that of the FTSE4Good and FTSE Bursa Malaysia Index Series. The

FTSE Bursa Malaysia Committee defines the eligible universe through the composition of the FTSE Bursa Malaysia

Index Series, and the independent FTSE4Good Committee is responsible for overseeing the environmental, social and

governance criteria.

Investment funds with ESG/SDG considerations

Some domestic institutions e.g. pension funds are taking ESG/SDG into consideration as part of their investment decision-

making process.

13 Mongolia MASD The “Mongolian green lending fund” has budgeted 60 million USD in 2018 in order to implement the following 3 missions;

- To provide eased credits to The Ger district citizens for the thermal solutions which would lead to a decrease in air

pollution,

- To provide eased credits to construction projects adopting environmentally friendly new technologies,

- To provide eased loan to power users according to “Power saving” law.

The initial 20 million USD of the “Green fund” will be funded by the donor organizations such as “Climate green fund”,

“Whole world climate corporation fund”, “European Bank for Reconstruction and Development” and other financial

institutions.

Green bonds do not exist in Mongolia yet.

The following are funds that the Mongolian fiscal budget funded and which are implemented by The Government or

ministries;

№ Budget Funds Millions

1 Education loan fund 9.3

2 Employment support fund 8.2

3 Small and medium enterpeneur development fund 20.3

4 Cattle protection fund 16.7

5 Farming support fund 17.2

6 Social welfare fund 131.5

7 Technical education support fund 3.6

8 Science and technology fund 6.9

9 Culture and arts development fund 0.04

10 Environment and climate fund 0.9

11 Health support fund 1.2

12 Federal reserve fund 13.5

14 Myanmar SECM Still in development in collaboration with other regional regulators.

15 Nepal SEBON N/A

(So far our market is equity based, as debenture/bond trading is almost zero. Still, the government and regulators have met

to take initiatives for ESG/SDGs related market.)

16 Philippines PASBDI

(PSE)

N/A

17 Singapore SAS In October 2017, SGX welcomed its first green rupee-denominated (Masala) bond listing of Indian Renewable Energy

Development Agency Limited (IREDA), a public limited government company that provides financial support for

renewable energy projects in India.

This inaugural listing raised US$300 million through a five-year green rupee-denominated bond, offering an annualized

coupon of 7.125%.

18 Taiwan TSA 1. To promote the 5+2 Industrial Innovation Plan and to put Taiwan in line with the international trend, Taiwan’s

competent authority has been pushing for green bonds since last year. Taipei Exchange announced Taipei

Exchange Operational Directions for Green Bonds on Apr. 21, 2017.

2. The green bonds of the first wave were listed on May 19, 2017. At present, 18 green bonds have been listed,

with issuance value around USD 1.5bn.

3. Financial Supervisory Commission announced Regulations Governing Issuance of NTD Bank Debentures by

Foreign Bank Branches, which requires that the funds raised from the NTD bank debentures shall be used for

relevant financing of major public constructions, offshore wind power constructions, and other constructions of

green energy industries in Taiwan as a general rule, and the regulations also stipulate that these may not be

exchanged to foreign currencies.

19 Thailand ThaiBMA SEC is in the process of drafting the Green Bond Principles, guideline and standards for local green bond issuance to

encourage issuance, and ThaiBMA is considering reducing the Bond Registration Fee for green bonds.

81

20 Turkey TCMA Borsa İstanbul Sustainability Committee was established in 2015 to implement sustainability in an integrated and effective

manner, to monitor sustainability strategy and performance and to conduct works and studies to integrate sustainability into

decision making mechanisms and business models in Borsa İstanbul.

Borsa Istanbul has a sustainability index called the BIST Sustainability Index. BIST Sustainability Index aims to provide a

benchmark for Borsa İstanbul companies with high performance on corporate sustainability and to increase the awareness,

knowledge and practice on sustainability in Turkey. Moreover the index is a platform for institutional investors to

demonstrate their commitment to companies managing environmental, social and governance (ESG) issues with high

performance.

TSKB, a pioneering bank in sustainability, executed a “Green / Sustainable Bond” issuance in the international capital

markets. The deal is the first ever public benchmark Green / Sustainable Bond out of Turkey and CEEMEA region with

300 million dollars of a size and 5 year tenor.

21 Uzbekistan CSM The SDGs-related market infrastructure is currently being discussed as a part of every aspect of reform made throughout

the country.

22 Vietnam 1 VASB N/A

23 Vietnam 2 VBMA N/A

82

VII. Challenges for Securities and Capital Market

VII – 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 the EU Benchmarks Regulation

2. Capital risk and market liquidity following the finalization of post-crisis financial reforms from the Basel Committee

on Banking Supervision (BCBS)

3. Fragmented markets with distinct legal systems and market structures

4. Pension fund and insurance reform to broaden the institutional investor base in the local capital markets

5. Lack of well-developed electronic systems and connectivity

6. Unnecessary restrictions and requirements that are either complex or bring unintended consequences, which serve as

impediments to investment

7. Cybersecurity threats and business continuity management (e.g., data localization, third-party mandated penetration

testing, restrictions on cross-border data transfers)

8. Improvements to conduct and risk culture in financial institutions

2 Bangladesh BSEC Our market is still at a nascent stage without much diversity of products and mostly dominated by retail investors.

3 Cambodia SECC - Business owner understanding about securities market. Most 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 1. Bond Connect: Northbound Trading commenced on 3 July 2017, allowing overseas investors from Hong Kong

and other regions to invest in the China interbank bond market (CIBM) through mutual access arrangements in

respect of trading, custody and settlement. Southbound Trading will be explored at a later stage. China’s bond

market is now valued at 65 trillion yuan (US$9.57 trillion) and foreign investors hold about 800 billion yuan, or

1.3 per cent of the total.

2. HKEX removes the streamlined process for GEM transfers to the Main Board; introducing a mandatory public

offering requirement of at least 10% of the total offer size for all GEM initial public offerings (IPOs); increasing

the minimum market capitalization of Main Board applicants at the time of listing from $200 million to $500

million. And increasing the minimum cash flow requirement for GEM applicants from $20 million to $30 million;

3. On 9 July 2018, XiaoMi Corporation (1810.HK) was the first weighted voting rights (WVR) company listed in

Hong Kong. However, the Shanghai and Shenzhen stock exchanges announced on 14 July that Hong Kong listed

dual-class shares would not be admissible for southbound trading on Stock Connect given Mainland retail investors

are not too familiar with the WVR structure.

4. The sharp depreciation of Renminbi, which has been falling more than 8% against the dollar since March 2018.

5 India 1 ANMI - Physical settlement in equity derivatives

- Additional risk management measures for the derivatives segment

- Various udpates in the reporting requirements prescribed by the Exchanges.

6 India 2 BBF Recent Incidents:

1. Misuse of clients assets by some securities firms

2. Unauthorized trading in dormant clients accounts

Challenges:

Increase in regulatory compliances due to the above recent incidents.

GST understanding and its implementation.

7 Indonesia APEI The main challenges in the securities market are:

1) Increasing the public knowledge of the Capital Market so that the public understands:

a) Which investment product is actually part of the capital market and under supervision by authorities.

b) 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 regulations to monitor the securities firms, the investors, as well as 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 always discourages foreign investors

8) Synchronization of rules between OJK, the Tax Office and the Bank of 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

83

9 Kazakhstan AIFC Major Challenges in the securities market are:

- low liquidity of the securities market;

- small number of retail investors. Major investors of the securities market of Kazakhstan are institutional investors, like

single pension fund, commercial banks, insurance companies;

- small number of issuers; and

- deficit of financial instruments.

10 Korea KOFIA 1. Impact of Technology Development on the Financial Investment Industry and Industry Response

1-1, Technology development poses both an opportunity as well as a threat to the Korean financial investment

industry → “Too big to ignore”

- (Threat) Competition with existing global players will intensify as global IBs like Goldman Sachs* leverage IT

technology. Not only that, but internet companies such as Google and Amazon are projected to emerge as strong

competitors

* Declared itself an IT company in 2015; in fact, more than one fourth of its executives and employees are computer

engineers

- (Opportunities) Korea is globally competitive with a tech-friendly environment and sophisticated IT infrastructure

and workforce

1-2, From a technological perspective, the Korean capital market is: i) a tech-friendly market, ii) a market where the

convergence of finance and technology is promoted, iii) a market that actively responds to the 4th Industrial Revolution

i) The Tech-Friendly Korean Financial Investment Market

- The percentage of individual investors’ trading agreement is very high (50~70%) in Korea due to the sophisticated

IT infrastructure and convenient electronic trading platforms (HTS, MTS)

ii) Active Collaboration between financial companies and IT companies

- The Korean financial authority is pressing for the regulatory reform of the fintech industry* and stronger

cooperation is being witnessed between financial companies and fintech companies

* Opened the Fintech Service Center (in May 2015), established the financial industry’s joint fintech open platform (in

Aug. 2016), introduced the regulatory test bed (in Nov. 2017), nurtured venture capital and promoted the KOSDAQ

market (in Jan. 2018), etc.

- Korean securities firms are providing the market place* to fintech companies by actively introducing investment

advisory solutions of fintech companies → Expanding the customer contract points of fintech companies and

providing various selection opportunities

* Example: “Robo-market” of Kiwoom Securities (algorithm store)

- In addition, Korean securities firms are proving their global competitiveness by exporting their electronic trading platforms

(HTS, MTS, etc.) to other countries including Thailand

· Korean companies’ platforms are also being implemented and applied for acquisition of overseas financial investment

companies

iii) Active Response to the 4th Industrial Revolution

- (Response of Members) Korean securities firms and asset managers, etc. are introducing services utilizing Robo-

advisors, big data, Blockchain and Chabot

- (Response of KOFIA) The pilot services of the Blockchain-based Chain ID* have been launched (at end-Oct. 2017),

which established an electronic signature system that does not require an institution to authenticate transactions

* 7 companies out of 11 participating companies are currently providing services to clients (clients may select 1 between

the public key certificate and Chain ID; the number of issuances is steadily increasing), 4 companies are in the

internal testing process → commercialization continues to be a matter of discussion; planning to have members

that wish to participate from 2H 2018 sign commercialization contracts

1-3, In addition, KOFIA is reviewing plans to jointly develop AI-based technologies and RegTech platform with

members

1-4, KOFIA will take the lead in the digital innovation of the financial investment industry as a “digital innovator”

through the launch of the “Digital Innovation Forum,” which will oversee the digitalization of the industry.

* Enhance the understanding of and participation in digital innovation through discussions among 13~15 industry CEOs,

ICT experts and academics with the KOFIA Chairman presiding over the forum. Organization composition and

initiatives will be selected going forward.

11 Laos LSCO 1. Inadequate legal and regulatory frameworks;

2. Limited choice of 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 of the capital market.

84

12 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 in 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.

13 Mongolia MASD Strengthening the capacity of MASD as an 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.

14 Myanmar SECM - No major recent incidents

- No secondary market for bonds yet

- Preparation for foreign investors to participate in the capital market once the Myanmar Companies Act takes effect

on 1st August 2018

15 Nepal SEBON Absence of real sector companies and dominance of banks and financial institutions have increased the sectorial

risk of the market.

Lack of institutional investors and the dominance of the individual investor cause high volatility in the secondary

market.

16 Philippines PASBDI

(PSE)

Create an enabling market infrastructure that can cope with structural changes

Limited products

Small investor base

Impact of ASEAN integration to the stock market

17 Singapore SAS Cyber Attacks

Some 1.5 million personal data records were stolen from Singapore Health Services after a cyber attack in July 2018. In

the wake of this attack, MAS directed all financial institutions in Singapore to tighten their customer verification

processes and conduct risk assessments, requiring additional information from clients.

Regulatory Stance on Cryptocurrency Exchanges and ICOs

MAS view digital tokens, ICOs as securities or futures contracts which contravene the Securities & Futures Act with no

regulatory safeguards for customers.

Smart Nation Initiatives

The National Digital Identity framework (MyInfo, digital Id, digital signatures, PayNow, PayNow Corporate) are being

progressively rolled out as part of Smart Nation initiatives.

We are working with SGX to improve end-to-end customer experience for a seamless and integrated journey through

MyInfo (drawing information from the National Digital Identity System of citizens’ records hosted by GovTech).

IMF Financial Sector Assessment

Singapore will undergo IMF’s Financial Sector Assessment Program this year to assess resilience of its financial sector,

quality of MAS regulatory framework and supervision, and capacity of authorities to manage and resolve financial crises.

Dual Class Shares

SGX released its responses to feedback following two public consultations on a listing framework for DCS structures,

codifying the framework and appropriate safeguards in Singapore. A majority supported it though some felt governance

issues like disclosure and share conversion still fell short.

SGX reported good interest in DCS listing and believed Richard Li’s FWD Insurance Group may be one of the pioneer

DCS to be listed.

85

Derivatives Product Listing

SGX is resuming talks with regulators in India and India’s National Stock Exchange (NSE) after India stopped the

licensing agreement with SGX on Nifty 50 futures products in Feb this year, citing migration of liquidity from India as

the reason.

18 Taiwan TSA 1. Extension of reduction on Day Trading tax by half to the end of 2021.

2. Separation of capital gains tax from income tax.

19 Thailand ThaiBMA 1. Fund flows in and out of the emerging markets according to the expectations of the FOMC decision on raising

the policy rate

2. Brexit effects

3. Fluctuation of exchange rates

4. Fed Fund Rate expectations

5. Financial innovation technologies, such as blockchain, DLT, cryptocurrencies

20 Turkey TCMA The Turkish government introduced the auto-enrolment scheme within the context of private pension system in 2017. The

system covers both private and public sector employees and is intended to boost domestic savings and provide additional

income to participants upon retirement.

The system went live on Jan 1st, 2017 for companies with 1,000+ employees. As of June 2018, there are more than 4.1

million enrollees in the auto-enrolment scheme with AUM totaling TRY 4.3 billion in addition to the 7.0 million enrollees

in the private pension system with AUM of TRY 71.2 billion.

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 Vietnam 1 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 Vietnam 2 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

86

VII – 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 Our market is dominated by retail investors and the market is sometimes volatile.

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.

- Company owners’ belief that going public will cost more for their companies. They are reluctant to go public as they

are not sure they can activate their company if they list on the exchanges.

4 Hong Kong HKSA 1. US imposed tariffs on US$34 billion of Chinese products on July 6, prompting similar action from China. The Hong

Kong government said about 17 per cent – or HK$60 billion (US$7.6 billion) worth – of Chinese exports in question

passed through the city to the US, and about 9 per cent – HK$6 billion – of US exports came through on the way to

mainland China. The exports in question accounted for 1.4 per cent of Hong Kong’s overall trade.

2. The Fed and the European Central Bank pushed towards the normalization of monetary policy, The Fed’s rate hike will

inevitably accelerate and the dollar will strengthen.

3. The depreciation of the renminbi has accelerated. It is unfavorable for Chinese-funded enterprises and it may have a

chance to plague stock market performance.

4. China announced the CDR (Chinese Depository Receipt) trial earlier this year, which is modelled on US-listed

American depository shares, in a bid to lower regulatory barriers for offshore-listed Chinese companies to list at home.

Once the CDR program is introduced, the status of Hong Kong as major fundraising venue may be affected.

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 BBF 1. Capital markets need to expand the breadth and depth in serving the national economy and create financial

Inclusion.

2. The intrinsic restraint mechanism is not perfect, some market participant lack of honesty and law-abiding sense.

3. Capital markets need to improve investor suitability arrangement. Ensure the right product is sold to the right

investors.

4. The foundation of rational investment and long-term investment is not yet solid, and the phenomenon of

speculation is still quite prominent.

5. 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 Improving the institutional infrastructure for off-exchange transactions related to stocks (e.g. shareholders

community, equity-based crowdfunding, PTS margin transactions, etc.)

Shortening the settlement cycle for stocks (T+2)

9 Kazakhstan AIFC N/A

10 Korea KOFIA Please see our discussion in “Major Recent Incidents and/or Challenges in Securities and Capital Markets as a Whole”

11 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.

87

No. Market Name of

Organization

Specific Challenges in Equity Markets

12 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.

13 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.

14 Myanmar SECM - High interest rates

15 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)

16 Philippines PASBDI

(PSE)

Please see answer to “Major Recent Incidents” above.

17 Singapore SAS Increasing Retail Participation

Investors in Singapore are still spooked by the global trade wars amid uncertainties especially on EM assets.

SGX and member companies continue their education outreach through investment fairs and seminars.

Investors however prefer investing in properties than the equity market and the government came with another round of

cooling measures in July to dampen fervor.

Subdued Transaction Turnover due to high stock valuations and into passive investing

Revenue from equities and fixed income fell 0.6% to S$23m while the derivatives segment increased 4% to S$85m and

the securities trading and clearing went up almost 12% to S$56m as reported by SGX in its Q4 2018 report. Overall the

lacklustre performance drag down investors’ sentiment.

FinTech, Technology and other Disruptions

Fintech, robo advisers, artificial intelligence, Big Data, block chain, cyber security risks are constantly evolving and a

need to take advantage of digital trends to grow the business. Crowdfunding and other start-ups are drawing attention

with one crowfunding platform declaring as “private stock exchange”. MAS has since clarified that a regulatory licence is

needed to be a bourse operator.

MAS and SGX partnered with Deloitte, Nasdaq and Anquan to harness blockchain technology to develop Delivery versus

Payment (DvP) capabilities for settlement of tokenized assets across different blockchain platforms. SGX is also tapping

fintech to build a pre-IPO and IPO market for emerging growth companies.

18 Taiwan TSA 1. The percentage of market value held by foreign investors reached 39.59% as of September 2018 , and thus the challenge

that the TAIEX is heavily influenced by foreign investors still exists.

2. Domestic individual investors in Taiwan account for 60.2% of the Trading Value as of September 2018.

3. There is a shortage of young retail investors participating in the equity market.

4. Due to the nature of our small market in Taiwan, our securities market is prone to be influenced by the performance of

global markets, which explains the recent slides of our securities market despite the good fundamentals of the economy

and of the listed companies

19 Thailand ThaiBMA N/A

20 Turkey TCMA Domestic retail investors show little interest and confidence in the equity market. The turnover of shares for domestic retail

investors is about only a month. Only 5% of the household assets are invested directly in equity as of the end of first quarter

2018.

21 Uzbekistan CSM Delay in payment of dividends to minority shareholders;

Non-transparent market for different types of investors.

88

22 Vietnam 1 VASB - Vietnam stock market remains a relatively small market with total market capitalization of US$ 210bn (96% GDP)

at the end of May 2018. 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

around 20% 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 Vietnam 2 VBMA - Need to accelerate equitization of state-owned companies

- Need to upgrade the electronic trading platform in order to handle the rapid growth in market capitalization and

the rising number of active accounts registered on the stock market

89

VII – 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 Very high yield on government securities and dependence of bank borrowing by the entrepreneur.

3 Cambodia SECC N/A

4 Hong Kong HKSA 1. With the depreciation of renminbi, the demand for offshore market dim-sum bonds denominated in renminbi has

declined. In 2017, the issuance of dim sum bonds was less than half of that last year at 86.7 billion yuan, the lowest

level since 2010.

2. With the Southbound Trading of the “Bond Connect” opened later this year, the demand for the Panda Bond, Chinese

renminbi-denominated bond from non-Chinese issuers sold in China, may increase. It may lower the demand for the

dim sum bond in Hong Kong.

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 BBF 1. Measure to increase the liquidity leading to price inefficiency and depth of the market.

2. Improve Corporate bond market with awareness programs so as to enhance participation.

3. Bond markets are underdeveloped, and the proportion of debt financing is low.

4. Retail Participation should be allowed in Government Bonds

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)—although KPEI has a clearing system for bond

trading transaction, many of the participants deal directly among themselves without reporting

8 Japan JSDA Improving the environment for expanding and diversifying the corporate bond market

Securing a smooth transition to the shortened settlement cycle of JGBs to T+1

Deliberating on the issues for shortening the settlement cycle of government bond retail transactions and general

bond transactions to T+2

9 Kazakhstan AIFC N/A

10 Korea KOFIA N/A

11 Laos LSCO N/A

12 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 higher-yield

bond market.

13 Mongolia MASD The bond market mainly consists of Government bonds and its secondary market is only at an initial development

stage;

Settlement and refunding system is different for the primary market bond trade, which is confusing and complicated

for investors, particularly the foreign kind;

Savings rate provided by the banks and the government bond coupon rates are high, which hinders the issuance of

corporate bonds. Also, issuance of corporate bonds needs to go through almost the same process as the making of

IPOs.

14 Myanmar SECM - No secondary market for bonds yet

15 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.

16 Philippines PASBDI

(PSE)

N/A

90

17 Singapore SAS SGX prides itself as the bond centre of Asia and raised some S$480 billion in the financial year ended 30 June 2018. HK

has been the largest global IPO market, but SGX has higher turnover velocity.

Temasek may offer its first bond for retail investors with a new S$5b programme under the SGX “seasoning framework”.

On the flipside, some 13 issuers have defaulted on a total of 23 S$ bonds by missing coupon payments, failing to repay

note holders at maturity, filing for judicial management or bankruptcy since November 2015. There is also a trend

catching on here to lower fund expenses (total expense ratio).

18 Taiwan TSA The main challenge lies in the difference between the primary market and the secondary market. The volume of issuance

of bonds in Taiwan is good. However, the liquidity in the secondary market is low due to the low interest rate environment

in Taiwan. The yield curve of bonds, a relatively flat line without ups and downs, cannot be formed, and therefore there is

no benchmark. Due to this low interest rate, investors are more inclined to “buy and hold.” Moreover, the low liquidity

issue in the secondary market in turn affects the issuance in the primary market, as they are closely interrelated. In a nutshell,

the bond market in Taiwan is still not very healthy.

19 Thailand ThaiBMA Currently, we see a rapid growth in the corporate bond markets; however, the infrastructural 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 that being said, the Corporate Bond Market Development Plan (known by the name “Corporate Bond Market

4.0”) is necessary in order to promote market integrity and efficiency, as well as protect investors which will in effect

decrease systemic risk.

The work scope of this plan will mainly focus on the current market failure area. The road map of the development plan is

as follows:

Liquidity in the secondary market for corporate bonds is still low, but it is increasing. To reduce the settlement risk that

comes with increased trade in the secondary markets, as well as improve liquidity (e.g. debentures in Thailand are mostly

in paper form), the ultimate goal of the Corporate Bond Market 4.0 Development Plan is to make the corporate bond

trading to be Real Time DVP.

For the past year, ThaiBMA worked on the “Standardization” part of the plan, and this year we will be working on the

“Central Registrar” portion, in which we plan on using blockchain technology, DLT, and Smart Contract to increase the

efficiency of the system.

20 Turkey TCMA • Most of corporate bond issues are conducted 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 Vietnam 1 VASB - 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

- There is a lack of reliable credit rating information relating to corporate bonds

23 Vietnam 2 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.

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 the “Buy and hold”

practice, hence there is virtually no secondary market for corporate bonds.

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

91

VII –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 Bangladesh Capital Market observed a series of major reforms both at the legal/ regulatory, structural and operational fronts.

On October 2012, BSEC declared a 10-year master plan entitled: “Bangladesh Capital Market Development Master Plan

2012-2022”. The main highlights of the reform plans are:

Restructuring and strengthening the Bangladesh Securities and Exchange Commission (BSEC).

Strengthening the rules and regulations pertaining to the capital market.

Ensuring operational and financial independence and the accountability of BSEC.

Demutualization of the Exchanges.

Establishing a special Capital Market Tribunal.

Creating an Independent Financial Reporting Council for Transparency of Audited Financial Statement and

discipline of Auditors.

Strengthening BSEC’s Information and Internal Control Systems - establishing a state-of-the-art Surveillance

System for BSEC.

Enhancing the Corporate Governance Guidelines for the listed companies

Establishing a Central Clearing Corporation

Reducing Settlement cycle from T+3 to T+2

Developing the Bond Market

Introducing New Products in the capital market like Derivatives, etc.

On April 29, 2013, The Exchanges Demutualization Act 2013 was passed by the Bangladesh Parliament, gazetted on May

2, 2013.

After initial delays, the new Financial Reporting Act which includes provisions for setting up an independent Financial

Reporting Council has been approved by Parliament in September 2015.

Very recently Corporate Governance Guidelines has been amended again. Moreover, formation of Clearing and

Settlement Company in the name of “National Clearing Company of Bangladesh Limited (NCCBL)” is in the process

under the guidance of BSEC.

3 Cambodia SECC - Financial Sector Development Strategy 2016-2025

- Sub-decree on Tax Incentives in Securities Sector, 2015

4 Hong Kong HKSA 1. In late December last year, China Securities Regulatory Commission (CSRC) unrolled a pilot project for "full

circulation of H-share listed companies", significantly improving the issue system of Hong Kong stock market. It could

help enhance Hong Kong stock liquidity, index weight and corporate governance, further raising H-share valuation.

2. In April this year, HKEX introduced new rules to broaden Hong Kong’s listing regime. They included changes to the

Main Board Listing Rules to permit listing of biotech issuers that do not meet any of the Main Board financial eligibility

tests and companies with weighted voting right (WVR) structures, and to establish a new concessionary route for

Greater China and overseas companies that wish to have a secondary listing in Hong Kong.

3. The People's Bank of China governor Yi Gang said on 11 April 2018 that China would attempt to launch the Shanghai-

London stock connect program within this year. Under the proposed mechanism, the London Stock Exchange would

select a group of the top London-listed companies to be traded by mainland Chinese investors during Shanghai’s market

trading hours. The London exchange would appoint designated brokers to act as market makers, while trades would be

cleared and settled in Shanghai. Likewise, Shanghai Stock Exchange will select a group of mainland companies to be

traded on the London Stock Exchange via appointed market makers.

4. The daily quotas under Shanghai-Hong Kong Stock Connect and Shenzhen-Hong Kong. Stock Connect were expanded

fourfold to RMB52 billion for northbound trading and RMB42 billion for southbound trading, effective from 1 May

2018.

Additional Information on ‘’China Connect’’

The mutual market access scheme establishes trading links between the Mainland China and Hong Kong

exchanges through the Shanghai-Hong Kong Stock Connect (“Shanghai Connect”) and Shenzhen-Hong

Kong Stock Connect (“Shenzhen Connect”) respectively launched in November 2014 and December 2016

(together, the “Stock Connects”). The scheme now covers over 2,000 eligible equities in Shanghai,

Shenzhen and Hong Kong.

The Stock Connects allow investors in Mainland China to trade eligible securities listed on the SEHK via

the so-called “Southbound trading links”,

A principle of the Stock Connects is that “home market” rules and laws will apply to all trades, Shanghai

or Shenzhen in the case of the Northbound trading links, and Hong Kong in the case of the Southbound

trading links

As for the Northbound trading links of Stock Connects, all Hong Kong persons and overseas investors who

are able to trade on the SEHK are able to participate.

As for the Southbound trading links of Shanghai Connect, the only Mainland China persons able to

participate are:

(a) institutional investors; and

(b) an individual investor holding at least RMB500,000 in his securities and cash accounts.

92

No. Market Name of

Organization

Specific Measures Introduced/Implemented for the Securities Market

Northbound trading:

Eligible securities for Northbound trading via Shanghai Connect are:

(a) constituent stocks of the SSE 180 Index:

(b) constituent stocks of the SSE 380 Index; and

(c) SSE listed A shares with a dual listing of H shares on the SEHK.

In each case provided the security is traded in RMB and the security has not been placed under “risk alert”

(see Note to next section) by the SSE.

Eligible securities for Northbound trading via Shenzhen Connect are:

(a) all the constituent stocks of the SZSE Component Index;

(b) the SZSE Small/Mid Cap Innovation Index which have a market capitalisation of not less than

RMB 6 billion;

(c) all the SZSE-listed A shares which have corresponding H shares listed on SEHK; and

(d) stocks listed on ChiNext Board of SZSE – however, these are initially only open to institutional

professional investors.

Southbound trading:

The following are eligible securities for Southbound trading under both the Shanghai Connect and the

Shenzhen Connect:

(a) constituent stocks of the Hang Seng Composite LargeCap Index;

(b) constituent stocks of the Hang Seng Composite MidCap Index; and

(c) all H shares where the issuers have a dual listing with A shares listed on the SSE.

In addition, the following additional securities are eligible under the Shenzhen Connect for Southbound

trading:

(a) constituent stocks of the Hang Seng Composite SmallCap Index that have a market capitalization

of not less than HKD 5 billion; and

(b) all H shares where the issuers have a dual listing with A shares listed on the SZSE.

Trade quota

Trading under both the Northbound and Southbound trading links is subject to a daily quota of the maximum

amount by value that can be traded on that trading day. The Northbound daily trading link quota for each

of the Shanghai Connect and the Shenzhen Connect is RMB52 billion. The Southbound daily trading link

quota for each of the Shanghai Connect and the Shenzhen Connect is RMB42 billion.

5 India 1 ANMI The Exchanges recently introduced their Additional Surveillance Measures (ASM).

6 India 2 BBF 1. Voice Recording system introduced to prevent Un-Authorized Trades:

To prevent unauthorized trading activities, market regulator SEBI has directed stock brokers to compulsorily keep records

of orders placed by clients from 1 January 2018.

Under the stricter regulatory framework, stock brokers have to compulsorily use telephone recording systems to record

the instructions and maintain telephone recordings, in case the client is giving the orders on phone.

2. Implementation of Risk-Based Supervision (RBS):

RBS is gradually becoming the dominant approach to regulatory supervision of financial institutions around the world. It

is a comprehensive, formally structured system that assesses risks within the financial system, giving priority to the

resolution of those risks.

3. ASM

SEBI has been working continuously with an intent to keep investors safe and put a check for stock brokers / Promoters

manipulation of stock prices. SEBI has directed NSE and BSE to introduce additional surveillance measures (ASM) to

curb volatility in some of the stock prices.

7 Indonesia APEI Growing market capitalization through the addition of more and more publicly listed companies – including more

Government Owned Enterprises

Continuing to provide education to the public at the general and university level. Through the cooperation between OJK,

IDX and Brokers, all sides understand the difficulties that the other sides face. We hope that there will be 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 ATM – along with using internet means.

8 Japan JSDA Promoting NISA, Junior NISA and Dollar-Cost Averaging NISA

To expand the investor base and support the asset-building efforts of individuals, NISA (the Japanese version of the

Individual Savings Account) and Junior NISA were introduced in 2014 and 2016, respectively. Along with these two

schemes, the Dollar-Cost Averaging NISA was launched in January 2018 to promote regular and diversified investments

in ETFs and stock investment trusts using only small sums of money (with an annual investment limit of ¥400,000

(approx. US$3,670); non-taxable for up to 20 years). The JSDA is actively promoting these NISA schemes through a

variety of media including advertisements on TV, newspapers, and the internet.

Shortening the Settlement Cycle of JGBs and Stocks

With regard to the shortening of the settlement cycle for JGBs to T+1, even after the implementation date of May 1, 2018

(trade date basis), the JSDA put together a handbook on running tests conducted at member firms, and cooperated with

market participants and relevant institutions in awareness/dissemination activities and in improving market practices in

order to smoothen the transition.

93

No. Market Name of

Organization

Specific Measures Introduced/Implemented for the Securities Market

Further, for the shortening of the settlement cycle for stocks, through the Working Group on Shortening the Settlement

Cycle of Stock Trading, the JSDA collated and published “Guidelines of Borrowing and Lending Transactions of Share

Certificates” and “Points to Note Concerning Settlement Failure for Stocks”. Moreover, in May 2018, the JSDA

announced the target implementation date for the shortened T+2 stock settlement cycle to be July 16, 2019 (trade date

basis).

*Information on shortening of the stock settlement cycle is available at:

http://www.jsda.or.jp/en/activities/research-studies/html/t2_final_report.html

Realizing an Environment that Supports the Seamless Transfer of Risk Assets between Generations

In its 2018 tax reform requests to relevant authorities, the JSDA recommended a review of the assessed value of the

inheritance tax for listed stocks, and suggested the establishment of tax incentive schemes for inheritance taxes related to

intergenerational investment as well as tax relief measures to alleviate the drop in stock prices at the time of inheritance.

Furthermore, the JSDA established a Study Group in collaboration with the Japan Securities Research Institute (JSRI) to

conduct research (including empirical analysis) of the possible tax measures to reduce risks and promote investment that

is invaluable to economic growth, as well as to investigate the policy framework to construct an environment supportive

of the intergenerational transfer of risk assets.

Facilitating Information Sharing Regarding FinTech

In June 2017, the JSDA established the Study Group for Research on the Securities Industry and FinTech in collaboration

with JSRI. The group held discussions regarding the future expectations and implications of the emergence of FinTech for

the securities industry, and compiled the results of the discussions in a report, which was published on the JSDA website

in June 2018.

9 Kazakhstan AIFC N/A

10 Korea KOFIA System Improvements for Expanding the Growth Basis

1. Laying the groundwork for promoting the IB business

1-1 (Introduction of Mega IBs) Five securities firms have been designated as mega IBs* (in 2017) and one of them (Korea

Investment & Securities) was authorized for the money market business (in Nov. 2017)

* Shareholder equity of USD 3.98tn or above (money market business, general currency exchanges for companies), USD

6.96bn or above (Investment Management Account (IMA), real estate collateral trust)

1-2 (Introduction of SME and Venture Company-Specialized Securities Firms) Six securities firms* have been designated

as securities firms specializing in investment banking for SMEs and venture companies (in 2016)

* Kiwoom, IBK, Korea Asset, Yuanta, Eugene, KTB

→ These firms can provide customized IB services to SMEs and venture companies based on their growth stage

2. Expanded Basis for Promoting the Asset Management Business of Financial Investment Companies

2-1 (Introduction of New Products) Introduced the Individual Savings Account (ISA), the tax-free savings account

popular overseas in countries such as the UK and Japan (in Mar. 2016)

- Financial investment companies’ wealth management profit sources have increased thanks to the launch of non-

taxable overseas equity funds* (in Feb. 2016), etc. that offers tax benefits for overseas equity investments

* Sales balance at end-2017, when the subscription deadline expired: USD3.9bn in total

2-2 (Innovative Financial Services) The basis for innovation in the asset management industry was established through

the approval of Robo-advisor* services (in May 2017)

* Investment advisory or discretionary investment services that minimize the intervention of people or do not have

intervention of people at all

11 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).

94

12 Malaysia ASCM Stamp duty exemption for ETF, Structured Warrants and small and mid-cap stocks for 3 years

Intraday short-selling

Volume-based incentive program

Trading specialist

Waiver of clearing fees for new investors for 6 months

Liberalised margin rules

13 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

14 Myanmar SECM - Tax reduction for listed companies

- Listing Consulting Division has been officially formed under the Listing and Trading Participant Department of

Yangon Stock Exchange as of 25th March 2018. The purpose is to facilitate consultation to the candidate companies

(local and foreign) and related organizations thereof (securities companies, law firms, accounting firms, etc.),

which would have inquiries about listing criteria, listing regulations, listing examination procedures, and any other

matters or issues relevant to listing on YSX.

15 Nepal SEBON Provision to view market depth;

Introduction of over the counter (OTC) market;

Compulsory DE-MAT account;

Provision of direct deposit of refunds and dividends in investors’ bank accounts; and

Provision of viewing order placement in market using the investor’s username/password provided by the broker.

16 Philippines PASBDI

(PSE)

Small investor base: market education campaigns mentioned in item III.

Create an enabling market infrastructure that can cope with structural changes: adoption of X-Stream Trading

System, launch of an online trading platform called PSEtrade XTS, launching in November 2014 of the PSETradex

Mobile App, and the launch of the PSE EDGE Mobile App.

Limited products: developing new products and services such as the Dollar Denominated Securities, and after the

issuance of the PSE Supplemental Listing and Disclosure Rules Applicable to a Public-Private Partnership (“PPP”)

Company in 2016, PSE inked a memorandum of agreement with the Public-Private Partnership Center in 2017 to

facilitate listing applications of PPP Company

Impact of ASEAN integration to the stock market: participation in ASEAN Exchanges collaboration, including

pursuing the objectives under the Invest ASEAN and ASEAN index development.

17 Singapore SAS Trade Settlement Cycle

After seeking public comments, CDP is making a suite of changes to modernize and enhance its services with a new

securities post-trade system and changes to its securities settlement framework to provide new/enhanced services, reduce

risks, adopt relevant international best practices and comply with industry standards. One of the changes is to shorten the

trade settlement cycle from T+3 days to T+2 business days.

18 Taiwan TSA 1. Extension of reducing day trading transaction taxes by half and separating dividend tax from income progressive taxation

2. Approval of securities firms conducting spot foreign exchange transactions

3. Approval of securities firms engaging in asset management and issuing Exchange Traded Notes

4. Promotion of more flexible IPO solutions

19 Thailand 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 quotations must be inspected before submitting to ThaiBMA to derive the

Government Bond Yield Curve. There are 3 persons included in this process: the 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.

5. ThaiBMA initiated a major revision of the standardized terms and conditions for bond issuance after 15 years

without official review.

20 Turkey TCMA N/A

95

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 the 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 1 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 2 VBMA - More frequent dialogues between regulators and market participants

- Bond future will be launched in Q3 2018

- Decree 90/2011/ND-CP dated 14/10/2011 on corporate bond issuance is in the process of amendment

- New Decree (Decree 95/2018/NĐ-CP) on Issuing, registering, depository, listing and trading of Government debt

instruments issued on June 30 2018

- Mini-GMRA is being prepared by VBMA and ADB will help to develop the repo market

96

VII – 5. Measures to Invite Foreign Investment (De-regulation, Promotion Activities, etc.)

No. Market Name of

Organization

Measures to Invite Foreign Investment

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 In Bangladesh, 100% ownership of a company/corporation by foreigners is allowed by law.

No restrictions with respect to repatriation of capital gain and profits.

With respect to investment in our capital market, there is no discrimination between local and foreign investors.

3 Cambodia SECC - Providing incentives like tax exemption (WHT) on dividends for foreign investors

- Equal treatment between foreign and local investors

- Conducting seminars and workshops to the public and establishing an elite group of potential listed companies.

4 Hong Kong HKSA 1. SFC signed a memorandum of understanding (MOU) with Autorité des Marchés Financiers on mutual recognition of

funds, allowing eligible French and Hong Kong public funds to be distributed in each other’s markets through a

streamlined vetting process.

2. March 2018, four SFC authorized funds were approved by the Swiss Financial Market Supervisory Authority for

distribution to retail investors in Switzerland under the Switzerland-Hong Kong MRF arrangement.

3. SFC signed separate Fintech cooperation agreements with the financial regulators in the UK, Switzerland, Australia,

Dubai and Malaysia. With strengthened co-operation with the UK in FinTech development and promotion, the

government hopes to see HK’s home-grown FinTech firms grow and expand their business to the UK. HK also

welcomes UK FinTech firms to establish presence in Hong Kong. In addition, the agreement with Switzerland provides

for a bilateral mechanism for referrals of innovative firms seeking to enter one another’s markets.

5 India 1 ANMI - Government's effort to improve the ease of doing business and relaxation in FDI norms are attracting foreign

individuals to invest in the Indian Capital market.

6 India 2 BBF 1. Ease Of Doing Business:

The Current move of the Government on Ease of doing Business has moved India up 30 places. The World Bank released

a fact sheet on the substantive changes India implemented during 2016/17 moving India to Top 100 countries in terms of

Ease of doing Business.

2. Tax Simplification :

Simplifying the tax regime is also one of the main measures to invite foreign investment by providing frameworks to

avoid future litigation.

3. Institutional Participation in the Commodities market

4. Gift City

Setting up of Global Financial Hub at Gift (Gujarat International Finance Tec-City) city.

Welcoming foreign individuals along with institutions with world class technology.

5. FDI relaxation in Single brand retail, Defense

6. Make in India Promotion

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 Kazakhstan AIFC The applicable law of the AIFC is guided by principles, norms and precedents of England and Wales’s law and standards

of the leading international financial centers.

AIFC introduces a single window system, a simplified mode of: Issuing visas, Registration, Obtaining work permits and

other procedures related to the AIFC.

Exemption from payment of corporate, individual income, land tax and property tax for a period of 50 years (until the end

of 2065).

A visa-free regime will be provided for up to 30 days for OECD, UAE, Malaysian, Singaporean and Monaco citizens.

Participants of the IFAC and their family members will enjoy a special visa regime with the possibility of extending to 5

years.

10 Korea KOFIA N/A

97

No. Market Name of

Organization

Measures to Invite Foreign Investment

11 Laos LSCO 1. Currently, LSCO is encouraging 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;

3. LSCO together with LSX and the market participants have organized the Investment Promotion Campaign to enhance

securities investment for potential local and foreign, and both individual and institutional investors to participate in

such events;

4. Granting a reduction of corporate tax of listed companies by 5% of normal rate (24%) for the period of four years 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 changed the trading limitation from 1 share 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.

12 Malaysia ASCM 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. 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.

The Annual Invest Malaysia Kuala Lumpur ("IMKL") event is organized by Bursa Malaysia together with securities brokers

to attract more foreign investors.

13 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.

14 Myanmar SECM Up to 35% of foreign ownership will be allowed for listed companies within a few months.

15 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 Nepalese government has theoretically accepted

for the investment of NRNs. Also, Foreign Investment policy formulation is underway.

16 Philippines PASBDI

(PSE)

The PSE co-organized the two-day 2017 Philippine Corporate Day in Tokyo, Japan with DBP-Daiwa Capital Markets

Philippines, Inc. The non-deal roadshow brings together premier eight PSE-listed companies and top Japanese fund

managers for the opportunity to share investment prospects, opportunities, and insights.

There are no general restrictions on foreign participation in the Philippine stock market except for ownership limits on

securities belonging to certain sectors and industries. Republic Act (RA) 7042, also known as the Foreign Investments Act

(FIA) of 1991, is the basic law that governs foreign investments in the Philippines. Under the FIA, foreign investors are

allowed to invest 100% equity in companies engaged in almost all types of business activities subject to certain restrictions

as prescribed in the Foreign Investment Negative List (FINL). The FINL, a shortlist regularly issued by the Office of the

President via an Executive Order, enumerates the investment areas or activities that are open to foreign investors subject to

percentage limitations and those reserved to Philippine nationals.

17 Singapore SAS The Committee on the Future Economy (CFE) in Singapore had said dual-class share (DCS) structures could play a role

in the development of capital markets which would aid in the transformation of Singapore’s economy. To this end, SGX

sought public comments and the first DCS may be listed soon.

SGX partners with Tel Aviv and Nasdaq for a pipeline of companies looking to raise capital in Singapore and is gaining

traction with 2 Israeli firms being listed. It also eyes a controlling stake in the Tel Aviv Stock Exchange (TASE) to reap

benefits from greater exposure, co-operation and advantages of scale.

To encourage more junior mineral, oil and gas (MOG) listings and recognizing its different development stages, SGX

relaxed its listing rules to enable more MOG companies to raise funds.

A new service provided by SGX in partnership with fintech firm M-Daq has been introduced, which allows investors to

view, trade and settle in multiple currencies in addition to exchange-listed ones.

Vying to be a REITs IPO centre, 22 new equity listings for S$6.2b were raised by SGX with bulk from REITs and

infrastructure firms for year ended June 2018. This was five times more than that of the previous year (S$1.3b from 23

new listings). More billion dollar REITs, consumer, tech, and healthcare IPOs are expected.

18 Taiwan TSA 1. The FSC has been promoting increasing the level of corporate governance in encouraging English annual reports and

enhancing the IR dimension. Therefore, the information revealed either within investment conferences or without is now

more useful to foreign investors.

2. TPEx leads listed companies for visits abroad and hold investor roadshows in Hong Kong and other countries to attract

foreign investment.

19 Thailand ThaiBMA Euroclear accepts 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

98

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 Vietnam 1 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

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 offer more choices of large cap companies

23 Vietnam 2 VBMA - Develop derivative markets for hedging: VND/FX option, bond future

- 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.