COMPARATIVE ANALYSIS OF ASIAN SECURITIES REGULAORS & …€¦ · 13.11.2015 · 1 (Compiled as of...

1

(Compiled as of December 17, 2015)

6th

COMPARATIVE ANALYSIS OF ASIAN SECURITIES REGULAORS & SROs

AND

MARKET CHARACTERISTICS

(Data and information provided by participating organizations in the 11th ASF Tokyo Round Table)

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. Challenges of Securities and Capital Market

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

V – 2. Specific Challenges in Equity Market

V – 3. Specific Challenges in Bond Market

V – 4. Specific Measures introduced / Implemented for the Securities Market

V – 5. Measures to Invite Foreign Investment (De-regulation, Promotion Activities, etc.)

The content herein is based on the feedbacks from each delegate of participating organizations in the 11th ASF Tokyo Round Table. Japan

Securities Dealers Association (JSDA) makes no representations as to, or guarantees, its accuracy or completeness.

2

I. Basic Organizational Features

I – 1. Organization Type, Statutory Basis

No. Country Name of Organization Organization Type Statutory Basis

1 Cambodia Securities and Exchange Commission of

Cambodia

SECC Government

Regulator

Established by Law on Issuance and Trading of

Non-Government Securities, 2007

2 Hong Kong Hong Kong Securities Association HKSA Industry Association Established spontaneously in 1978, HKSA is the

first securities industry association in Hong Kong.

3 India Association of National Exchanges

Members of India

ANMI NPO registered under

Indian Companies Act

Established pursuant to the Companies Act 1956

4 Indonesia Association of Indonesian Securities

Companies

APEI Industry Association Spontaneously established

5 Japan Japan Securities Dealers Association JSDA SRO & Industry

Association

Established pursuant to Financial Instruments and

Exchange Act

6 Kazakhstan National Bank of Kazakhstan

NBK Government

Regulator

Established in accordance with Law

7 Korea Korea Financial Investment Association KOFIA SRO & Industry

Association

Established pursuant to Financial Investment

Services and Capital Markets Act (FSCMA)

8 Laos Lao Securities Commission Office LSCO Government

Regulator

Established by Securities Law

9 Malaysia Association of Stockbroking Companies

Malaysia

ASCM Industry Association Established by The Societies Act in Malaysia

10 Mongolia Mongolian Association of Securities

Dealers

MASD SRO&Industry

Association

Established by Securities Market Law of Mongolia

11 Myanmar Securities and Exchange Commission of

Myanmar

SECM Government

Regulator

Securities Exchange Law, 2013

12 Nepal Securities Board of Nepal SEBON Government

Regulator

Established by Securities Act, 2006

13 Pakistan Securities and Exchange Commission of

Pakistan

SECP Government

Regulator

Established under the Securities and Exchange

Commission of Pakistan Act, 1997

14 Philippines Philippine Stock Exchange PSE Exchange SRO Pursuant to the Securities Regulation Code

15 Singapore Securities Association of Singapore SAS Industry Association Spontaneously established

16 Sri Lanka Securities and Exchange Commission of

Sri Lanka

SEC Government

Regulator

Established by The Securities and Exchange

Commission of Sri Lanka ACT No.36 of 1987 as

Amended by Act No. 26 of 1991, No. 18 of 2003

and No. 47 of 2009

17 Taiwan Taiwan Securities Association TSA SRO & Industry

Association

Established by or in accordance with Commercial

Group Act; Securities and Exchange Act

18 Thailand Association of Thai Securities Companies ASCO Industry Association Established by Securities and Exchange Act of

1992 section 230-237

19 Turkey Turkish Capital Market Association TCMA SRO & Industry

Association

It has been established according to the in

accordance with Article 75 of the Capital Market

Law no. 6362

20 Vietnam1 Vietnam Association of Securities Business VASB Industry Association Decree No.45/2010/ND-CP dated April 21, 2010 of

the Government on the establishment, operation

and supervision of associations

21 Vietnam2 Vietnam Bond Market Association VBMA Industry Association Established according to Decree No.

45/2010/ND-CP dated 21 April 2010 of the

Government on the establishment, operation and

supervision of associations

22 Asian Region Asia Securities Industry and Financial

Markets Association

ASIFMA Industry Association n/a

3

I –2. Number of Staff, Funding Source and Number of Member Firms

No. Country Name of

Organization

No. of Full Time

Staff

Funding Source Number of Member Firms (by Business Category)

1 Cambodia SECC 110 Government Budget In Cambodia, there are four type of business member firms:

- 7 Security underwriters

- 4 Security brokers

- 1 Security Dealers

- 2 Investment Advisors

2 Hong Kong HKSA 3 Membership Fee and

other sources (courses

& events organized by

HKSA)

Approximately 1200 individual members who come from firms

carrying Securities Brokerage, Asset Management, Futures Contracts,

Corporate Finance and so on.

3 India ANMI 7 persons attached to

the Registered Office

of the Company.

Regional offices of

ANMI are staffed

independently.

(Due to lack of feedback,

previous statement is

retained)

Membership Fee,

Sponsorship & events,

etc.

About 800 Members on all India basis, comprising of Market

Intermediaries Firms / Companies including foreign

institutional broking firms / companies.

4 Indonesia APEI 7 Membership Fee,

SRO Sponsorship,

Training Course Fee

Our members are only Securities Companies, which consist of : 114

companies of Stock Exchange Member and 12 companies of Non

Stock ExchangeMember, with the following breakdown:

Securities Houses 30

Underwriter Houses 12

Securities and Underwriting Houses 53

Securities and Fund Management Houses 2

Underwriter and Fund Management Houses 2

Securities,Underwriting and Fund Management Houses 15

Sub-total 114

Brokerage agency, Asset Management 12

5 Japan JSDA 357 Membership Fee,

Fees for Examination

and Training Course

(As of October 1, 2015)

250 Regular Members consisting of securities companies including 14

foreign securities companies

213 Special Members consisting of 187 banks, 14 insurance

companies and 12 other financial institutions

2 Specified Business Members

6 Kazakhstan NBK 37 persons in the

Department of the

Securities Market

Supervision

Financed by own

budget - the Budget of

the National Bank of

Kazakhstan

As of the 1st September, 2015 there are 86 legal entities carrying out

their professional activity as a stock market operators, as follows:

- 47 broker/dealers;

- 23 investment portfolio managers;

- 10 custodians;

- 2 transfer-agents;

- 1 stock exchange;

- 1 clearing organization;

- 1 central depository

- 1 single registry.

7 Korea KOFIA 220 Membership Fee

Examination fees for

financial certifications

and revenues from

textbook sales

(As of Oct. 31th)

161 Regular members which include securities firms, asset

management firms and futures firms etc.

117 Associate members which include investment advisory business

entities, banks, insurance companies etc.

23 Special members which include general administration companies,

fund assessment companies, Korea Securities Depository etc.

8 Laos LSCO 54 Government‘s Budget (as of October 30, 2015)

LSCO is a national securities supervisory authority, having direct

responsibility to supervise, monitor and inspect securities activities to

ensure an efficient, fair and transparent capital market in Lao PDR. At

the present, there are four securities firms, a Lao Securities Exchange

(LSX), four issuing companies and three audit firms, a custodian bank

(approved by LSCO) under LSCO supervision.

Lao Securities Exchange (LSX) 1

securities firms 4

4

No. Country Name of

Organization

No. of Full Time

Staff


issuing companies 4

audit firms 5

custodian bank 1

securities association Waiting for approve by MOA

Credit Rating Agencies Waiting for approve by LSCO

Asset Valuation Company Waiting for approve by LSCO

9 Malaysia ASCM 3 Membership Fee,

income from organizing

training and Income

from fixed deposit

(As at 26 October 2015)

16 Securities Firms including 3 with foreign ownership.

10 Investment Banks.

10 Mongolia MASD 3 Membership Fee,

Licensed Courses,

Corporate governance

courses and other

courses

Total 46 Securities firm members including 46 underwriting

companies, 12 financial advisory service companies, 2 bank

subsidiaries.

( as of Nov.10, 2015)

11 Myanmar SECM 22 Government‘s Budget

Under consideration

12 Nepal SEBON 29 Mmbership fee, and

Specific Securities

registration fees

S.N. Business Category Number

1 Stock Exchange 1

2 Stock Broker 50

3 Merchant Banker 17

4 CDS 1

5 Depository Participants of CDS 51

6 Fund Manager and Depository 6

7 Credit Rating Agency 1

13 Pakistan SECP 500 (approx..) SECP is a self-funded

organization and

generates revenue from

the registration of

companies, licensing of

regulated entities like

NBFCs, CIS, brokers,

credit rating companies

etc., transaction and

other fees on securities

markets, annual

monitoring fee for

various market

intermediaries, and fee

charged for approvals

and other processing

functions.

Under the SECP Act

following are the

sources of funding:

(a) grants by the

Federal Government;

(b) grants and money

borrowed or raised by

the Commission;

(c) taxes, fees, penalties

or other charges levied

in exercise of powers

under the administered

laws/enactments; and

(d) all other sums or

property which may in

any manner become

payable to or vested in

the Commission in

respect of any matter

incidental to the

exercise of its functions

and powers.

The SECP is the apex regulator of the corporate sector, the capital

markets, the commodity futures market, the insurance sector and the

non-banking finance companies. It does not have any member firms

but a breakdown of regulated entities by each category as on June 30,

2015 is as follows:

Private and unlisted companies 67,624

Listed companies 560

Stock Exchanges (Karachi, Lahore & Islamabad) 3

Commodity Exchange

(Pakistan Mercantile Exchange Limited)

1

Stock Brokers 344

Agents of Stock Brokers 262

Commodity Brokers 183

Insurance Companies 49

Reinsurance Companies 1

Insurance Brokers 9

NBFCs (includes asset management companies,

investment advisors, mutual funds, pension funds,

real estate investment trust management companies

and funds, investment finance companies, leasing

companies, modaraba companies)

261

5

No. Country Name of

Organization

No. of Full Time

Staff


However, the penalties

imposed on violations

of the provisions of the

laws are being

deposited with the FG

treasury.)

14 Philippines PSE 135 Revenues from

operation as Stock

Exchange

There are 184 trading participants, of which 132 are active members.

Out of 132 active Trading Participants, 7 are brokers and 125 and

Broker dealers.

Out of 132 active Trading Participants, there are 10 foreign Trading

Participants while 122 are local Trading Participants.

15 Singapore SAS 2 Membership fees, fees

from training courses

16 member firms, of which 9 are local stockbroking firms, 1 is an

international firm, and 6 OTC products providers.

16 Sri Lanka SEC 75 Membership and

licence fee, CESS* levy

(*A part of brokerage

which SEC is entitled

to receive)

36 - Licensed Stock Broking Companies (28 for Equity/Debt, 08 Debt

Trading only)

01 - Registered Central Depository System

35 - Registered Investment Managers

32 - Registered Margin Providers

09 - Registered Underwriters

01 - Registered Central Depository System

02 - Registered Credit Rating Agencies

14 - Managing Companies of Unit Trusts

15 - Licensed Stock Dealers

17 Taiwan TSA 45 Membership Fee,

Specific fees for

training course,

business service, Bond,

dividend, and interest

Taiwan Securities Association (TSA) members cover 144 headquarters

and 988 branches, totally 1,132 offices. Among the 144 headquarters,

there are 82 securities firms, 45 banks, 7 futures firms, 8 bills finance

firms, and 1 securities finance firm, and 1 post office. （As of October

16, 2015）

18 Thailand ASCO 37 Membership Fee, Fees

for examination and

training course, Capital

Market Development

Function (CMDF),

Club members

41 Regular Members consisting of securities companies. These

members include 16 foreign securities companies.

19 Turkey TCMA 29 Membership Fee &

Training fee

95 brokerage firms, 44 banks, 43 portfolio management companies, 9

securities investment trusts, 31 real estate investment trusts and 7

venture capital investment trusts - Total of 229. (as of October 2015)

-

20 Vietnam1 VASB 5 Membership Fee,

Supportive funds,

Operating revenues

from services

32 members:

- 28 security firms

- 2 fund management companies

- 2 banks

21 Vietnam2 VBMA 3 Membership Fee, Fees

collected from training

coursestraining fee,

data selling to vendors

- 56 members (consisting of 26 local banks, 8 foreign banks, 10

securities firms, 4 fund management companies, and 6 other

financialissuance company, 01 Law firm and 01 audit company.)

(as of 30 October 2015)

22 Asian Region ASIFMA 23 Membership Fee (As of 13 November 2015)

- 34 Banks

- 37 Non-Banks

- 23 Asset Management (buy-side)

6

II. Regulatory Framework of the Securities Markets of Each Country

No. Country Name of

Organization

Major Laws, Rules or Practice in the Securities Markets of Each Country

1 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

2 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.

3 India ANMI - Securities and Contracts (Regulations Act) (1956) (SCRA)

- Securities and Exchange Board of India (SEBI) Regulations

- Foreign Exchange Regulations

- Indirect Tax

- Income Tax

- Companies Act

- Other relevant applicable Acts

4 Indonesia APEI - Capital Market Law Number 8 Year 1995 (UUPM)

- Financial Services Authority Law Number 21 Year 2011 (UUOJK)

Our Capital Market is regulated by the Indonesian Financial Services Authority (OJK). A body which was formed on

January the 1st 2013, it‘s operation is funded from 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 has a sustainable and stable growth

protecting the interest of consumer in the financial market

Aside being supervised by OJK, we have to comply to rules and regulations from the following SRO‘s (Self Regulating

Organization):

Indonesia Stock Exchange (IDX)

Indonesia Clearing and Guarantee Corporation (KPEI)

Indonesia Central Securities Depository (KSEI)

5 Japan JSDA Financial Instruments and Exchange Act (hereinafter referred to as the ―FIEA‖)

JSDA enforced more than 50 rules. (http://www.jsda.or.jp/en/rules/index.html)

JSDA‘s rules are categorized as ―rules relating to customer management and internal management by association

member‖, ―rules relating to employees and sales representatives of association members‖, ―rules relating to advertising‖,

―rules relating personal information protection‖, ―code of ethics‖, or ―rules relating to stocks/bonds/foreign products/

securitized products/derivatives.

6 Kazakhstan NBK Laws ―On National Bank of Kazakhstan‖, ―On securities market‖, ―On joint stock companies‖, ―On investment funds‖,

―On banks and banking system in Kazakhstan‖, etc.

7 Korea KOFIA Financial Investment Services and Capital Markets Act (Hereinafter referred to as the ―FSCMA‖)

8 Laos LSCO Major Laws, Rules or Practices in Your Regulatory Securities Market:

- Law on Securities, No.21/NA, Date: December 10, 2012;

- Decree on Organization and Operation of Lao Securities Commission;

- Regulation on Organization and Operation of Securities Company ;

- Regulation on the Issuance of Stock to the Public;

- Regulation on Exchange Supervision;

- Regulation on Accounting and Auditing for related Securities Businesses;

- Regulation on the Management of Foreign Investors in Securities Market in Lao PDR;

- Regulation on Disclosure of Information;

- Regulation on Inspection of Securities Business Activities;

- Regulation on Securities Practitioners Supervision;

- Regulation on Reporting;

- Regulation on offering of corporate bond;

- Other legislation of LSCO to facilitate the development of capital market in Lao PDR.

Formulating new Regulation:

- Regulation on Related Party Transactions;

7

No. Country Name of

Organization


- Regulation on Acquisition & Disposition of Assets;

- Regulation on Registration of Foreign Credit Rating Agencies;

- Regulation on Registration of Foreign Asset Valuation Companies;

- Guideline on CG for Lao PLCs and Lao CG Scorecard;

9 Malaysia ASCM - Capital Markets and Services Act 2007 (―CMSA‖)

- Bursa Malaysia Rules

In order to achieve its regulatory goals and in ensuring a consistent and cohesive approach to its actions and decisions,

Bursa Malaysia as supervisory body to securities firms (stockbroking companies) and future broker, monitors and

supervise the securities firms based on the following principles;

1. Clear and easily accessible rules and requirements

2. No more regulation than necessary

Balance competing needs of regulation and business efficacy

Ensure costs and burden of regulatory compliance are proportionate to the benefits

3. Principles-based approach where appropriate

Move towards a principles-based approach to regulation, where appropriate but issue guidance where

necessary

4. Outcome focused

Target outcomes through our regulatory actions or decisions rather than mere compliance with rules

Use discretion to modify or waive the rules, where the spirit of the rules can still be achieved, where the

business can be facilitated without harming other stakeholders or where the burden of complying far

outweighs the benefits

Always be guided by our regulatory objectives and the current regulatory concern

Consider the impact of our regulatory actions or decisions before and after taking each action or decision

5. Innovative and competitive

Facilitate innovation, for example, by avoiding unreasonable restrictions on regulatees

Maintain the competitive position of Bursa Malaysia as an integrated exchange

6. Risk-based approach

Emphasise on risk-based supervision rather than "one-size fits all" regulation

Facilitate early detection of problems, issues and trends, enabling prompt pre-emptive actions

7. Values-based approach

Enforce the rules without fear or favour

Act professionally with integrity and fairness

10 Mongolia MASD Laws:

- Revised Securities Market Law

- Company Law

- Investment Fund Law

- Income Tax

Rules:

- Mongolian Financial Regulatory Committee regulations and guidelines

- SRO regulations

- Mongolian Stock Exchange regulations

- Securities Clearing House and Central Depositary Regulations

11 Myanmar SECM - Securities Exchange Law, Securities Exchange Rule

12 Nepal SEBON Major Laws, Rules or Practices in Your Regulatory Securities Market:

Securities Act, 2006 : Establishment of SEBON, Provisions for licensing of stock exchange and securities

Businesspersons, Issue and Trading Regulation

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, 2008

- 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 Registration and Issue Approval Guidelines, 2000

- Bonus Share Issue Guidelines, 2001

- Rights Issue Disclosures Policy, 2005

- Debenture Trust Deed Disclosure Policy, 2006

- Mutual Fund Guidelines, 2011

8

No. Country Name of

Organization


13 Pakistan SECP Statutes:

- Securities Act, 2015

- Stock Exchanges (Corporatization, Demutualization and Integration) Act, 2012

- Securities and Exchange Commission of Pakistan Act, 1997

- Central Depositories Act, 1997

- Securities and Exchange Ordinance, 1969 (only portions not repealed by the Securities Act, 2015)

Rules:

- Ballotters and Transfer Agents Rules, 2015

- Underwriters Rules, 2015

- Securities (Leveraged Markets and Pledging) Rules, 2011

- Clearing Houses (Regulation and Registration) Rules, 2005

- Commodity Exchange and Futures Contract Rules, 2005

- Brokers and Agents Registration Rules, 2001

- Stock Exchange Members (Inspection of Books and Record) Rules, 2001

- Members' Agents and Traders (Eligibility Standards) Rules, 2001

- The Public Companies (Employees Stock Option Scheme) Rules, 2001.

- The Companies Buy Back of Shares Rules, 1999.

- The Companies (Asset Backed Securitization) Rules, 1999.

- The Companies (Issue of Capital) Rules, 1996

- Central Depository Companies (Establishment and Regulation) Rules, 1996

- Credit Rating Companies Rules, 1995

- Securities and Exchange Rules, 1971

Regulations framed under the Statutes

- Book Building Regulations, 2015

- Issue of Sukuk Regulations, 2015

- Research Analyst Regulations, 2015

- The Issue of Commercial Papers Regulations, 2013

- Stock Exchanges (Corporatization, Demutualization and Integration) Regulations, 2012

- Debt Securities Trustee Regulations, 2012

- Listed Companies (Substantial Acquisition of Voting Shares and Takeovers) Regulations, 2008

- Central Depository Company of Pakistan Limited Regulations

- National Clearing Company of Pakistan Limited Regulations.

Guidelines/Practices

- Code of Corporate Governance, 2012

- Guidelines for Preparation of Prospectus

- Guidelines for Issue of Commercial Paper

- Guidelines for The Issue of Term Finance Certificates (TFCs) to General Public

Apart from the above the market infrastructure institutions [stock exchanges, Pakistan Mercantile Exchange Limited

(PMEX), Central Depository Company of Pakistan Limited (CDC) and National Clearing Company of Pakistan Limited

(NCCPL)] also have their own set of regulations which require prior approval from the SECP under the relevant

provisions of law.

14 Philippines PSE The main laws affecting the securities market are the Securities Regulation Code or Republic Act No. 8799, its Amended

Implementing Rules and Regulations, the Corporation Code of the Philippines or Batas Pambansa Blg. 68, rules and

issuances of the Securities and Exchange Commission, the Exchange and the Capital Markets Integrity Corporation.

15 Singapore SAS - Securities and Futures Act

- Securities and Futures (Licensing and Conduct of Business) Regulations

- SGX Code of Corporate Governance

- SGX Rulebooks

16 Sri Lanka SEC - Securities and Exchange Commission of Sri Lanka Act (as amended)

- Securities and Exchange Commission of Sri Lanka Act Rules and Regulations

- Rules and Regulations of the Colombo Stock Exchange (Stockbroker Rules, Listing Rules & Trading

Rules, etc.)

- Unit Trust Code & Unit Trust Regulations

- Rules applicable for Market Intermediaries (Clearing House, Investment Managers, Margin Providers, Credit Rating

Agencies and Underwriters)

- Take Over and Mergers Code

17 Taiwan TSA - Securities and Exchange Act;

- Securities and Exchange Act Enforcement Rules;

18 Thailand ASCO - Securities and Exchange Act of 1992 (SEA)

- Regulations and Notifications of the Securities and Exchange Commission (SEC‘s regulations)

- Regulations and Notifications of Stock Exchange Of Thailand (SET‘s regulations)

9

No. Country Name of

Organization


- Notifications Procedures and Guidelines of Association Of Thai Securities Companies(ASCO‘s regulations)

19 Turkey TCMA - Capital Market Law (CML)

- Turkish Commercial Code

20 Vietnam1 VASB - The Law on Securities dated June 29, 2006; as amended in 2010

- Decree providing detailed regulations for implementation of a number of Articles of the Law on Securities

(No.58/2012/ND-CP dated Jul 20, 2012), as amended in 2015 (No.60/2015/ND-CP dated Jun 26, 2015)

- Decree on administrative penalties for violations in securities and securities market (No.108/2013/ND-CP dated Sep

23, 2013)

- Decree on derivatives and derivatives market (No.42/2015/ND-CP dated May 5, 2015)

21 Vietnam2 VBMA Circular 111/2015/TT-BTC dated 28/7/2015 on government bond issuance:

- Adding issuing term of 7 year and 20 year.

- Adjusting time of auction: Before 10:30 members register buying demand instead of 14:00

- Adjusting settlement date: T+1 instead of T+2

- Reducing the custody time from T+5 to T+3

- Members can join the additional session in the afternoon if they won the morning session.

Circular 99/2015/TT-BTC dated 29/6/2015 on government guaranteed bond issuance:

- Issuers must publish information frequently

- Updating reporting form

Circular 100/2015/TT-BTC dated 29/6/2015 on municipal bond issuance:

Issuers must publish information frequently

22 Asian Region ASIFMA n/a

10

III. Regulation & Self Regulation

III –1. Major Rule Making Functions of Each Organization

No. Country Name of

Organization

Major Rule Making Functions

1 Cambodia SECC - Law on Issuance and Trading of Non-Government Securities

- Sub-decree on Conduct and Organization of the Securities and Exchange Commission of Cambodia

- The responsibility of Securities and Exchange Commission of Cambodia includes the following :

1. To regulate and supervise securities market in the Kingdom of Cambodia;

2. To enforce policy with respect to securities markets;

3. To formulate conditions for granting approval to the operators of a securities market, clearance and settlement

facility, and securities depository;

4. To formulate conditions for granting license to securities companies and securities company representatives;

5. To promote and encourage compliance with requirements of this law;

6. To act as an appeal body in respect of decisions made by approved entities affect members, participants or

investors;

7. To consult with any qualified person for the purpose of formulating policies for the development of a securities

market in the Kingdom of Cambodia; and

8. To fulfill other duties prescribed by the Royal Decree and sub-decree.

2 Hong Kong HKSA As far as securities and futures regulation is concerned, SFC is the only statutory organization making rules, regulations

and codes and so on.

HKSA takes part in the consulting period when SFC has new rules or codes to launch, HKSA will give opinions and

market noises to SFC. When the new rules or codes become effective, HKSA will hold kinds of meetings/seminars 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.

3 India ANMI n/a

4 Indonesia APEI APEI is not a Self-Regulatory Organization (SRO). We are partner of the Regulators – OJK and the other SRO‘s: IDX,

KPEI & KSEI in rule-making-rule process. It includes Focused Group Discussions and review of regulations.

5 Japan JSDA Make and enforce a wide range of self-regulatory rules covering the securities business in Japan that control the conduct

of our member firms.

6 Kazakhstan NBK The major goals of the NBK as financial institution and financial market regulator are:

- maintenance of financial stability of financial market and financial institutions and support of the confidence in the

financial system as a whole;

- maintenance of the appropriate level of protection of interests of consumers of financial services;

- creation of equal conditions for the activities of financial institutions, aimed at supporting fair competition in financial

market.

The National Bank of Kazakhstan establish such rules as:

- prudential norms for market intermediaries;

- rulings and limitations for market intermediaries activity;

- requirements for risk management and internal control systems of market intermediaries;

- licensing rulings;

- manipulation criteria and rulings for control of insider information;

- listing rules;

- reporting rules.

7 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.

8 Laos LSCO The Securities Law introduced the legal authority for LSCO in formulating and amending laws and regulations for the

supervision of securities business activities including investigation, inspection, dispute resolution, and supervision of

securities practitioners, 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).

9 Malaysia ASCM ASCM is not a self-regulatory organization. The industry is regulated by the Securities Commission and Bursa Malaysia

which acts as both an exchange and frontline regulator of the Malaysian capital market.

10 Mongolia MASD 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 to the members not

11

No. Country Name of

Organization


complying with the law, regulation or MASD rules.

1. membership admission criteria, membership fees, and rule on membership suspension and termination;

2. code of professional ethics of its members and officials to be followed due course of its operations;

3. rule on supervision of members‘ operations and resolving complaints and disputes;

4. rule on management, administration and operation of the self-regulatory organization;

5. rule on training members and organizing other measures to improve the professional skills of the officials;

6. rule on coordination of actions to promote fair trading practices such as to prevent market manipulation and insider

trading; and

7. other matters as stated in legislation

11 Myanmar SECM Enactment of Rules, Notifications, etc.

12 Nepal SEBON To offer an advice, as per necessity, to the Government of Nepal on matters incidental to the development of

capital market.

To approve bye-laws of Stock Exchange and those bodies which are related with securities business and engaged

in Securities Transactions, and to issue orders to Stock Exchanges and those bodies which are related with

Securities Business and engaged in Securities Transactions to make necessary amendment in their bye-laws with

a view to making necessary provisions concerning the development of Capital Market and protecting the interests

of investors in Securiites.

To regulate and monitor the activities of the capital market.

13 Pakistan SECP The SECP as a statutory body constituted under the Securities and Exchange Commission of Pakistan Act, 1997 (SECP

Act, 1997) is mandated with the responsibility of facilitating development of modern and efficient corporate sector and

capital market, based on sound regulatory principles that provide impetus for high economic growth. The SECP Act, 1997

entrusts the SECP with the following functions:

(a) regulating the issue of securities;

(b) regulating the business in Stock Exchanges, Commodity Exchanges and any other securities markets;

(c) supervising and monitoring the activities of any central depository and Stock Exchange and clearing house;

(d) registering and regulating the working of stock brokers, sub-brokers, share transfer agents, bankers to an issue,

trustees of trust deeds, registrars to an issue, underwriters, portfolio managers, investment advisers and such other

intermediaries who may be associated with the securities markets in any manner;

(e) proposing regulations for the registration and regulating the working of collective investment schemes, including unit

trust schemes;

(f) promoting and regulating self-regulatory organizations including securities industry and related organizations such as

Stock Exchanges and associations of mutual funds, leasing companies and other NBFCs;

(g) prohibiting fraudulent and unfair trade practices relating to securities markets;

(h) promoting investors‘ education and training of intermediaries of securities markets;

(ha) hearing and deciding investor complaints against persons involved in brokerage business for violations of securities

laws, rules, regulations, directives, codes, etc.;

(i) conducting investigations in respect of matters related to the Act and the Companies Ordinance, 1984 and in particular

for the purpose of investigating insider trading in securities and initiating action against the offenders;

(j) regulating substantial acquisition of shares and the merger and take-over of companies;

(ja) regulating professionals who provide services within the financial services market;

(jb) maintaining and issuing panels of auditors from which companies may appoint auditors, and approving audit firms

for financial institutions, listed companies and NBFCs;

(k) calling for information from and undertaking inspections, conducting inquiries and audits of the Stock Exchanges and

intermediaries and self-regulatory organizations in the securities market;

(l) considering and suggesting reforms of the law relating to companies and bodies corporate, securities markets,

including changes to the constitution, rules and regulations of companies and bodies corporate, Stock Exchanges or

clearing houses;

(m) encouraging the organized development of the capital market and the corporate sector in Pakistan;

(n) conducting research in respect of any of the matters set out in this sub-section;

(o) performing such functions and exercising such powers of the Authority, including any powers of the Federal

Government delegated to the Authority, (other than the power to make any rules or regulations) under the provisions of

the Companies Ordinance, 1984, the Securities and Exchange Ordinance, 1969, the Modaraba Companies and

Modaraba (Floatation and Control) Ordinance, 1980 and under any other law for the time being in force under which

any function or power has been conferred on the SECP including, but not limited to, the functions and powers set out

in the Schedule to SECP Act;

(p) performing such functions and exercising such powers (other than the power to make any rules or regulations) under

the Ordinance or any other law for the time being in force as may, after the commencement of this Act, be delegated to

it by the Federal Government and exercising any power or performing any functions conferred on it by or under any

other law for the time being in force;

(q)proposing regulations in respect of all or any of the aforesaid matters for the consideration and approval of the Board;

(r)exercising all powers, discharging all duties and performing all functions assigned to the Commission under, and

generally administering, the Law of Insurance;

(s)ensuring and monitoring compliance by insurers, insurance surveyors and insurance intermediaries of all laws, rules

and regulations pertaining to insurance for the time being in force;

(t) regulating professional organizations connected with the insurance business;

12

No. Country Name of

Organization


(u) encouraging the organized development of the insurance market in Pakistan.

(v) promoting and regulating development of Private Pension Schemes and Funds; and

(w) promoting and regulating any scheme, fund, arrangement or undertaking (including but not limited to pension,

superannuation gratuity and provident funds and schemes) established by or on behalf of companies and state owned

corporations as employers, for entitlement of post-employment benefits of their employees.

In addition to the rule-making powers conferred vide the SECP Act, 1997 the relevant statutes governing each area under

SECP‘s mandate also provide rule-making functions to the SECP, e.g., the CDC Act, 1997, the Securities and Exchange

Ordinance, 1969, the Securities Act, 2015. Moreover, regulations of the market infrastructure institutions are also framed

with prior approval of SECP.

14 Philippines PSE The Philippine Stock Exchange (PSE) was granted its self-regulatory organization status by the Securities and Exchange

Commission (SEC) in June 1998.

As a self-regulatory organization, it can create and enforce its own rules, particularly those relating to monitoring market

conditions and trading activities, processing of new listing shares, suspension and delisting of listed issues, imposing of

sanctions on listed companies and monitoring of the compliance of listed companies to 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.

15 Singapore SAS No rule making functions. SAS is an industry association which serves as a bridge between member firms and the

regulators, MAS and SGX. SAS liaises with MAS and SGX through regular meetings and responses to consultation

papers.

16 Sri Lanka SEC The SEC is the statutory body entrusted with the task of regulating the Securities Market in Sri Lanka. The SEC was

established in pursuance of the Securities and Exchange Commission of Sri Lanka Act. No. 36 of 1987 as amended by

Act No. 26 of 1991, Act No. 18 of 2003 and Act. No.47 of 2009. The SEC Act encompasses the regulatory framework for

the capital market and is the foundation of Sri Lanka‘s Securities market.

The Objectives of the SEC are as follows;

- The creation and maintenance of a market in which securities can be issued and traded in an orderly and fair manner;

- The protection of the interest of investors;

- The operation of a Compensation Fund to protect investors from financial loss arising as a result of any licensed stock

broker or licensed stock dealer being found incapable of meeting his contractual obligations; and

- The regulation of the securities market and to ensure that professional standards are maintained in such market.

The SEC grants licenses to the following entities:

- Stock Exchanges

- Stock Brokers

- Stock Dealers

- Managing Companies of Unit Trusts

The SEC grants Certificates of Registration to the following Market Intermediaries:

- Underwriters

- Margin Providers

- Credit Rating Agencies

- Investment Managers

- Clearing Houses

17 Taiwan TSA TSA establishes and enforces self-regulatory rules for the engagement by the members in the

underwriting, proprietary trading, and brokerage trading of securities, and any other business approved for

operation in Taiwan.

18 Thailand ASCO ASCO makes rules with approval of SEC or SET or ASCO‘s Broad Of Executive Director (BOED) enforced the

brokerage businesses to control the business conduct and effectiveness of its member firms.

During preparation to become a SRO, The ASCO‘s Member Supervision functions will be responsible for ASCO‘s rule

formation, qualification setting and coordinating with other regulators such as SET and SEC in supervision, monitoring

business conduct of members.

19 Turkey TCMA - Establish 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

13

No. Country Name of

Organization


- Evaluate complaints against its members and inform the Board on the results

- Engage in financial literacy activities

20 Vietnam1 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 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.

21 Vietnam2 VBMA VBMA‘s charter and code of conduct regulate corporate governance of our association and conduct of the member firms.

VBMA performs the following function as an association of debt market professional in Vietnam

- A high-standard debt market professionals community in Vietnam

- 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 that is designed with a view to assisting VBMA members in

standardizing and improving their back-office operations relating to debt market transactions. VBMA has selected 4

member firms for pilot implementation of this Back Office Manual.


14

III –2. Qualification System for Market Professionals

No. Country Name of

Organization

Qualification Systems for Market Professionals

1 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 SECC to engage in the

securities business activities in the Kingdom of Cambodia. The training and examination are mainly focused on legal

aspect (SECC‘s regulation, CSX‘s rules, Law on Commercial Enterprise, Law on Investment, etc.). The examination is

conducted as paper based and multiple choice questions (MCQ).

So far, there are 199 participants attended the training course and took the examination organized by the SECC.

2 Hong Kong HKSA SFC oversees 10 kinds of Regulated Activities (will have 12 in 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 in Registration/Licensing system, i.e., each market practitioner has to be

licensed by SFC as either Responsible officer (RO) or Representative (Rep). Each regulated entity must have 2 RO‘s 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.

3 India ANMI Under the SEBI and Exchange regulations, India have adopted a registration systems where at least two Designated

Director of the Securities Companies, should have a minimum of 2 years experience in an activity related to dealing in

securities. E.g. as a portfolio manager, or as investment consultant, or as a merchant banker, or in financial services or

Treasury, Broker, Sub Broker, Authorized Agent or as a Authorized Person to a member of a recognized stock exchange,

Dealer, Jobber, Market Maker, or in any other manner in dealing in securities or clearing and settlement thereof.

The exchange requires member‘s firms‘ officers and dealers to pass suitable examinations certifying their capability to

function in the capacity in which they are employed. They require obtaining the National Institute of Securities Market

(NISM) and National Certificate for Financial Markets (NCFM). This is a prerequisite to employment in any securities

company to ensure that they have adequate skills and knowledge. The NCFM certificate is available in all operational

subjects.

The National Stock Exchange, Bombay Stock Exchange as well as MCX Stock Exchange conduct their own

examinations for the Equities Market, Futures & Options Market and the Currency Market. Here is the link to NSE‘s site

introducing you to NCFM:

http://www.nseindia.com/education/content/about_ncfm.htm

In addition, NSE also offers a host of other examinations (including for those who want to become Insurance Agents).

Here is the link giving a list of their modules:

http://www.nseindia.com/education/content/module_ncfm.htm

A few years ago SEBI formed an Institute called NISM, with the objective of making it, over time, the sole body

conducting examinations for the Capital Markets. It has become compulsory now. Here is the link to the NISM website:

http://www.nism.ac.in/

The only outsourcing done by them is for conducting of the examinations, where they get professional entities (largely IT

training institutes, since they have the required set-up) to conduct the examinations for them. The test material and all

other back end work is handled by the respective entities.

The only outsourcing done by them is for conducting of the examinations, where they get professional entities (largely IT

training institutes, since they have the required set-up) to conduct the examinations for them. The test material and all

other back end work is handled by the respective entities.

4 Indonesia APEI There are four types of professional licenses:,

1. Broker Dealer

2. Underwriter

http://www.nseindia.com/education/content/about_ncfm.htm

http://www.nseindia.com/education/content/module_ncfm.htm

15

No. Country Name of

Organization


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, 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 – A joint cooperation between The Indonesia Stock

Exchange and University of Indonesia.

A Broker dealer license must work in a securities firm in order to hold the license. Under new regulation POJK No.

27/POJK.04/2014, those licenses (No. 1, 2 & 3) has expiry period of 2 years. Extension can be proposed to OJK after

attending specific training (will be decided by OJK).

License number 4 – Mutual Fund Sales Agent hopeful must take an exam conducted by APRDI – The Association of

Investment Management Companies.

5 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. Class-1 Examination

became open to the public starting from January 2012, in addition to Class-2 Sales Representative which has been open to

the public since September 2004.

It 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 enable 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 2014 is shown in the

following table.

Examination Examinees Successful Applicants

Class-1 Sales Representative 59,088 25,463

Class-2 Sales Representative 27,312 15,055

Internal Administrator 20,361 16,598

Special Member's Class-1 Sales Representative 10,128 3,655

Special Member's Class-2 Sales Representative 15,038 7,406

Special Member's Internal Administrator 3,422 3,098

Total 143,950 71,277

6 Kazakhstan NBK In order to obtain a license an applicant must comply with the following qualification requirements:

- availability of a business plan, which describes the purpose of organization of the applicant, guidelines of activities

and the market segment in which the applicant plan to operate, types of services, marketing plan, risks related to

professional activities of the applicant and methods to reduce such, financial perspectives (estimated balance-sheet,

income statement for the last three financial (operating) years), a staffing plan;

- availability of programs, computers and other equipment required for activities in the securities market in accordance

with the regulatory legal acts of the authorized body;

- compliance of the organizational structure with the requirements established by Law of the Republic of Kazakhstan

―On security market‖ and regulatory legal acts of the authorized body;

- presence of regulations concerning the internal audit of the applicant.

7 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 qualified person has professional expertise for skills and knowledge, and partially

prevents incomplete sales and conflict between sales company and individual investor.

REGISATRATION STATUS OF FIANANCIAL INVESTMENT PROFESSIONALS (As of Dec.31, 2013)

16

No. Country Name of

Organization


Types of certification Number of people

Certified Fund Investment Advisor 129,757

Certified Securities Investment Advisor 96,725

Certified Derivatives Investment Advisor 52,955

Certified Investment Advisory Officer 14,950

Certified Investment Manager 11,594

Certified Research Analyst 1,192

Certified Financial Risk Manager 240

Credit Rating Agent 2

Total 307,624

8 Laos LSCO Referring to the Securities Law, LSCO shall grant a securities business professional license (i.e., broker, financial advisor,

analyst or fund manager license) to individual in accordance with conditions, methods and procedure as prescribed in the

regulation on Securities Professional Supervision. Eligibility criteria for granting such license includes that a person have

to be employed by a securities company and pass a securities professional course‘s examination (i.e., Lao Professional

Investment Banking or Lao PIB). For foreign practitioners who received a securities practitioner certificate from other

countries, we require that they have to pass a Lao legal examination prior to be granted with a securities business

professional license by LSCO.

9 Malaysia ASCM In Malaysia, the CMSA requires market professionals to hold Capital Markets Services Representative‘s License

(―CMSRL‖) in order to deal in securities and futures trading. In attaining their licenses, the market professionals are

required to pass licensing examinations set by the Securities Commission which acts as the regulator and enforcer of the

CMSA.

10 Mongolia FRC 1. All professionals working in a regulated entity by FRC must be certified by MASD upon the successful completion of

the training course

2. The qualification has certain types and ranks dependent upon level of expertise and types of services to be provided.

3. The Commission shall define the types and ranks considering opinions of the professional associations and

self-regulated organizations of the securities market.

4. The qualification stated in the Securities Market Law shall be granted for three years term for first time takers (second

time for 4 years, third time for 5 years, fourth time undated) to an individual who passed the professional selection,

based on the conclusion of the Professional Board.

There‘re 2 types of professional licenses in capital market. The main courses for obtaining the licenses are:

-Brokerage license

-Investment consultant license

11 Myanmar SECM Under consideration

12 Nepal SEBON The qualification of the directors and the chief executive of the Stock Broker, the Securities Dealer and Market Maker

shall be as follows:

The Chairman of the Board of Directors, Director and the Chief Executive shall require to hold a minimum

bachelor degree in economics or commerce or finance or accounts or management from a recognized educational

institution or be a certified chartered accountant or equivalent or hold bachelors degree in any other areas and

having a minimum of two years experience in accounts, finance or management related functions in industry or

commerce or securities market or finance sector.

Shall require being a Nepali citizen.

The qualification of the directors and the chief executive of the Merchant Banker shall be as follows:

A two-third of the directors including chairman and executive chief shall have a minimum bachelor degree in

economics or commerce or finance or accounts or management or commercial law from a recognized educational

institution or be a certified chartered account and having 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,

Possessing Nepali Citizenship

Provided that even a foreign citizen can also be director or chief executive with the approval of the government.

13 Pakistan SECP In terms of section 20(4)(h) of the SECP Act, 1997 the SECP is responsible for training of intermediaries of securities

markets. In this connection, the Institute of Capital Markets (ICM), Pakistan‘s first securities market institute, has been

established as a permanent platform to develop quality human capital, capable to meet the emerging professional

knowledge needs of capital markets and create standards among market professionals.

The Institute has been envisioned to conduct various licensing examinations leading to certifications for different

segments of the capital markets. In addition, ICM also provides a platform for research & development, exchange of ideas

17

No. Country Name of

Organization


and consulting services on Capital Markets issues.

All existing professionals employed by the brokerage house who are engaged in sales and marketing, customer relations,

research analysis, trading, risk management, settlement and compliance functions of the brokerage house must obtain the

Pakistan Markets and Regulation Program (PMR) and Fundamentals of Capital Market (FCM) certifications offered by

ICM.

All brokerage house employees engaged in sales function for advising clients about investments shall in addition to PMR

and FCM also obtain ICM‘s Stock Broker Certification.

All newly entering professionals in the capital market are required to attain relevant certification within 1 year from the

date of employment with the broker.

14 Philippines PSE Details may 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), attached hereto, 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.‖

15 Singapore SAS Singapore has adopted a licensing regime for trading representatives. They should be licensed by the MAS, and the TR

must be:

At least 21 years old

Satisty a minimum educational qualification of at least 4 GCE ―O‖ levels credit passes, and

Comply with examination requirements eg for dealing in securities, to pass Module 1A (Rules and Regulations for

Dealing in Securities) and Module 6 (Securities Products and Analysis) and 6A (Securities and Futures Product

Knowledge)

Latest development is that member firms no longer have to renew or apply for licencing for Trade Representatives.

They only need to certify that these representatives meet the ―fit and proper‖ requirements, and register them with

MAS in the MAS Public Register.

16 Sri Lanka SEC The Capital Market Education and Training (CMET) of the SEC plays an important role by facilitating licensing

examinations, financial literacy programs as well as continuous learning opportunities for professionals in the Securities

Industry and the SEC has made this qualification compulsory to work as an Investment Advisor in the Stock Broking

Industry.

Courses conducted by CMET are as follows:

- Certificate in Capital Markets

- Diploma in Capital Markets

- Continuous Professional Development (CPD) Programs

- Programme in Investing

- Advanced Programme in Investing

- Certificate Programme in Unit Trusts

- University Pragrammes and Student Programmes as well as Teacher Training Programme

- Registered Investment Advisor Licensing Programme

Other Market Intermediaries are required to comply with the Fit and Proper criteria, qualification and experience

framework as specified in the Rules applicable for Market Intermediaries.

17 Taiwan TSA According to Regulations Governing Responsible Persons and Associated Persons of Securities Firms, only person who

obtains qualification as a sales agent can engage in 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 Institution (SFI) at

the request of the TSA. SFI is a center to provide various testing and qualification recognition.

Qualification Examinations for securities professionals can be divided into written exams and computer-based

qualification exams. Written exams are quarterly offered; computer-based qualification exams have been offering since

1999, which enable candidates to take examinations on any business day. Besides that, 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.

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.

18 Thailand ASCO According to the SEA, SEC regulations and SET regulations, Market professionals must comply with the following

qualification requirements;

1. Approval requirement

18

No. Country Name of

Organization


An executive officer (Director, manager or any authorized person dealing with management) must be approved from

SEC. SEC is going to review a background of individual person in order to check his/her previous violations, personal

financial problems, minimum educational or work experience.

2. Licensing and registration requirement

An investment Consultant (IC) is required to register with SEC. For registration requirement, IC has to meet SEC

criteria and pass the license examination conducted by ASCO Training Institute (ATI).

Examinations

On behalf of ASCO, ATI also provides the examinations for ICs to ensure that they have enough skills and

knowledge. ATI also provides computerized examinations which are conducted in English as well. The examination

outline of the fiscal year 2015 is shown as follows;

Group Examination Topics

Group 1 Investment Consultant Group

Paper 1 Paper 1(Eng): Securities Investment Consultant Examination

Paper 2 Paper 2(Eng) : Derivatives Investment Consultant Examination

Paper 3 Paper 3 (Eng) : Debt Instruments Investment Consultant Examination

Paper 4 Paper 4 (Eng) : Fund Investments Consultant Examination

Paper 5 Paper 5 (Eng) : Equity Investment Consultant Examination

Group 2 Additional Products Group

Paper 7 Paper 7 (Eng) : Examination for Additional Product : Debt Instruments

Paper 8 Paper 8 (Eng): Examination for Additional Product : Funds

Paper 9 Paper 9 (Eng) : Examination for Additional Product : Equities

Paper 10 Paper 10 (Eng) : Examination for Additional Product : Funds and Equities

Paper 11 Paper 11 (Eng) : Examination for Additional Product : Equities and Debt Instruments

Paper 12 Paper 12 (Eng) : Examination for Additional Product : Funds and Debt Instruments

Paper 13 Paper 13 (Eng) : Examination for Additional Product : Debt Instruments, Funds, and Equities

Paper 14 Paper 14 (Eng) : Examination for Additional Product : Derivatives

Group 4 Rules and Regulations Group

Paper 17 Paper 17 (Eng): Examination on Dealing Rules and Regulations : Securities (Including Derivatives)

Paper 18 Paper 18 (Eng) : Examination on Dealing Rules and Regulations : Securities (Excluding Derivatives)

Paper 19 Paper 19 (Eng): Examination on Dealing Rules and Regulations : Derivatives

Paper 22 Paper 22 (Eng): Core Rules and Regulations

Paper 23 Paper 23 (Eng): Core Rules and Investment Suitability

Paper 24 Paper 24 (Eng): Rules and Regulations for Dealing in Securities (Excluding Derivatives)

Paper 25 Paper 25 (Eng): Rules and Regulations for Dealing in Derivatives

The number of the examinees and successful applicants as end of September 2015 is ;

- Applicants total 18,430 persons

- Examinees total 17,731 persons

- Successful applicants total 4,570 persons (Passing rate =25.7%, Industry = 21.4%)

3. Refresher course training is required for the renewal of license for Investment Consultant (IC) conducted by

ASCO Training Institute. (ATI).

Investment consultant type Trained (not less than 15 hours.)

Fundamental

Technical

Derivatives

Ethics, Rules and

Regulations

Asset

Allocation

1.Investment Planner (IP) non-obligatory at least 6 hrs. at least 3 hrs. at least 3 hrs.

2.Investment Consultant

(Capital market)

non-obligatory at least 6 hrs. at least 3 hrs. at least 3 hrs.

3. Investment Consultant

(Securities market)

non-obligatory non-obligatory at least 3 hrs. at least 3 hrs.

4.Investment Consultant (Bond non-obligatory non-obligatory at least 3 hrs. at least 3 hrs.

19

No. Country Name of

Organization


market)


(Mutual Fund)



(Equity)



(Derivatives market)

non-obligatory at least 6 hrs. At least 3 hrs. at least 3 hrs.


(Precious metal)

non-obligatory at least 6 hrs. at least 3 hrs. at least 3 hrs.

4. Training certificate requirement

A head of compliance is required to receive training certificate which is organized by ASCO.

5. Registration requirement

A trader is required to register with SET. For registration, a trader has to meet SET criteria.

19 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 at 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

20 Vietnam1 VASB According to 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, namely:

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 securities and

stock market.

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 of

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 of

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 of

qualifications needed for the Financial Analysis Certificate and qualification on Fund and Asset Management.

Exams are held by the Securities Research and Training Center under the State Securities Commission (SSC).

21 Vietnam2 VBMA Generally speaking, there are no mandatory qualification requirements applicable to commercial banks‘ dealers dealing

with bond trading. For brokers and analysts working for securities companies, please see our discussion below.

According to Decision No. 15/2008/QĐ-BTC dated 27-3-2008 by the Ministry of Finance, there are 2 types of certificates

relating to securities business that market professionals must have, namely: 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 securities and stock market.

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

20

No. Country Name of

Organization


- Fund Management Certificate

1. To attend the exam for Securities Brokerage Certificate, the Securities Professional Certificate must comprise of

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 of

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 of

qualifications needed for the Financial Analysis Certificate and qualification onFund and Asset Management.

Exams are held by the Securities Research and Training Center under the SSC.

VBMA also provide the training course on the Fixed Income Trading Techniques for dealer in the market. We expect that

in the time to come, all dealer must attend this training course.


21

III –3. Training System for Employees/ Sales Representatives of Securities Companies

No. Country Name of

Organization

Training System for Employees/ Sales Representatives of Securities Companies

1 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 year, the employees/sales

representatives of Securities firms need to go through the exam again.

2 Hong Kong HKSA SFC requires every market participant, for each regulated activity per year, must attend 5 hours of continuous professional

training (CPT) provided by few financial institution recognized by SFC, such as HKSA.

In terms of training system in Securities companies, it varies from one securities company to another.

3 India ANMI These are undertaken by individual brokering houses on need basis.

4 Indonesia APEI APEI works with the Regulators to the implementation of new regulations or to enhance participants' understanding of

their functions in the securities company.

OJK requires company‘s directors to participate in the continuing education in order to get better understanding about the

development and implementation of existing regulation. 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

entitled for license extension from OJK. Those licenses will be expired after 2 years.

5 Japan JSDA Based on a training program drawn up annually, JSDA provides training seminars for executive officers and employees of

Association Members for the purpose of renewal of qualification and enhancement of their expertise. JSDA flexibly

conducts training seminars other than those included in the program in response to amendments of laws and institutional

reform.

Total of participants attended these seminars during the fiscal year 2014 : 4,629 persons (102 sessions)

To contribute to strengthen the compliance system and to enhance internal training in member firms, JSDA edited and

distributed a collection of rulebooks on laws and regulations to be used as reference material in internal training courses.

In addition, JSDA provided summaries and training materials on compliance-related themes from among its training

themes for the fiscal year.

FY2015 Training Plan

1. Training Based on Self-regulatory Rules

i. Seminar for company representatives (held once per year)

ii. Training for Officers (held 4 times per year)

iii. Training for internal administration supervisors (mandatory・held 10 times per year)

iv. Training for internal administration assistant supervisors (mandatory・held 10 times per year)

v. Training for internal Administrator (held 6~8 times per year)

vi. Training for sales managers (held 6~8 times per year)

vii. Training for qualification renewal of sales representatives (computer based training)

2. Training on Ethics and Compliance

i. Basic compliance Seminar (held 8~10 times per year)

ii. Compliance Practice Seminar (held 10~12 times per year)

iii. Risk management seminar (held 2 times per year)

iv. Compliance seminar for sales staff (held 4~6 times per year)

v . Corporate ethics seminar (held 1 per year)

6 Kazakhstan NBK There are not any special requirements to training system for employees /sales representatives of securities companies,

excepting traders of KASE‘s members, which must take trainings how to work with KASE‘s trading system and know

what limitations and restrictions there could be.

7 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 2015, KIFIN runs 124 classes in 9 different spheres, categorized into 3

groups. KIFIN also offers advanced courses, each tailored to the needs courses and 67 online courses. KIFIN also offers

advanced courses, each tailored to the needs of its member companies. KIFIN started running its website in July, 2000,

with the total number of individuals that have signed up online reaching 408,955

22

No. Country Name of

Organization


NUMBER OF TRAINEES ENROLLED IN KIFIN COURSES

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

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

their certification and specialties.

8 Laos LSCO According to regulation on securities practitioner supervision, a person having a securities practitioners license are

required to attend trainings on laws and regulations relating to securities market. Such training shall be organized by

LSCO from time to time for refreshing and updating purposes. Also, employees/sales representatives of securities

companies may participate in the trainings as may be available in four companies.

9 Malaysia ASCM The CMSRL holder are required on annual basis to attend industrial related training conducted by either Securities

Industry Development Corporation (SIDC), a training centre established by SC or any approved training providers and

are given certain number of 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 industrial related development in terms of regulation, guidance and technical aspect of the

industry standard.

10 Mongolia MASD MASD regularly organizes workshops or training in order to enhance the capacity building of market participants and

promote the understanding related to the implementation of new regulation, compliance system, back office function and

internal audit.


12 Nepal SEBON SEBON provides training to securities companies and merchant bankers as their necessity.

13 Pakistan SECP Please refer to response for ―Qualification System for Market Professionals‖ above.

14 Philippines PSE Please see answer to Qualification System for Market Professionals.

15 Singapore SAS To qualify for renewal of licence by the regulators, amongst other requirements, TRs must earn Continuing Education

Program (CEP) credits as follows:

TR < 48 months experience need 2 CEP credits.

TR > 48 months experience need 1 CEP credit

1 CEP credit is equivalent to 3 hours of classroom or e-learning from accredited training program. The

CEP training content includes product training, market/sector development, economics and

investing/trading skills, soft skills, regulatory and compliance training.

These requirements still apply under the new notification framework for ―fit and proper‖ certification by

the member firm.

16 Sri Lanka SEC - Continuous professional development programs for existing investment advisors in the stock broking industry to

enable them to constantly assess and update themselves with the latest trends in the local and global capital

markets;

- Ethical Framework and Best Practices in Professional Conduct issued by the Commission for individuals

involved in conducting investment analysis, making investment recommendations, taking investment actions

and/or engaging in any other investment profession activities ("Practitioners");

More recently an MOU was signed between the SEC and the Sri Lanka Institute of Directors to provide training to

company directors on securities laws and regulations and to inter alia create awareness on directors about their

responsibilities in respect of matters related to the Capital Market of Sri Lanka. The MOU encompassed duties with

regard to Related Party Transactions; Takeovers and Mergers; Insider Dealing and additionally provides practicing

Directors and aspiring Directors a vehicle to cater to their professional needs through awareness of best practices, learning

and development and similar interventions and to promote excellence in Boardroom Governance.

17 Taiwan TSA Qualification exams of securities:

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

nine written qualification exams including securities-related: (1)Senior securities specialist exam and (2) securities

specialist exam.

Pre-job and on-the-job financial training for securities personnel (employees/sale 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

23

No. Country Name of

Organization


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.

18 Thailand ASCO Training Courses

On behalf of SET, Capital Market Development Function (CMDF) has formulated and developed Training Courses for

securities companies. Capital Market Academy (CMA) managed by CMDF has provided synergy knowledge, visions and

leadership for policy makers inside and outside the scope of capital market.

ATI conducted by ASCO has provided financial and capital market mechanism, principle of investment, basic knowledge

of securities products with their valuations, SEC regulations and ethics for Investment Consultants and provides training

courses for executive officers and employees of member firms for the purpose of renewal of qualification and

enhancement of their expertise. Furthermore, ASCO also provides training courses for the members‘ head of compliance

in order to enhance and strengthen the compliance knowledge.

As of September 2015, There are in house training 146 courses and public training 44 courses. Total of participants

attended these courses as of September 2015: 13,520 persons.

19 Turkey TCMA n/a

20 Vietnam1 BASB A securities broker or securities analyst of a securities company needs to obtain the Securities Professional Certificate. In

order to obtain such certificate, brokers/analysts 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. 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

21 Vietnam2 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 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:





A securities analyst is required to participate in the following courses held by the SSC:





5. Course 5: Financial Advisory and Securities Underwriting

6. Course 6: Analysis of Financial Reports


24

III –4. Securities Firms Inspection or Audit

No. Country Name of

Organization

Securities Firms Inspection or Audit

1 Cambodia SECC The SECC has conducted on-site and off-site inspection to the securities firm. The securities firm shall submit the

periodic financial statement to the SECC.

2 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 condition, 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 requires regulated firms to submit their financial resource report (FRR) and other reports on daily basis.

3 India ANMI SEBI and the Exchanges inspect members‘ books for adherences to compliance requirements as stipulated by them from

time to time. Generally, all inspections are on-site inspections. The authority conducting the inspection may call for

additional records.

4 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.

Aside from the above, IDX also checks us on data feed distribution to investors and indirect vendors. And since 2015,

KSEI also audit securities firms regarding movement of stocks.

5 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 onsite

inspection, off-site or document-based inspection may be conducted using account records etc. submitted by the

Association Members subject to the inspection without visiting the said Association Members.

JSDA also conducts offsite monitoring and timely check the financial condition of Association Members.

6 Kazakhstan FSC The NBK have the right to carry out inspections of activities of issuers, licensees.

The following shall be recognized as reasons for the performance of an inspection:

- complaints of investors;

- complaints of securities holders;

- complaints of professional participants of the securities market and self-regulatory organizations;

- a court ruling, resolution of the procurator or an inquest and preliminary investigation authority for the performance

of an inspection or for the participation of workers of the authorized body in an inspection;

- discrepancy of information contained in documents or details, discovered by the authorized body in the course of

considering documents submitted by an issuer for the state registration of an emission securities issue, consideration

and approval of a report on results of allocation and (or) redemption of emission securities;

- discrepancy established by the authorized body in the course of considering reports on activities of licensees;

- information on commission of a transaction in emission securities or other financial instruments with the use of

information which constitutes commercial and service secrets in securities markets;

- other facts of violation of the Republic of Kazakhstan legislation by securities market entities, that became known to

the NBK.

The on-site inspection is carried on a regular basis in accordance with the plan. Large companies are inspected once a

year, while small companies are inspected once in a three years.

There are special divisions which provide off-site regulation without visiting companies. There exist ad hoc on-site

inspections if necessary.

7 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.

8 Laos SECO LSCO is given the authority to supervise, monitor and inspect securities firms 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 right and interest 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.

9 Malaysia ASCM As a frontline regulator, Bursa Malaysia closely supervises the business conduct of brokers 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 brokers with the focus to assess

the degree of compliance, level of market conduct and adequacy of clients‘ assets protection.

25

No. Country Name of

Organization


Compliance Monitoring – ensure timely reporting by brokers, conduct analytical review on the periodic submissions and

raise alert when the needs arise.

Financial Monitoring - monitor the brokers‘ financial condition and ensure the compliance with minimum financial

requirements from various aspects.

Registration – ensure all licensed brokers, the key staff and licensed personnel are duly registered with Bursa Malaysia for

monitoring purpose.

Others - Evaluate and process applications received from brokers that require prior consent of Bursa Malaysia before

implementation, which among others, include applications for new business activity and establishment of new office

premises

10 Mongolia MASD 1. The Financial Regulatory Commission shall conduct an inspection of a regulated entity and securities‘ issuer‘s

operation, whether they comply with this Law, other relevant legislations, and rules and regulations set by the

Commission.

2. The Commission may conduct an inspection at any time on its own initiative if deems as necessary or upon request or

information received from clients, legal entities, or foreign regulatory organization.

3. The Commission shall conduct continuous supervision on whether a regulated entity complies with this Law, rules and

regulations set by the Commission in conformity with this Law and the conditions and requirements of the special

permits.

4. A regulated entity is obliged to deliver documents and materials required by the Commission within a specified time.

5. A regulated entity shall have its accounts and other records audited at the end of each financial year and submit a

certified copy of the audited financial statements to the Commission along with the auditor‘s opinion within the period

specified in the Law.

6. An auditor shall immediately report to the Commission and to the regulated person in writing, if during the

performance of audit of a regulated person, an auditor becomes aware of any matter which would critically affect the

financial position of that regulated organization or discovers evidence of violation of financial regulations.

7. The Commission if deems as necessary may demand the regulated entity to have its quarterly financial statements

audited.

8. Regulated entity must have an internal compliance officer in accordiance with the Regulatory body regulation

11 Myanmar SECM Certain Audit firms recognized by SECM

12 Nepal SEBON SEBON conducts onsite and offsite inspection of the securities firms. Onsite inspection is conducted by visiting the office

the Securities firm and inspecting its account, other records and physical facilities, etc. In off-site inspection SEBON

observe the transaction of brokerage firm from surveillance software.

The Stock Broker, Securities Dealer and Market Maker shall be required to keep its 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.

13 Pakistan SECP The SECP has a dedicated department which conducts and concludes inspections of securities firms. This department also

carries out investigations of conduct that may indicate violations for which a criminal or administrative penalty may be

imposed. Inspections are conducted on routine, periodic and thematic basis in accordance with the annual inspection plan

and in line with the approved inspection manuals. During surveillance and inspection of the brokers of the exchanges the

SECP checks the compliance of applicable rules and regulations by the brokers including the conduct and governance of

business, infrastructure requirements, accuracy of calculation of capital adequacy, disclosures, segregation of clients‘

assets etc.

Furthermore, the SECP can initiate inspection on the basis of a complaint or intelligence received regarding a regulated

entity. The SECP has initiated inspections based on investor‘s complaints, tips, and complaints from other sources in the

past.

As regards audit requirements for securities firms, the stock exchanges have with the approval of the SECP adopted

Regulations Governing System Audit (Regulatory Compliance) of the Broker of the Exchanges. Selection of broker for

audit is done through a biannual balloting on January 31 and July 31 of each year. The objective is to audit all brokers in a

two year ‗cycle‘. The auditor is selected from a panel of independent auditors specified by the exchange. The scope of the

audit includes minimum activities as specified in Schedule A to the regulations. The main areas covered include Client

Level Compliance, Recording of Orders Placed Through Telephone, Details to be Printed on Broker‘s Correspondence

and Contract Notes, Registration with the Commission, Branch Offices and Agents, Segregation of Clients‘ Assets,

Trading by employees of the Broker, Illegal Financing, Internet Trading, Leveraged Trading, and General Obligations of

the Broker. The auditor prepares a system audit report based on the findings of the audit and the report is submitted to the

relevant exchange and the SECP. If the report identifies any non-compliance(s) the exchange may, after giving the broker

an opportunity of being heard and considering the severity and materiality of the non-compliances, take appropriate

enforcement action including issuing warnings, imposing fines, suspension of membership rights etc. The Exchange may

by order, direct the broker to pay a fine for each instance of non-compliance, in addition to the specific

penalty/enforcement action as provided in the relevant law, rules and regulations.

26

No. Country Name of

Organization


14 Philippines 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.

15 Singapore SAS The Capital Markets Intermediaries Departments under the MAS are mainly responsible 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 CMI departments administer the licensing and business conduct rules for these intermediaries to promote

safe, sound and fair-dealing intermediaries. To achieve this, they conduct regular inspections of the member firms under

their licensing regime. The inspections can be thematic, e.g., implementation of Anti Money Laundering polciies and

procedures or a rountine Business as usual inspection on risk and controls compliance.

16 Sri Lanka SEC The Supervision Division of the SEC conducts both risk-based On-Site and Off-Site inspection of Broker Firms and other

market intermediaries. The Broker Supervision Department of the CSE conducts risk based On -Site Inspections on Stock

Broker Firms only.

On-Site inspections of stock broking companies are carried out on a risk based approach focusing on different risk

categories such as prudential, liquidity, financial, credit, legal and operational risks with an emphasis on compliance with

applicable Rules and Regulations.

Off-site inspection is conducted by reviewing the monthly and audited financial statements which are submitted by the

regulated entities.

17 Taiwan TSA 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.

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, or 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.

18 Thailand ASCO ASCO has coordinated with regulators (SEC & SET) in supervising and monitoring business conduct of members. Each

member has to be audited by SEC under SEA supervision and monitoring on financial responsibility rules and

regulations. Each member has to be audited by SET under SET supervising and monitoring on members‘ trading

activities.

19 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, 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 on the results; and

•Establish, enforce and supervise regulations on subjects assigned by the legislation or specified by CMB.

TCMA can enforce its members in compliance with the above regulations. On-site inspection is rare. In most of the cases,

investigations are handled by collecting the necessary documents.

20 Vietnam1 VASB VASB is not authorized or mandated to conduct any inspection or audit of member firms

21 Vietnam2 VBMA Under the VBMA Charter, VBMA is not authorized or mandated to conduct any inspection or audit of member firms


27

III –5. Disciplinary Action and Measures Against Misconducts

No. Country Name of

Organization

Disciplinary Action and Measures Against Misconducts

1 Cambodia SECC According to 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 company, issuing company and other market

participants while the other is applied to individual.

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, any person who contravenes any provisions of this Prakas, the Director General of SECC is

authorized to apply the following administrative sanction:

- A warning

- A correction order

- A suspension or dismissal of directors and/or senior officers.

- Imposing restrictions on the license

- A suspension or revoke the license.

2 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 prison plus fines or fines only for most of the cases; for civil cases, the

disciplinary actions can be revoke/suspend of license, public reprimand, fines and warnings.

SFO gives SFC full power to investigate, to prosecute, to apply court orders to freeze assets, disqualify directors of listed

companies or licensed corporations.

3 India ANMI Under the SEBI and Exchange regulations, disciplinary action is applied against the securities company for any

transgression of the governing laws by either the company or its employees.

The disciplinary action may include any of the following: (1) Reprimand, (2) imposition of a fine, (3) suspension of

membership for a defined period, (4) Expulsion in case of a serious offence. Separately SEBI may compound the offence

by disgorgement of profits with a consent order.

4 Indonesia APEI Under the Law Number 8 Year 1995 regarding Capital Market (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 individual license

- revocation of individual license

Before sanctions are applied, OJK will ask for explanation to the parties regarding the offense committed and its

supporting documents. The Regulator will impose penalty based on the results of the completed investigation. The

activities are automatically suspended if the sanctions are connected with the revocation of the license.

5 Japan JSDA Disciplinary Action and Measures Against Misconducts:

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 are acting as sales representatives. (*)

In addition to the task of taking administrative disciplinary actions regarding to sales representative which is assigned to

JSDA under the FIEA, JSDA also has two categories of disciplinary actions based on its self-regulation which are 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 regarding to employees, there are two categories; the first one is the prohibition

from business of sales representatives, and the second one is treatment of a perpetrator of an inappropriate act. The details

are as follows.

Categories Subject acts Duration Prohibition from

employing

Prohibition from

business of sales

Violation of laws and

regulations, etc.

— Within five (5)

years

—

28

No. Country Name of

Organization


representatives

Treatment of a

perpetrator of an

inappropriate act

(disqualification as

a sales

representative)

Serious violation of laws

and regulations, etc.

which led to significant

loss of public confidence

and internal

discipline equivalent to

dismissal

Class 1

(most serious

cases)

Indefinite

Class 2

(other than Class

1)

Five (5) 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 taken against the Association Member.

6 Kazakhstan NBK There are wide instruments which NBK or criminal authorities could use against market intermediaries and issuers,

including:

- administrative fines for market manipulation, insider trading and other misconduct;

- sanctions which connected with removal of top-managers and other executives or withdrawal (suspension) of a license;

- criminal fines or jail for market abuse which cause a major damage;

- other enforcement measures (require a letter of commitment, compile a written agreement with the market

intermediary, issue a warning, issue a written prescription, obligatory for execution).

7 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:

Request for the member to be barred from the general meeting;

1. Suspension of the qualification of the member;

2. Suspension of the whole or part of the duties provided to the member by the Association;

3. Imposing sanctions;

4. Warning; or

5. Caution.

The types of sanctions that can be recommended on 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 or

not to dismiss the executive concerned at the shareholder‘s meeting

2. Suspension of business practices for less than six months

3. Warning; or

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; or

5. Caution

8 Laos LSCO Person or organization who violates the provisions in the Law on Securities and related regulations shall be subject to the

following sanctions:

(1) Being warned in writing,

(2) Being fined,

(3) Repay in values of damage,

(4) Suspending or revoking a securities business license or revoke the Securities Practitioner license,

(5) Being subject to legal proceeding upon the character and scope of their violation.

9 Malaysia ASCM 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, 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

29

No. Country Name of

Organization


suspension

any other action deemed appropriate

10 Mongolia MASD The Securities Market Law imposes administrative sanctions on offending persons, expressed in financial penalties. The

Revised Securities Market Law significantly increases these fines by 200 to 300 times the existing levels to a maximum

of MNT 86,400,000.

11 Myanmar SECM Section (49 to 52) of Chapter 9 and Section (54 to 64) of Chapter 12 of Securities Exchange Law describe prohibitions

and penalties.The Commission have authority to suspend or revoke license of any Securities Business Firm which is

violates any duty and terms and conditions. Any person who violates on conviction any prohibition under this Law shall

be punished with imprisonment or with fine or both.

12 Nepal SEBON In the case of violation of Act, or Rules, bye-rules, Directives, there under or the order or direction issued by the SEBON,

it may punish with one or more than one punishment as mentioned below:

Make alert or provide written warning

Issue the order for correctional steps

Suspend or annul the service on securities market being provided by the Board.

Impose full or partial restriction on the transaction of approved securities entrepreneur or security market.

Impose monetary penalty.

13 Pakistan SECP The SECP, being the apex regulator monitors compliance of all applicable securities market laws, rules and regulations

and implements measures to avoid misconducts while also taking disciplinary actions, where required in the light of the

applicable regulatory framework. Show cause notices are issued to the party which appears to be in violation of securities

market laws and orders are passed after providing an opportunity of hearing and analysis of facts and figures and

appropriate action taken against proved misconduct/violation.

The recently promulgated Securities Act, 2015 provides the following wide-ranging powers and disciplinary actions in

cases of market manipulation, misconduct and non-compliance:

Any person who commits an insider trading offence shall be liable:

(a) in the case of an individual, to imprisonment of either description for a term which may extend to three years or

to a fine which may extend to two hundred million rupees or three times the amount of gain made or loss avoided

by such person, or loss suffered by another person, whichever amount is higher; and

(b) in the case of a company, to a fine which may extend to three hundred million rupees or three times the amount

of gain made or loss avoided by such company, or loss suffered by another person, whichever amount is higher.

Any person who commits offence of False trading and market rigging transactions, Market manipulation, Fraudulently

inducing trading in securities, Employment of fraudulent or deceptive devices or False or misleading statement inducing

securities transactions, shall be liable—

(a) in case of an individual, to imprisonment of either description for a term which may extend to three years or a

fine not exceeding two hundred million rupees, or both; and

(b) in the case of a company, to a fine which may extend to three hundred million rupees.

Any person who contravenes the provisions of sections 3 and 22 and sub-section (1) of section 64 of the Securities Act,

2015, i.e., operating without a licence or other authority, shall be liable to pay to the SECP, by way of penalty,—

(a) in the case of an individual, such sum which may extend to hundred million rupees;

(b) in the case of a company, such sum which may extend to two hundred million rupees; and

(c) in the case of a continuing offence, a further sum which may extend to two hundred thousand rupees for every

day or part thereof during which the offence continues.

Any person who commits an offence under section 92, i.e., criminal liability for defective prospectus shall be liable to

imprisonment of either description for a term which may extend to three years or with fine not exceeding one hundred

million rupees or with both unless he proves that either the statement was immaterial or that he had reasonable ground to

believe and did up to the time of issue of prospectus, that the statement was true.

Notwithstanding the above penalties, any person who—

(a) contravenes or fails to comply with any provision of the Securities Act, or of any rules or of any regulations

made under this Act;

(b) furnishes or produces any return, document or statement for the purposes of this Act or any requirement imposed

under the provisions of this Act or of any rules or regulations made under this Act, the contents of which, to his

acknowledge, are untrue, incorrect or misleading; or

(c) obstructs or contravenes or does not comply with any order or direction of the SECP, including an employee of

the SECP, or an authorized person or investigator, in the performance of his duties under this Act,

shall be liable to pay by way of penalty—

(i) in the case of an individual, such sum which may extend to one hundred million rupees; and

(ii) in the case of a company, such sum which may extend to two hundred million rupees and

30

No. Country Name of

Organization


Where any of the above the offences involves fraud, deceit or deliberate disregard of the regulatory requirement such

person shall be liable to pay by way of penalty—

(a) in the case of an individual, such sum which may extend to one hundred million rupees; and

(b) in the case of a company, such sum which may extend to two hundred million rupees;

Where the offence involved fraud, deceit or deliberate disregard of the regulatory requirement and such offence resulted

in substantial losses or created a significant risk of substantial losses to other persons or resulted in substantial pecuniary

gain to the person who committed the offence such person shall be liable to pay by way of penalty,—

(a) in the case of an individual, such sum which may extend to one hundred million rupees or twice the amount of

loss caused or gain made whichever is higher; and

(b) in the case of a company, such sum which may extend to two hundred million rupees or twice the amount of loss

caused or gain made whichever is higher.

In addition to the above, the SECP may impose an additional penalty, not exceeding the amount of loss caused, on an

individual or a company if the individual or company has failed to comply with any provision of the Act, or of any rules

or of any regulations made thereunder or direction given by the SECP under the Act and the non-compliance has resulted

in a loss to any other person.

Moreover, the market infrastructure institutions (stock exchanges, PMEX, CDC and NCCPL) also provide for

disciplinary proceedings in cases of market manipulation, misconduct and non-compliances in their respective sets of

regulations.

The various market conduct regulations and broker conduct regulations of the stock exchanges provide for imposition of

penalties for specific non-compliances/instances of misconduct by the brokers. Similarly, the PMEX General Regulations

provide penalties to be imposed in case of manipulation/misconduct/non-compliance by the commodity brokers.

CDC and NCCPL can impose penalties on their participants in terms of their respective regulations.

14 Philippines PSE Violations of CMIC Rules are classified as minor, major and grave violations.

Minor violations are penalized with a written reprimand for the 1st offense, and a fine of at least P10,000

(US$227) but not more than P50,000 (US$1,136) for the 2nd

and succeeding offenses.

Major violations are penalized with a fine of at least P10,000 (US$227) but not more than P30,000 (US$681) for

the 1st offense, a fine of at least P30,000 (US$681) but not more than P50,000 (US$1,136) for the 2

nd offense, a

fine of at least P50,000 (US$1,136) but not more than P75,000 (US$1,705) for the 3rd

offense, and a fine of at

least P75,000 (US$1,705) for the 4th and subsequent violations.

Grave violations are penalized with a written reprimand and fine of at least P25,000 (US$568) not to exceed P200,000

(US$4,545) 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 entering in or employment in or having any kind of commercial association

with the PSE or any other TP, for the 3rd

and subsequent offense.

15 Singapore SAS Any suspected breach or misconduct 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:

a. issue a letter of warning to the Relevant Persons;

b. make an offer of composition to the Relevant Persons;

c. take other forms of enforcement actions available to us; 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.

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 authorisation, 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.

16 Sri Lanka SEC - Cancel or suspend the Licence/Registration granted to a Stock Broker, stock dealer or any other market

intermediary

- Reprimands

- Convictions

- Compounding of Offences

31

No. Country Name of

Organization


- Cautions

- Warning

17 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:

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 correction is made or required

actions are undertaken.

Suspend all or part of the entitlements enjoyed by the member. Report the case to the governing authority for proper

sanction

18 Thailand ASCO Under SEA, there are two categories of administrative disciplinary action. The first one is applied to securities businesses

such as a broker, a dealer, an underwriter, mutual or private fund management, an advisory investment service, etc. The

second one is applied to an individual employee such as an executive officer, an investment consultant, a fund manager

and trader affiliated with those businesses as following:

Sanction against the company via

1. Writing warning notice

2. Penalization

3. Temporary suspension

4. License Revocation

Sanction against individual via

1. Giving Probation

2. Suspension of license, approval or registration

3. Revocation of license, approval or registration

Control of contact with investors and work procedures for staff

Securities companies must create and issue work procedures that regulate the activities of their personnel. The work

procedures are needed in order to ensure that every staff member performs efficiently and does not cause any damage to

any client, to the employee, and to the firm. In addition, the procedures help ensure all operations comply with the

standards or code of conduct prescribed by the SEC. In accordance with best practices for internal control, companies

shall divide their operations into two groups: front office and back office. This division enhances the checks and balances

in work procedures. For example, front desk employees are prohibited from safeguarding trading confirmation tickets,

client asset summaries, or modifying client information. Furthermore, securities companies shall establish an internal

check and balance system so that all the important tasks of a process are not delegated to one person. Mistakes or even

fraud will be more likely if one person performs or controls all the important tasks in a process. For instance, when a

client is trading over his or her account limit, the exception must be approved through the appropriate line of authority.

All revisions of erroneous transactions must be approved by a supervisor, after the supervisor examines the transactions

and finds that the revisions are necessary and proper. Also, any withdrawal or transfer of the clients‘ securities must be

approved through a designated line of authority.

Securities companies must set up a work manual for staff. The manual helps make sure that operation runs smoothly

when staff changes occur. The manual should have clear and full explanations of the work procedures and policies. The

manual must be kept up to date.

In addition to the aforementioned operational controls, securities companies must also control staff trading by establishing

clear rules to prevent conflicts of interest and the exploitation of nonpublic information. If a securities company is also a

brokerage firm, the company should permit staff to have a trading account only with their employer. However, if the

company allows its staff to open trading accounts with other companies, it is crucial to set up a working control and

compliance system. The control and compliance system can ensure the same level of efficiency as when staff open

accounts at the company.

19 Turkey TCMA A member which 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.

32

No. Country Name of

Organization


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.

20 Vietnam1 VASB According to Decree No.108/2013/NĐ-CP dated Sep 23, 2013 of the Government on dealing with administrative

violations in the field of securities and securities markets, 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 includes (a) a reprimand, (b) imposition of fine (up to VND 2 billion), and (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 criminal investigation pursuant to The 2012 Law on

Treatment of Administrative Violations. Administrative sanctions and remedies are publicly announced on the website of

SSC.

21 Vietnam2 VBMA Under the existing law and the VBMA Charter, VBMA is not authorized or mandated to take any disciplinary action or

measure against misconducts of the member firms or the member firms‘ professional staff (such as a securities broker or

securities analyst)

According to Decree No. 108/2013/NĐ-CP dated 23 September 2013 of the Government on dealing with administrative

violations in the field of securities and securities markets (―Decree 108‖), 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 includes (a) a reprimand, (b) imposition of fine (up to VND 2 billion), and (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 criminal investigation pursuant to The 2012 Law on

Treatment of Administrative Violations. Administrative sanctions and remedies are publicly announced on the website of

SSC.


33

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

No. Country Name of

Organization

Dispute Resolution System between Securities Firms and Customers

1 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 a criminal case.

After receiving a complaint, SECC shall interrogate all parties about subject matters of the dispute and try to mediate

them based on laws, rules and regulations. Result of mediation shall be kept in a record made by SECC stating whether or

not both parties agree with the mediation. The mediation record must be signed by SECC and all parties concerned each

of whom must be provided with a copy of the record. Any agreement reached in the presence of SECC shall be effective

for execution.

In case the mediation has failed, each party may refer an unsettled mediation record to a competent arbitral tribunal or

appeal to a competent court. Valid period of the appeal to the arbitral tribunal or the court shall be of 90 (ninety)

days, otherwise the rights to appeal will lose.

SECC currently is in the process of drafting the Prakas (Regulation) on Dispute Resolution System as well.

2 Hong Kong HKSA An organization, namely Financial Dispute Resolution Scheme (FDRS), was set up few years ago, its main purpose is to

resolve disputes between securities firms and customers. All regulated financial institutions are required (by SFC) to

join FDRS as members, all claims up to HKD500,000 or below can be settled via FDRS by means of mediation and

arbitration. Along the claim proceedings, if misconduct found, the case will be referred to SFC.

3 India ANMI The SEBI regulations require all exchanges to organize a grievance redress cell for customers. At first, the exchange

attempts to conciliate between the disputants.

In case conciliation is frustrated, the disputants can refer the dispute to arbitration under the Indian Arbitration Act. The

exchanges specify the rules for Arbitration in accordance to the Arbitration Act. The disputants may appeal against the

arbitration award. The final award is binding on the disputants.

4 Indonesia APEI Investors may report securities firms to OJK, who will conduct an investigation. 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.

5 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 based 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.)

6 Kazakhstan FSC There is the Commission on Disputes and Conflicts Resolution on KASE, which considers dispute cases between

Securities Firms and Customers.

Also there is Financial Institutions‘ Association of Kazakhstan with whom NBK discuss projected bylaws, before

approval.

7 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.

8 Laos LSCO Dispute relating to securities shall be resolved by any of the following steps:

1) Negotiation by parties,

2) Resolution by the LSCO,

3) Resolution by the Economic Dispute Resolution Center,

4) Resolution by the People‘s Court,

5) International resolution method

9 Malaysia ASCM Securities Firms are required to establish its own Complaint Unit 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 prescribed time frame.

Simultaneously, the Customer shall have the right to lodge their complaints against securities firms and its CMSRL holder

to SIDREC, a complaint centre established by SC. Whilst on complaint against the improper conduct of Bursa‘s

employees, any complaints should be directed to its customer service

10 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 efficient and fast dispute resolution determined by experienced market professionals.

34

No. Country Name of

Organization


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.


12 Nepal SEBON SEBON accepts complaints and grievances from customers about Securities firms and solves their complaints and

grievances.

13 Pakistan SECP The stock exchange regulations provide brokers and their clients with avenue for dispute resolution in the form of

arbitration procedures under which such disputes are handled by a panel of arbitrators. The procedures provide forum for

appeal within specified time in case the party is not satisfied with the award of the panel of arbitrators and in case of

defective arbitration proceedings, the investors can approach the SECP. The arbitration award, if not appealed with due

time is binding on both parties.

Under the SECP Act, 1997 the SECP is also empowered to handle investor complaints related to violation of regulatory

framework by the securities firms.

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

concurrence of the other CMIC 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.

15 Singapore SAS If customer feels aggrieved, he 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 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.

16 Sri Lanka SEC If an investor has a complaint against a Stock Broker Firm in respect of dealings in Securities, such investor shall, in the

first instance, refer same in writing to the Compliance Officer of the Stock Broker Firm within a period of 3 months from

the date of the disputed transactions. The Compliance Officer shall deal with the complaint and shall ensure that it is

resolved expeditiously and satisfactorily.

If the investor is not satisfied with the decision taken by the Stock Broker Firm, then the investor may refer the complaint

to the Colombo Stock Exchange (CSE).

The complaint shall be dealt with by the officer appointed by the CEO of the CSE to deal with such complaints and the

decision of the officer shall be conveyed to the investor and/or Stock Broker Firm in dispute, as appropriate. If a party is

not satisfied with the decision, such party may appeal, within a period of 21 days from the date of the decision, to the

Dispute Resolution Committee of the CSE for an adjudication of the decision.

17 Taiwan TSA 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.

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.

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 of 2012.Financial consumers may deal with a

dispute by filing a complaint with the financial services enterprise, such as securities firms.

18 Thailand ASCO Securities companies must provide written work procedures to cover client complaints. The procedures must be clearly

stated and fair to clients. For verbal complaints, securities companies must record the complaint in writing and require the

client‘s signature. Upon receiving a complaint, a company must resolve it without delay and notify the client and the SEC

http://www.fidrec.com.sg/

35

No. Country Name of

Organization


of the result. If the complaint is complicated, the company shall notify the client periodically of any progress, because a

complicated complaint can take more time to resolve. Companies shall review all client complaints to find the causes. If

the complaints come from inefficiencies in service or control, the companies shall improve the quality and control of their

operating systems. Companies are required to keep all client complaints, and all supporting documentation, for at least

two years from the settlement date.

Arbitration is a disputed settlement procedure whereby the disputed parties agree to be bound by the arbitrator‘s decision.

SEC facilitates disputed settlement by means of arbitration between investors and intermediaries (e.g., securities firms,

selling agents of foreign shares, mutual fund supervisors, private fund custodians and derivatives business operators).

19 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 do so, 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.

20 Vietnam1 VASB The dispute resolution system between securities firms and customers hasn‘t been established yet in Vietnam. However,

as a dispute arises between securities and customers, the stock exchange (HSX & HNX stock exchange) will be the

reconciler. If this mediation is failed, the SSC‘s inspector will be involved; in case of unresolved problem, each party may

appeal to a competent court.

21 Vietnam2 VBMA Currently there are no dispute resolution systems as such in place. However, there were precedents that the parties

requested VBMA to act as mediator. VBMA will provide mediation in accordance with Mediation Rules of VBMA.


36

III –7. Investor Education Activities

No. Country Name of

Organization

Investor Education Activities

1 Cambodia SECC SECC has been trying to promote investor education for general public including potential listed companies, public

investors, medias, universities students, as well as other market participants through conference, seminar/workshop, and

training course both in the city and provinces. Also, SECC cooperated with a private institute, Financial Institute of

Cambodia (FIC), CamEd Bussiness School for providing education in the securities sector including diploma decree and

certificate.

Besides, we also cooperate with other international bodies such as Securities and Exchange Commission of Thailand,

Stock Exchange of Thailand, and Toronto Centre, etc. to co-conduct the training.

2 Hong Kong HKSA SFC set up Investor Education Center (IEC) in 2012, with a hope that IEC will provide a source of education to the public

investors, about kinds of risks involved in the financial market, about financial products available in the market, about

making investment decisions, 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.

3 India ANMI The association conducts from time to time investor education and financial literacy programs. Soon we will collaborate

with SEBI for a comprehensive move on investor literacy programs aimed at the emerging classes of investors from

schools and colleges.

4 Indonesia APEI OJK conducted national survey on financial literacy in the first half of 2013. The survey result is as follows:

Not

Literate

Less

Literate

Sufficient

Literate

Well

Literate

Utilization

Index

Knowledge Knowledge Knowledge

Confidence Confidence

Skills

Financial Services Industry 0.41% 2.06% 75.69% 21.84% 59.74%

Banking 0.73% 2.04% 75.44% 21.80% 57.28%

Insurance 39.80% 0.68% 41.69% 17.84% 11.81%

Multi-Finance 72.10% 0.21% 17.89% 9.80% 6.33%

Pawnshop 45.44% 0.83% 38.89% 14.85% 5.04%

Pension Fund 81.03% 0.11% 11.74% 7.13% 1.53%

Capital Markets 93.79% 0.03% 2.40% 3.79% 0.11%

Source: National Strategy on Financial Literacy

The study identified the low awareness as one of the main reasons on the low percentage of local investors in the capital

market.

In order to increase the number of investors in the capital market and to increase investor knowledge of the mechanisms

associated with transactions in capital market, OJK, IDX, APEI and it‘s members regularly conducts investor education

and financial literacy programs in the form of seminars, workshops, training program, gathering, etc. The activities held

in public places including malls and universities include :

Socialization/education of capital markets to public, prospective investors and Students

Development of capital market information centers in rural and urban areas

Study of the characteristics of investors conducted on an ongoing basis

IDX and exchange members conduct Regular Education Program to arouse public interest in learning stock investment

and to attract new investors: retails and institutions. The education program is divided into three levels :

1. Basic Education Program is the level for participants with less knowledge of stock investment

2. Intermediate Education Program is the level for participants who have completed the Basic level and are

interested to learn more on stock investment

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, University and Security Company) are established in the universities so that

the academic can learn about the Capital Market.

5 Japan JSDA Currently, Japan envisages the following issues;

1. Need to change money flow from savings to investment

2. Continued low interest rates in a mature economy and growing difficulty to build wealth through deposits and savings

3. Growing concerns about public pension system in an aging society

4. Complex financial products supplied through various sales channels (unexpected losses, financial fraud, etc.)

Under these circumstances, JSDA acknowledges the increasing need for upgrading financial literacy among Japanese

citizens and has been conducting investor education activities as mentioned below;

37

No. Country Name of

Organization


• Supports school teachers by providing experience-based teaching materials, education programs and information

magazines, and holding seminars

• Set up websites for teachers and students

• Supports securities research activities by university students

• Offers donated courses on securities through the Open University of Japan

• Holds ―Investment Day‖ commemorative events

As a member of the International Forum for Investor Education (IFIE), JSDA participated in its annual conference in

Kuala Lumpur in May, 2015 and exchanged views with the members and relevant parties.

6 Kazakhstan NBK One of the current goals of NBK is to increase the demand on capital market among the individual investors.

In 2007 Government approved the Program of increasing the investment culture and financial literacy of population of

Kazakhstan on 2007-2011 years.

It gave good results. For example, in 2011-2012 the number of individual investors increased from 10 to 50 thousand

people.

NBK with Government planning to establish a new program of increasing the investment culture and financial literacy of

population of Kazakhstan on 2016-2020 years and increase the number of individual investors to 160 thousand people.

7 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 11,344 visitors during the year 2014.

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.

8 Laos LSCO In order to enhance public understanding on Lao Capital Market, one of current priority tasks of LSCO is to provide

training and education to investors and market participants on securities law and regulations as well as on securities

investment. To achieve the above objective, various methods have been used by LSCO including training and educating

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

and government organizations and etc.

9 Malaysia ASCM With a strong collaboration between Bursa Malaysia and securities firms, we had implemented the following investor

education activities:

1. Capital Market and PLC Profiling

We had a number of initiatives to promote our capital markets and PLCs in Malaysia, Singapore, Thailand and Japan. The

choice of engagement channels/platforms used differed with each country. In The Spotlight events in 2014, PLCs were

38

No. Country Name of

Organization


profiled under two themes - 2013 IPO Review and Property & REITs - to fund managers, investment advisers and

remisiers in Kuala Lumpur. We promoted our market to retail investors in Singapore via weekly profile of PLCs on the

Sharesinv.com website and social media. Through the Spotlight On Malaysia events, we worked with various partners in

each country for on-ground profiling of market and PLCs. To extend our outreach, we also invited ASEAN media

practitioners to Kuala Lumpur to showcase the diversity of our marketplace and PLCs to share their stories.

In Thailand, we collaborated with Money Channel to raise Thai retail investors‘ awareness of investment opportunities in

Malaysia via two programmes, i.e., ―Good Morning Bursa Malaysia‖ and ―Stocks Around Us‖. ―Good Morning Bursa

Malaysia‖ features live phone-in interviews with licensed research analysts, while ―Stocks Around Us‖ showcases video

clips of selected PLCs recorded at the PLCs‘ business premises/factory. The programmes are aired on Money Channel‘s

network platforms, which include satellite television channels and internet TV.

2. Engaging Youth

Our youth engagement activities focused on increasing financial literacy amongst Gen Y and on better familiarising them

with the operations, products and services of the Exchange. In 2014, 10 Bursa Young Investors' Clubs (BYICs) were

established in public and private universities in four states across the nation. We supported the BYICs by holding several

investor education activities including a leadership boot camp, investment seminars, hosting talks by PLCs and organising

field trips to Bursa Malaysia. Some 2,400 students from these universities participated in the clubs. In,the total number of

students visiting Bursa Malaysia rose 52% to 5,066 students from 3,343 students in 2013.

3. Online Trading Games and Competition

To further expand our outreach to young investors, we held a unique Fantasy FTBL.TRADR competition in conjunction

with World Cup 2014 to give them a taste of trading. The Fantasy FTBL.TRADR competition made use of the same stock

portfolio management tools available on BursaMKTPLC, and allowed users to analyse and trade football players much in

the same way that traders would analyse and trade stocks. We also held the inaugural Great Bursa Bull Hunt online

competition in 2014, which was designed to raise investment awareness in retail investors nationwide.

4. Engaging Institutional Investors

We held the Enhancing Portfolio Returns Using ETF and Securities Borrowing and Lending (SBL) Conference 2014 to

help our institutional investors better understand the way that ETF and SBL products can enhance their investment

returns. With respect to ETF, the event was structured to entice domestic and global players to consider Bursa Malaysia as

an ETF listing destination. As for the SBL space, the conference served as a platform to attract new players, especially

local institutions and investment banks, to participate in our growing SBL/Regulated Short Selling (RSS) market. The

conference also served as a networking avenue to both local and foreign institutional players.

10 Mongolia MASD MASD is promoting investor education in the securities sector for potential listed companies, public investors, reporters,

public, universities students, as well as other market participants through conference, seminar/workshop, and training

course.

11 Myanmar SECM n/a

12 Nepal SEBON SEBON has conducted the following investor education activities

A separate branch for investor education is established in SEBON

Investor awareness programs conducted in different parts of the country

Development of educational materials like booklet, pamphlets and leaflets

Distribution of educational materials in street awareness program and some other programs

Publication of quarterly newsletter

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

13 Pakistan SECP Under its Investor Education Program, the SECP is actively engaged in imparting market knowledge through the media

and by holding various seminars and workshops. Fifteen investor awareness seminars were organized in 6 cities during

the last financial year. Intensified efforts for increasing coverage in terms of the number of cities and awareness sessions

during this financial year are underway.

An investor education web portal www.jamapunji.pk has also been launched by the SECP during the current year. This

web portal is a vehicle by which users gain access to a broad array of resources related to investor education and

awareness. The said portal while imparting knowledge using digital means like SMS and social media also provides

exclusive features include risk profiler, scam meter, investment check lists, quiz shows, games, calculator, stock trading

simulator and information about various financial products. It also provides investors facility to verify a company

registration, dispute resolution mechanism and links to complaint registration.

Keeping pace with the latest trends, awareness about non-banking financial sector and products is also being created

through social media. For the youth, in particular for students at schools and universities, a comprehensive outreach

program has been rolled out under which MOUs with the partnering institutions are being signed for conducting on

campus awareness sessions and to run trading competition on real time feed from exchange.

In order to facilitate availability of non-banking financial products at one place and expand outreach to smaller cities, a

concept of Capital Market Hub has been introduced under which offices or representatives of stock brokers, mutual funds,

banks, pension funds and insurance companies will be available under one roof. First such hub has been opened in the

city of Abbottabad and will be followed by other smaller cities.

14 Philippines PSE Conducts monthly seminars for professionals, sectors, companies, and various organizations

Conducts local and international road shows regularly

39

No. Country Name of

Organization


Participates in expositions and exhibits

Conducts quiz bee competitions

Conducts bi-monthly stock market seminars

Accommodates Exchange visits

Conducts company visits for retail investors

Conducts short course on stock market investments

Conducts Stock Market 101 webinars

Implements the PSE Certified Securities Specialist Course together with partner education institutions

Conducts market education campaigns through social media, television and radio guestings, and the PSE

Academy website

In 2014, the PSE also held various provincial roadshows in Batangas, Pampanga, Cebu, Cagayan de Oro and Davao

Held its first provincial run of the Advanced Stock Market Course on January 24 and 25 in Cebu City.

Participated as an exhibitor during the 3rd Asia-Pacific Real Estate Investment Summit held on November 20

15 Singapore SAS Investor Education Activities are conducted mainly through the following channels:portals – SGX, SAS and ABS

have jointly set up two e-learning portals for investors to learn various investment products at their own pace.

SGX Academy conducts training seminars for investors, ranging from beginner, intermediate to professional

level.

Member companies also organized regular training workshops (self or SAS-SGX funded) for their customers.

MoneySense is the national financial education programme for investors in Singapore. Launched in 2003, the

programme aims to enable consumers to become more self-reliant in their financial affairs.

16 Sri Lanka SEC The SEC has two Divisions in order to educate stakeholders on the Capital Market.

The Capital Market Education and Training (CMET) conducts a qualification framework for financial sector professionals

and also conducts certificate courses for investors.

Further SEC educates investors/students/undergraduates/teachers in order to give them a sound understanding of the

investment opportunities available in the capital market by organizing seminars, workshops, road shows, TV/Radio

programmes and other promotional/educational activities.

17 Taiwan TSA To promote financial literacy and correct investment concepts, we planed lecture series and promotional activities.

Activities held in 2014 include:

Promotional activities: Financial Literacy Program: Community College Investing for the Future, Financial Literacy

Program: Financial Management onto the Campus, Community College and Campus Lectures, Financial Literacy

Program for College Students, Mediation Seminar, and Central and Southern Taiwan Lectures on Futures and Options.

Subsidizing personal investment and finance literacy knowledge classes hosted by non-finance faculty in tertiary

education institutes. A total of 24 lectures had their proposals approved in 2014; a total of 6,432 non-finance faculty

student attended general knowledge classes.

18 Thailand ASCO Essential functions of investor education activities is Capital Market Development Function (CMDF) operated by

Thailand securities institute (TSI) which is elaborating full ranges of its investor education activities especially for those

directed at youth, school, university and vocational students, and the general public. The programs contain curriculum,

including train-the–trainer, teacher development and activity-based education. Program resources cover student and

teacher manuals, e-learning, various books, games, and media such as Money Channel.

SET in the City

SET in the City, a one-stop investment expo organized by the Stock Exchange of Thailand. Participation is by the SET's

members, partners and alliances in the capital market, ranging from financial institutions, listed companies, securities

companies, asset management companies and insurance companies to associations with teams of experts.

The central themes of this financial conference will be enhancing knowledge of the economic situation in Thailand under

the current volatility and political factors that affect the economy and investment. This event will be presented in the form

of seminar/discussion and advice from experts to provide information, suggestions and answers for investors.

19 Turkey TCMA Experts from Borsa Istanbul, the Capital Markets Board and the TCMA visit several universities in order to create

and increase the awareness of capital markets among university students.

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.

20 Vietnam1 VASB - The security market is a subject teaching in the universities of economics.

- Securities firms have organized the periodic seminars of the security market and published company reports, market

commentaries, macro updates.

- The securities training programs are organized by the Securities Research and Training Center of the State Securities

Commission (SSC) and the training establishments approved by the SSC.

21 Vietnam2 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 popularize new

policies to the market players and the market players update the market situation to the Regulators.

- The Investor Guide is under the preparation and will be published soon

- To help the reporters to understand about the whole picture of the bond market and its operation that help them in

writing the news for the media, a training seminar was organized for the reporters.

http://www.sgxacademy.com/

40

No. Country Name of

Organization


- The basic and advance training for member is organized.

- The Investors Conference is also organized yearly.


41

IV. Market Structures

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

No. Country Name of

Organization

Breakdown of Financial Assets held by Household Account

1 Cambodia SECC In Cambodia, the financial assets of household are occupied in cash deposits and securities deposits, with record of the

real owner under the sub-account of the securities firms.

2 Hong Kong HKSA Data not available.

3 India ANMI Composition of (Changes in) Gross Financial Asset

Period Currency Bank

Deposits

Non

Banking

Deposit

Life

Insurance

Fund

Provident

and

pension

fund

Claims on

Govern-

ment

Shares

and

Debentu

res

Units of

UTI

Trade

Debt

(Net)

Gross

Finan-

cial

Asset

1970s 13.9 45.6 3.0 9.0 19.6 4.2 1.5 0.5 2.7 100

1980s 11.9 40.3 4.6 7.5 17.5 11.1 3.9 2.2 0.9 100

1990s 10.3 34.7 6.8 10.1 18.8 9.5 7.0 3.8 -1.0 100

2000s 9.6 44.7 1.3 17.4 12.4 11.1 4.1 -0.5 0.0 100

2000-

2005

8.9 37.8 2.0 14.7 15.1 19.5 2.8 -0.9 0.0 100

2005-

2011

10.7 49.9 1.7 19.9 10.3 3.5 4.3 -0.2 0.4 100

Projections of Household Savings Rate (in % of GDP)

2011-12 2012-13 2013-14 2014-15 2015-16 2016-17 12th Plan

Average

Household

Savings Rate

23.2 23.6 24.0 24.4 24.8 25.2 24.4

(Source: RBI)

(Due to lack of feedback, previous statement is retained)

4 Indonesia APEI n/a

5 Japan JSDA At the end of FY2014 (Apr. 2014 to Mar. 2015), the household financial assets totaled 1,707.5 trillion yen, expanding

approximately 84.5 trillion yen, or 5.2% from a year earlier.

FY2012 FY2013 FY2014

FY2014

(Amount) (¥ tril.)

Financial Assets of Household 1,580.3 1,623.0 1,707.5 1,707.5

Currency and deposits 53.6% 53.3% 51.7% 883.3

Bonds 2.0% 1.8% 1.6% 27.2

Investment trusts 4.5% 4.8% 5.6% 78.5

Shares & Other Equities 8.4% 9.3% 10.8% 184.0

Insurance and pension reserves 27.3% 26.8% 26.0% 444.1

Others 4.1% 4.0% 4.3% 73.4

(Source) Bank of Japan

6 Kazakhstan NBK n/a

7 Korea KOFIA The breakdown(%) of financial assets of households at the end of 2014 is as follows. (data from Bank of Korea)

cash and deposit 42.0

insurance and pension reserve 31.5

bonds 6.4

stocks 15.6

funds 3.7

etc. 0.8

8 Laos LSCO The table below shows breakdown of financial assets held by both domestic and foreign individuals and entities in Lao

PDR.

Amount: Billion Kip

2010 2011 2012 2013 2014

Currency Outside

Banks 3,799.92 4,843.88 6,019.73 6,489.73

6,316.00

Total Deposits 17,368.90 22,402.19 29,685.2 1 35,293.96 45,995.70

Source: Bank of the Lao PDR and Lao Securities Exchange

42

No. Country Name of

Organization


9 Malaysia ASCM Detail breakdown of Malaysian household financial assets is not readily published by the Central Bank.

10 Mongolia MASD Currently there is no entity to publish such data. 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. Rest of financial sector is

regarded to commercial banking sector.

11 Myanmar SECM n/a

12 Nepal SEBON 10 percent are institutional investor and 90 percent are general investor in Nepalese Capital Markets.

13 Pakistan SECP While a breakdown in terms of quantum of financial assets held in household accounts is not publicly available, the

financial asset held in the individual investors‘ account maintained with the CDC indicates the individual‘s investments in

listed and unlisted securities.

Securities by definition provided under the Securities Act, 2015 includes shares and stock of a company (shares); any

instrument creating or acknowledging indebtedness which is issued or proposed to be issued by a company including, in

particular, debentures, debenture stock, loan stock, bonds, notes, commercial paper, sukuk or any other debt securities of a

company, whether constituting a charge on the assets of the company or not (debt securities); loan stock, bonds, sukuk

and other instruments creating or acknowledging indebtedness by or on behalf of a government, central bank or public

authority (Government and public debt securities); modoraba certificates, participation term certificates and term finance

certificates; any option to acquire or dispose of any other security (options); units in a collective investment scheme,

including units in or securities of a trust fund (whether open-ended or closed end); the rights under any depository receipt

in respect of shares, debt securities and warrants (custodian receipts); and any other instrument notified by the SECP to be

securities for the purposes of this Act.

14 Philippines PSE The total investor accounts, which include traditional and online accounts, rose in 2014, higher by 9.4 percent from the

previous year's total. Of the total investor accounts, 95.3 percent were retail accounts while the remaining 4.7 percent

were institutional accounts.

15 Singapore SAS

43

No. Country Name of

Organization


Asia Ranking Net per Capita Financial Assets

16 Sri Lanka SEC No information available at present.

17 Taiwan TSA Assets Structure for Households Sector In Taiwan

Assets, Base on final ownership 2013

Item Amount

(100 Million NT$)

Composition

(%)

Net Non-financial Assets 436,177 37.22

Real Estate 399,283 34.07

Households‘ Equipment 36,894 3.15

Net Foreign Financial Assets 59,497 5.08

Net Domestic Financial Assets (A-B) 676,264 57.70

Net Domestic Financial Assets

(excludes Insurance and Pension Fund Reserves) 511,518 43.65

Domestic Financial Assets (A) 808,856 69.02

Cash and Demand Deposits 117,096 9.99

Time Deposits ＆ Foreign Currency Dep sits 141,135 12.04

Portfolio 333,643 28.47

Life Insurance and Pension Fund Reserves 164,745 14.06

Other Domestic Financial Assets 2, 36 4.46

Less: Domestic Financial Liabilities (B) 132,592 11.31

Loans 126,236 10.77

Other Domestic Financial Liabilities 6,355 0.54

Net Worth 1,171,938 100.00

Net Worth

(Excludes Insurance and Pension Fund Reserves) 1,007,193 –

Note：

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

44

No. Country Name of

Organization


18 Thailand ASCO Savings and investments of households 1992-2015

Note: The line graph represent the percentage. This picture shows that even through the amount of Household saving are

increasing, the proportion in percentage are decreasing. One of the reason is because of the Decrease of deposit protection‘s

ceiling.

Household savings and investments 2015

Year Mutual fund

NAV

(Exclude

RMF)

Private Fund

NAV

Household

Savings

Provident

Fund NAV

GPF NAV SSO Amount

of the Fund

RMF NAV

1992

1993

1994

1995

1996

1997

1998

1999

2000

2001

2002

2003

2004

2005

2006

2007

2008

2009

2010

2011

73,930.0

210,610.0

226,370.0

246,430.0

247,160.0

101,520.0

130,660.0

344,470.0

367,988.7

389,325.5

432,530.0

712,746.2

669,118.5

943,565.2

1,196,794.7

1,572,876.0

1,487,281.9

1,787,105.1

1,953,100.0

1,989,963.6

0.00

0.00

0.00

0.00

0.00

180.00

40,350.00

52,190.00

58,420.00

71,798.8

89,016.9

121,290.2

134,090.6

142,546.9

147,327.7

175,480.7

168,276.9

216,501.2

277,208.9

316,516.4

1,519,429.00

1,746,584.00

1,946,591.00

2,303,340.00

2,559,504.00

2,978,941.00

3,237,839.00

3,234,583.00

3,441,082.00

3,626,186.00

3,698,893.00

3,888,123.00

3,995,479.00

4,098,787.00

4,382,661.00

4,300,580.00

4,695,637.00

4,631,052.00

4,801,283.00

5,124,147.00

0.00

0.00

0.00

57,113.00

91,121.00

137,197.0

158,387.0

178,162.0

201,303.0

222,901.2

244,822.5

287,329.3

305,462.2

345,895.9

386,656.9

441,720.2

465,296.4

514,236.9

574,075.2

615,258.9

0.00

0.00

0.00

0.00

0.00

117,405.6

95,368.5

69,875.6

135,292.4

155,098.7

177,285.3

210,364.8

218,961.3

248,879.9

275,617.9

313,114.1

306,556.0

336,144.5

371,398.3

389,033.0

0.00

0.00

0.00

0.00

0.00

0.00

0.00

88,563.0

115,060.0

143,298.0

228,132.0

229,592.0

292,468.1

364,973.1

440,169.0

538,053.0

567,906.0

665,171.1

822,701.0

883,423.9

0.00

0.00

0.00

0.00

0.00

0.00

0.00

0.00

0.00

514.2

2,836.2

7,281.5

12,237.8

18,455.8

25,475.2

38,016.8

39,529.6

58,551.3

79,284.7

92,791.1

45

No. Country Name of

Organization


2012

2013

2014

Jun-15

2,491,255.7

2,939,100.6

3,642,220.2

3,867,982.1

322,111.0

430,810.8

479,421.1

528,773.0

6,161,904.00

6,510,683.00

6,758,340.00

6,790,862.00

696,144.1

748,008.9

837,077.2

876,059.4

423,288.0

454,174.0

492,371.6

520,686.1

991,837.0

1,099,625.0

1,251,859.0

1,318,988.0

123,147.2

136,855.8

166,290.1

170,338.4

Unit: Million Baht

Note: 1. Mutual Fund NAV exclusive of Retirement Mutual Fund (RMF).

2. Retirement investments comprise- Provident Fund NAV, Government Pension Fund NAV, RMF

NAV and Social Security Fund NAV.

3. Household Deposits.

Sources : 1. Association of Investment Management Companies-Mutual Fund NAV, Private Fund NAV and

Provident Fund NAV

2. The Government Pension Fund -Government Pension Fund NAV.

3. Social Security Office-Social Security Fund NAV.

4. Bank of Thailand - Deposits of households.

5. The Thai Life Assurance Association - Life Policy Reserves received on the annual life insurance report.

19 Turkey TCMA

Financial Assets of Households

2013/09 2014/09 2015/03

2015/03

(Bn. $)

Cash 10% 10% 10% 31.7

TL Deposits 48% 48% 47% 153.9

FX Deposits 21% 24% 26% 83.3

Equities 6% 5% 5% 16.6

Mutual Funds 4% 4% 4% 12.4

Pension Funds 4% 4% 5% 15.2

Bonds/Bills-Eurobonds 3% 3% 2% 7.5

Precious Metals 3% 2% 1% 4.1

Repo 0% 0% 0% 1.3

Total 100% 100% 100% 326.1

Source: Central Bank of the Republic of Turkey

Deposits (TL and FX) are the major component of the financial assets representing 73% of household‘s total savings.

Total deposits measure US$ 237 billion, as of end of first quarter of 2015. The adverse effect of the depreciation of TL

caused an increase in the share of FX deposits to 26%, up from 21% by the end of 2013. On the other hand, the shares of

equities exhibited a downward tendency.

20 Vietnam1 VASB n/a

21 Vietnam2 VBMA n/a


46

IV – 2. Share of Foreign Investors in the Stock Trading on the Exchange

No. Country Name of

Organization

Share of Foreign Investors in the Stock Trading on the Exchange

1 Cambodia SECC Allowing foreign investors trade freely in the market.

2 Hong Kong HKSA Overseas investors contribute 39% to total market turnover in 2013/2014.

(source: cash market survey 2013/14 by HKex)

3 India ANMI FII Activity (Equities)

Year Gross Purchase

(Cr)

Gross

Sale

(Cr)

Net

Investment

(Cr)

2007 814877.00 743390.70 71486.50

2008 721606.00 774593.10 -52987.10

2009 624237.75 540813.69 83423.90

2010 766281.38 633015.31 133266.00

2011 611055.31 613769.50 -2714.20

2012 669182.69 540823.00 128359.80

2013 796832.69 683697.19 113135.70

2014 (January – August) 693039.13 615397.23 77643.11


4 Indonesia APEI

Source: IDX

5 Japan JSDA

Market Share & Trading Balance by Types of Investors

-Tokyo, Osaka, Nagoya

Year Member

Account Individuals Overseas

Investment

Trusts

Business

Cos.

Life &

Non-life

Citi BK &

Regional BK Trust BK

Other Financial

Institutions

Market Share

2012 17.9% 18.0% 54.1% 1.8% 0.9% 0.4% 0.1% 4.6% 0.2%

2013 12.5% 28.0% 50.8% 1.5% 1.0% 0.2% 0.1% 3.1% 0.1%

2014 13.0% 23.3% 55.5% 1.8% 0.9% 0.2% 0.1% 3.3% 0.1%

Net Selling (-)/Buying (+) (¥ billion)

2012 254 -1,911 2,826 46 380 -698 -118 -1,019 -63

2013 -586 -8,751 15,120 427 630 -1,075 -283 -3,966 -469

2014 228 -3,632 852 -210 1,101 -503 -129 -2,784 -856

(Source) TSE Monthly Statistics Report


But there are some numbers about share of Foreign Investors in holding of securities.

As of Sep. 2015 (data from Central Depository)

Volume of securities, which

hold by residents, USD

Volume of securities,

which hold by

non-residents, USD

Corporate securities 65 160 796 362 2 901 746 001

Government securities 18 851 232 061 516 452

Foreign securities 728 664 392 143 811 762

Stocks Trading (3rd Quarter 2015)

Foreign Investor

57% 43%

47

No. Country Name of

Organization


7 Korea KOFIA From Jan. 1 to Dec.31, 2014 (data from Korea Exchange(KRX)

Sale Purchase Net purchase

Trading

volume

(mil. share)

Trading value

(bil. KRW)

Trading volume (mil. share) Trading

volume

(mil. share)

Trading value

(bil. KRW)

Total 155,004 1,458,804 155,004 1,458,804 - -

Foreign 9,509 319,696 9,638 325,347 128.6 5,651

% 6.14% 21.92% 6.21% 22.30% - -

8 Laos LSCO The foreign investment ratio of BCEL and EDL-GEN closed at a high 9.52% and 14.25% respectively which were close

to their holding limitation 10% and 20%, while the ratio of LWPC & PTL closed at 2.70% and 13.10% respectively at the

end of this year.

Remark: Foreign holding ratio for BCEL: 10%, EDL-GEN: 20%, LWPC & PTL: 100%.

9 Malaysia ASCM The table below indicates the market demography by trading value (in %) for retail investor as well as domestic and

foreign instituitional investors categories over the past 5 years.

Year

2010 2011 2012 2013 2014

Retail 27 26 23 22 26

Foreign Institution (%) 26 25 25 26 23

Domestic Institution (%) 47 49 52 52 51

10 Mongolia MASD As of end of 2014, total trade volume for both bond and stock was 60.3 billion of which only 9% was traded by foreign

investors.

11 Myanmar SECM Stock market has not been established yet. Foreign Investors are not allowed on the Exchange according to Myanmar

Company Act.

12 Nepal SEBON Nepalese capital market has not yet been opened to foreign investors

13 Pakistan SECP Trading by foreign investors in stock trading on the exchanges during the period from January 01, 2015 to November 15,

2015 can be assessed from the gross buy and gross sell position of foreign investors during this period. Foreign investors

during this period had a gross buy of PKR 244.85 billion and a gross sell of PKR 269.40 billion. The net sell position of

foreign investors at the close of this period is USD 236.1 million in current USD terms.

Trading by the foreign investors in the stock trading on the exchanges during the period from January 01, 2015 to

November 15, 2015 was PKR 514.25 billion, which is 2.04% of the total traded value of the stock traded on the

exchanges during the period.

14 Philippines PSE In 2014, foreign trades comprised 49.10 percent of total value of trades.

15 Singapore SAS Not available

16 Sri Lanka SEC 31.1%

17 Taiwan TSA Highlights of Foreign Investment in Taiwan Stock Market

Unit：US$100Million

Year

FIN FIDI Total

Accumulated Net

Inward Remittance

Percentage of

Market Value

Held by Foreign

Investors

Accumulated Net

Inward

Remitt nce

Accumulated Net

Inward Remittance

2011 1,556.44 3.21 1,559.65 31.10

2012 1,628.42 4.90 1,633.32 32.62%

2013 1,760.37 4.76 1,765.13 33.14%

2014 1,920.78 3.66 1,924.45 36.43%

2015 (Aug.) 1,954.06 3.43 1,957.49 37.10%

Note:

48

No. Country Name of

Organization


1. Each foreign institutional investor (FINI) is allowed to invest directly in the stock markets without an upper limit.

The maximum ceiling of foreign exchange settlement for each onshore and offshore overseas Chinese and foreigner

is US$5 million; and US$50 million for each onshore judicial person.

2. The accumulated net inward remittance of FINI has been adjusted by incorporating QFII and GFII.

18 Thailand ASCO Equity

1) Market capitalization

Unit: Million US Dollar

Month-Year SET Month-Year SET

Jan-15

Feb-15

Mar-15

Apr-15

May-15

Jun-15

Jul-15

Aug-15

Sep-15

409,144.70

413,419.14

392,626.80

398,214.98

390,072.66

354,940.00

377,733.91

363,372.78

354,940.00

Jan-14

Feb-14

Mar-14

Apr-14

May-14

Jun-14

Jul-14

Aug-14

Sep-14

Oct-14

Nov-14

Dec-14

314,494.48

326,836.68

339,497.35

350,691.68

352,499.13

371,544.08

375,585.07

390,439.41

401,287.49

401,172.34

408,265.18

385,399.92

(35.953 Baht/US Dollar ,Foreign Exchange Rates as of 8 October 2015)

Source : www.set.or.th

Market capitalization as of December 2014 is 13,856,283.32 Million Baht(Approx.= 385,399.92 Million US Dollar )

And as of September 2015 Market capitalization is 12,761,157.96 Million Baht (Approx.= 354,940.00 Million US

Dollar )

2) Daily average trading value of SET

2011 2012 2013 2014 Q1-2015 Q2-2015 Q3-2015

Unit: Million US

Dollar

802.56

864.58

1,337.03

1,157.20

1,262.268

1,042.182

1,016.878

3) Transactions by investor type

In 2014, 58.0% of the total turnover came from retail investors, while proportion of foreign investors increased to

23%, proprietary traders and local institutional traders had a share of 10 % and 10 %, respectively. However, as

of August 2015, the proportion of trading by foreign investors decrease to 22 % and retail investor increase to

60 %, while the proportion of proprietary traders and institutional investors trading decrease to 9 %.

Transactions by investor type (%)

Derivatives Market

1) Daily average trading volume of TFEX

2006 2007 2008 2009 2010 2011 2012 2013 2014 Aug-2015

Unit:

Contracts

1,204 5,219 8,837 12,771

18,676

41,145

43,823

68,017

147,025

214,350

http://www.set.or.th/

49

No. Country Name of

Organization


2) Transactions by investor type

Transactions by investor type (%)

%

Investor Type 2006 2007 2008 2009 2010 2011 2012 2013 2014 Aug-15

Local Institutions 27.9 25.3 26.4 28.4 32.7 33.6 38.9 35.9 36.0 33

Local Investor

52.9

55.0

56.6

60.3

57.2

60.0

53.4

56.0

55.2

58

Foreign Investor 19.2

19.7

17.1

11.3

10.1

6.4

7.7

8.0

8.8

9

Total

100.0

100.0

100.0

100.0

100.0

100.0

100.0

100.0

100.0

100.0

19 Turkey TCMA Domestic investors generated 78% of the equity trading volume in 1H2015. Domestic individuals drive the market

liquidity with a share of 59%. Volume share of foreign investors rose to 23% in 1H2015 in which foreign corporations

created 19% of the total trading volume.

Investor Breakdown of the Equity Trading Volume

2013 2014 2015/06

Domestic Total 80.4% 79.6% 78.0%

Domestic Individual 59.1% 59.6% 59.3%

Domestic Corporation 18.1% 17.2% 16.0%

Domestic Institutional 3.2% 2.8% 2.7%

Foreign Total 17.4% 20.4% 22.0%

Foreign Individual 0.1% 0.2% 0.2%

Foreign Corporation 15.9% 16.4% 18.6%

Foreign Institutional 3.6% 3.8% 3.2%

Source: TCMA

20 Vietnam1 VASB



20%

80%

Stock Trading Value 2014

Share of Foreign Investors Share of Domestic Investors

50

IV – 3. Share of Foreign Investors in the Bond Trading on Exchange/ OTC Market

No. Country Name of

Organization

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

1 Cambodia SECC There is no bond market in Cambodia at this stage. The draft of Regulation on corporate bond issuance will be finalized

shortly.

2 Hong Kong HKSA Data not available.

3 India ANMI FII Activity (Debt)

Year Gross Purchase

(Cr)

Gross

Sale

(Cr)

Net

Investment

(Cr)

2007 31417.70 21989.70 9428.10

2008 48019.20 36247.60 11771.60

2009 111772.10 107208.91 4563.30

2010 206371.91 159964.00 46408.10

2011 288858.31 246791.50 42067.00

2012 206847.30 171859.20 34988.10

2013 216753.41 267600.81 -50847.50

2014 (January – August) 254833.12 145342.67 109491.12


4 Indonesia APEI

Source: IDX

5 Japan JSDA

(Source) JSDA “Bond Trading Volume by Sector“


But there are some numbers about share of Foreign Investors in holding of securities.

As of Sep. 2015 (data from Central Depository)

Bonds Trading 3rd Quarter 2015

Local Investor Foreign Investor

39%

61%

51

No. Country Name of

Organization


Volume of securities, which

hold by residents, USD

Volume of securities,

which hold by

non-residents, USD

Corporate securities 65 160 796 362 2 901 746 001

Government securities 18 851 232 061 516 452

Foreign securities 728 664 392 143 811 762

7 Korea KOFIA 1. Share of Foreign Investors in the Bond Trading on the Exchange from Jan. 1 to Dec.31, 2014 (data from Korea

Exchange (KRX)

Bid Ask Net Bid

Trading

volume(Par

value)

(bil. KRW)

Trading

value(bil.

KRW)

Trading

volume(Par

value)

(bil.

Trading

value(tril.

KRW)

Trading

volume(bil.

share)

Trading

value(tril.

KRW)

Total 1,373,214 1,394,893 1,373,214 1,394,893 - -

Foreign 42.3 41.6 42.9 40.7 -0.6 0.9

% 0.003% 0.003% 0.003% 0.003% - -

2. Share of Foreign Investors in the bond trading on the OTC Market(data from KOFIA)

Year Total(tril. KRW) Foreign(tril. KRW) %

2009 4,217.8 97.5 2.3%

2010 5,678.4 145.2 2.6%

2011 5,863.1 93.4 1.6%

2012 6,018.1 94.5 1.6%

2013 6,187.7 113.6 1.8%

2014 5,259.6 99.8 1.9%

8 Laos LSCO n/a

9 Malaysia ASCM The first Exchange Traded Bond and Sukuk (ETBS) at Bursa Malaysia were launched on 8 January 2013 with the

issuance of DanaInfra Nasional Berhad. As at to date, the Exchange does not publish statistics on foreign investors‘

trading on the ETBS.

As for the OTC market, the data of foreign investors‘ holdings in debt securities and Sukuk for 2015 (up to September

2015) is as below:

10 Mongolia MASD As of end of 2014, total trade volume for both bond and stock was 60.3 billion of which only 9% was traded by foreign

investors and of which 36.1 billion was T-bills.

RENTAS - Pegangan Pemilik-pemilik Asing bagi Sekuriti Hutang dan Sukuk1

RENTAS- Foreign Holdings in Debt Securities and Sukuk 1

bersamaan RM juta / RM million equivalent

Bil Bank Negara /

Nota Kew angan Bank

Negara

Bil

Perbendaharaan

Malay sia

Sekuriti Kerajaan

Malay sia

Nota Boleh Niaga Bank

Negara / Nota

Kew angan Bank

Negara - Islam

Bil

Perbendaharaan

Malay sia Islam

Sukuk Bank

Negara

Malay sia

Ijarah

Terbitan

Pelaburan

Kerajaan

Sukuk

Perumahan

Kerajaan

Jumlah

: y ang mana dalam

denominasi mata

w ang asing

Jumlah

: y ang mana

dalam

denominasi mata

w ang asing

Jumlah

Bank Negara Bills /

Bank Negara

Monetary Note

Malaysian

Treasury Bills

Malaysian

Government

Securities

Bank Negara

Negotiable Notes /

Bank Negara

Monetary Note -

Islamic

Malaysian

Islamic Treasury

Bills

Bank Negara

Malaysia

Sukuk Ijarah

Government

Investment

Issues

Government

Housing

Sukuk

Total: of which foreign

currency denominated Total

: of which

foreign currency

denominated

Total

2015 1 42,799.4 35.0 146,694.4 9,529.1 45.0 - 5,282.7 610.0 8,393.4 - 5,434.1 - 218,823.1

2 40,729.9 2,297.0 145,695.4 9,589.8 20.0 - 5,857.8 610.0 8,393.8 - 5,464.5 - 218,658.2

3 33,629.6 2,892.6 151,426.4 5,279.5 62.1 - 5,903.3 585.0 8,439.0 - 5,197.0 - 213,414.5

4 28,999.9 3,347.6 157,563.2 3,065.2 222.1 - 10,747.6 15.0 7,114.1 - 5,278.8 - 216,353.4

5 21,905.6 2,465.0 158,160.0 2,142.3 261.1 - 10,853.4 15.0 7,270.2 - 5,376.1 - 208,448.7

6 18,185.5 3,317.3 166,803.4 1,009.1 199.0 - 9,769.1 15.0 7,231.5 - 5,397.0 - 211,926.9

7 16,494.9 3,375.3 165,439.9 726.1 96.7 - 8,202.3 15.0 7,030.6 - 5,391.4 - 206,772.2

8 14,571.6 3,807.0 157,430.5 480.4 267.7 - 8,718.2 15.0 7,146.7 - 5,397.8 - 197,834.9

9 21,830.2 4,225.9 153,781.4 158.4 1,012.7 - 8,304.3 15.0 7,151.1 - 5,494.6 - 201,973.7

End of Period

Akhir Tempoh

Konvensional /

Conventional

3.2

Sektor Swasta / Private Sector

SukukSukuk

Sektor Awam / Public Sector

Konvensional / Conventional

1 Merujuk kepada semua sekuriti hutang dan sukuk kerajaan serta swasta yang didepositkan dalam RENTAS, diisu oleh residen dan bukan residen * Tidak termasuk Secondary Notes bagi Sukuk

Sumber / Source: Bank Negara Malaysia RENTAS (Real Time Electronic Transfer of Funds and Securities)

1 Refer to all government and private debt securities and sukuk as deposited in RENTAS, issued by residents and non-residents* Ex clude Secondary Notes of Sukuk Issuances







52

No. Country Name of

Organization


11 Myanmar SECM Currently foreign investors are not allowed to participate in bond market trading.

12 Nepal SEBON Till now there is not provision of foreign investment if the stock market of Nepal.

13 Pakistan SECP Total listed corporate debt as on October 27, 2015 was PKR 47.81 billion. PKR 2.9 billion worth of listed corporate bonds

were traded on the Exchange during the period January 01, 2015 to October 27, 2012. However, data pertaining to trading

in listed corporate bonds by the Foreigners is not publicly available.

Total unlisted listed corporate debt as on October 27, 2015 was PKR 445.94 billion. Further, while PKR 3.8 billion worth

of unlisted corporate bonds available in dematerialized form in the Central Depository System (CDS) were traded OTC

during the period January 01, 2015 to October 27, 2012, data regarding traded value of non-CDS corporate debt securities

is not readily available. Moreover, data pertaining to trading in unlisted corporate bonds by the Foreigners is not publicly

available.

As regards Government Debt Securities, PKR 9.155 trillion has been traded since January to October 2015.

* It may be noted that Government debt market falls within the purview of State Bank of Pakistan.

14 Philippines PSE n/a

15 Singapore SAS No statistics are kept on share of foreign investors’ bond trading. However statistics below show local and

foreign bond listings.

16 Sri Lanka SEC The aggregate amount of Rs. 3.8 billion in Corporate Debt turnover

17 Taiwan TSA

Year/ OTC Market 2015 (Sept.) 2014 2013

Percentage of Foreign

Investors in the Bond Trading 9.14% 13.94% 10.68%

18 Thailand ASCO In 2014, 71% of the total outright trading value came from transactions between dealers and their clients, whereas

Inter-dealer transactions (29%)

Major active investors were Asset Management Companies (61%),

Following by foreign companies (FCO) (13%),

Domestic companies (DCO) (7%),

Insurance companies (5%),

Non-dealer financial institutions (NDL) (4%),

53

No. Country Name of

Organization


Individuals (0.3%)

Others (10%).

Composition of dealer to client transactions in year 2014

The movement of foreign investors.

The movement of foreign investors update in August 2015 found that the foreign investors in Thailand's bond market fell

by about 18,610 million baht of net purchases of long-term debt (age> 1 year) total 14,948 million baht while reducing

3,662 million baht from short-term debt and mainly came from net sales.

From the year to date, the foreign investors in Thailand's bond market, reducing 82,453 million baht as a result from net

sales of long-term debt (age> 1 year) total 15,561 Million baht, while decreased from short-term debt 66,892 Million

baht, mainly came from bond maturity date.

Composition of dealer to client transactions in August 2015

19 Turkey TCMA In Turkey, banks dominate the bonds and bills transactions totally both in exchange and OTC market. Banks generated

90% of transactions in 1H2015.

Breakdown of the Bonds & Bills Trading Volume

by Intermediaries 2013 2014 2015/06

Banks 92.2% 90.7% 90.0%

Brokerage Firms 7.8% 9.3% 10.0%

Total 100.0% 100.0% 100.0%

Source: TCMA

The table below shows only the brokerage firms‘ transactions breakdown. 99% of bonds and bills trading volume of

brokerage firms was generated by the domestic investors. It is known that foreign investors prefer to trade bonds through

banks.

Investor Breakdown of the Bonds & Bills Trading Volume of

Brokerage Firms

2013 2014 2015/06

Domestic Total 98.9% 97.6% 99.0%

Domestic Individual 1% 1% 2%

Domestic Corporation 14% 16% 17%

Domestic Institutional 84% 80% 80%

Foreign Total 1.1% 2.4% 1.0%

Foreign Individual 0% 0% 0%

Foreign Corporation 1% 2% 1%

Foreign Institutional 0% 0% 0%

Source: TCMA


21 Vietnam2 VBMA In 2015, foreign invetors share 11% of the aggregate bond trading on HNX.

54

No. Country Name of

Organization


Foreign investors‘ trading movement focus on 1 year (33,5%), 2 year (20%) and 5 year bond (11%)


11%

89%

Foreign investor

Local investor

1% 1% 1%

6%

7%

33%

20%

7%

3%

11%

0% 1%

2% 2% 2% 2% 1 month

2 month

2 month

6 month

9 month

1 year

2 year

3 year

3 - 5 year

5 year

5 - 7 year

55

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

No. Country Name of

Organization

Settlement and Clearing Systems for Securities Transaction

1 Cambodia SECC In Cambodia, the Securities Clearing and Settlement Facility are provided by Cambodia Securities Exchange (CSX). The

securities transactions are settled T+2 through the CSX. Cambodia has also just updated the regulation to allow trading

before settlement, and continuous trading.

2 Hong Kong HKSA There are three settlement and clearing houses in Hong Kong, which are 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.

3 India ANMI The Indian settlement system works under the T+2 compulsory ‗rolling-settlement cycle‘ i.e. transaction on the trade day

are settled on the second business day after the trade day. India has two Clearing Corporations; the National Securities

Clearing Corporation (NSCCL) organized by the National Stock Exchange and the Bank of India Services Limited

(BOISL) set up by the Bombay Stock Exchange.

In case the settlement is not completed on T + 2 day, the shares are auctioned. The auction is done on T + 3 day and

auction payout is done on T + 4 day. The auction standard will be T + 1 day price for NSE and T day price for BSE.

Default in auction payout then the closing out price would be 20% higher than the standard auction price.

All trades on the exchange platform are in the dematerialized form. There are two Depositories in India viz the National

Securities Depository Limited (NSDL) organized by the National Stock Exchange and the Central Depository Services

Limited (CDSL) set up by the Bombay Stock Exchange. Final settlement of trades takes place on the depositories in the

book entry format.

Trade Guarantee Fund: - SEBI requires the exchanges to have a system of guaranteeing settlement of trades or set up a

Clearing Corporation to take up counter party risk to ensure that payment default by the members does not disturb the

market equilibrium.

4 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 our 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)

The 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 consist of stock

exchange validation, netting, positioning, up to 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)

The system to settle the corporate and retail bonds transaction in Indonesian Stock Exchange that involves the

Custodian Bank as one of the proactive party over the confirmation and affirmation process of the bonds

transaction data. This clearing mechanism shortens the settlement over bonds obligation and also increases the

efficiency.

3. Settlement and Clearing System for Derivatives : Risk Monitoring On-line (R-MOL)

The system was developed by KPEI to support clearing and risk management of derivatives transaction

settlement process. This system combines the client-server and web-based technology to manage all clearing

process, transactions settlement, administration and reporting up to derivatives transaction. This system enables

the data interfacing between KPEI, IDX, exchange members and Payment Bank without manual intervention.

5 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

56

No. Country Name of

Organization


securities/cash, and settlement guarantees .

In Japan, the settlement period for stock transactions is T+3, and the settlement period for JGB is T+2. There are

discussions to shorten these settlement periods. (Please refer to VI. ―Specific Measures introduced / implemented for the

Securities Market‖ 3.)

Source: JASDEC Presentation Material

6 Kazakhstan NBK In Kazakhstan, the settlement services for securities transactions are provided mainly by the Central depository.

Its services consist of the following functions:

- render to deponents services associated with the nominal holding of financial instruments;

- carry out settlements in financial instruments in relation to transactions concluded in the organized securities market

and in relation to transactions concluded in the over-the-counter market with the participation of its deponents (between

deponents themselves; between a deponent on the one hand and a client of another deponent on the other hand;

between clients of two different deponents), as well as other persons carrying out broker and (or) dealer activities

without an appropriate license in accordance with legislative acts of the Republic of Kazakhstan;

- carry out depository services with regard to state securities in accordance with the Republic of Kazakhstan legislation

and its compendium of rules;

- render consultative, information services and other types of services not contradicting the Republic of Kazakhstan

legislation.

Clearing services for deals for financial instruments (excepting commodity derivatives) providing by Kazakhstan stock

exchange.

7 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 notified 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 firms complete 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.

8 Laos LSCO The Lao Securities Exchange provides settlement and clearing services for securities transaction (i.e., currently there are

only stocks available for trading in the exchange). Its services includes 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.

57

No. Country Name of

Organization


9 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.

On the other hand, Bursa Malaysia Securities Clearing and Bursa Malaysia Derivatives Clearing provide clearing services

for securities and derivatives transaction respectively. The clearing services include netting of cash/asset positions,

settlement instruction to settlement banks for asset/cash, and settlement guarantees.

Government and corporate bonds are settled and cleared at the Central Bank‘s Real Time Electronic Transfer of Funds

and Securities (RENTAS) settlement system.

10 Mongolia MASD

11 Myanmar SECM The Stock Exchange will be taking care of clearing and settlement system for listed companies. The Central Bank of

Myanmar introduces Central Security Depositary system (CSD) and plans to adopt a Real Time Gross Settlement (RTGS)

System at the end of 2015.

12 Nepal SEBON CDS and Clearing Limited, a company established in 2010 to provide centralized depository, clearing and settlement services in

Nepal. The main objective of the company is to act as a central depository for various instruments especially to handle securities

in dematerialized form. The depository functions will be performed by the company under the securities regulations of

Securities Board of Nepal (SEBON).

13 Pakistan SECP The clearing and settlement function is centralized at the National Clearing Company of Pakistan Limited (NCCPL)

which provides for integrated settlement of trades executed at the stock exchanges in dematerialized shares. All listed

stock, debt and derivative transactions are cleared and settled through NCCPL.

58

No. Country Name of

Organization


Both exchange and non-exchange trades and transactions are settled by the National Clearing and Settlement System

(NCSS) under Balance Order Multilateral Netting with T+2 and T+1 settlement cycle. NCCPL also facilitates cross

exchange netting, provides broker-to-broker delivery system to facilitate arbitrage transactions, institutional delivery

system facilitating direct settlement of institutional trades, margin financing and margin trading modules and registration

of Unique Identification Numbers (UINs).

Netting of Future Market (Derivative) Transactions with Regular Market Trades is also carried out at NCCPL. Clearing

and settlement of net buy or net sell positions of Clearing Members takes place in each security at the end of the Future

Contract Period.

A Negotiated Deal Reporting System has also been introduced whereby reporting of off-market transactions to the

NCCPL for both debt and equity market segments is being done on real-time basis. To enhance transparency and

minimize the potential misuse of the negotiated deal market, all transactions carried out through negotiated deals

functionality are also being settled through the NCCPL.

To provide for clearing and settlement of government debt securities, the CDC has become a member of the debt

securities system deployed by the SBP for clearing and settlement of government debt securities. The CDC provides

clearing and settlement services both for government debt securities and money obligations in respect of eligible

government securities traded at or reported to the stock exchange.

14 Philippines 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.

15 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.

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.

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 and 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 requirement re-calculated. The computed

profits and losses for futures and OTC swaps, and premium for option trades are collateralized together with margin

http://www.sgx.com/wps/portal/sgxweb/home/clearing/securities/securities_clearing/securities_clearing/!ut/p/a1/hc_BCoJAEAbgZ_EBYmfN0o6rWVqJiLnpXmQT3RZMRa1DT59Gl4hsbj98Mz-DGIoRq_hdCt7LuuLlmNkyVQnRHLBgBcbWANem1FtvHGwd8QCSAcCPIfBvf4eYKOvzqypRW8_yBGIN7y8zWRU1irs8u7Wyl3mXZmXOW1kJdELs86wfYR3cyAw0k0ZY1fE02JPFF6AwAt8MQ0pxYM_fYOKx5ho_DkXoSqIoT2_nbzc!/dl5/d5/L2dBISEvZ0FBIS9nQSEh/

http://www.sgx.com/wps/portal/sgxweb/home/clearing/derivatives/derivatives_clearing

http://www.sgx.com/wps/portal/sgxweb/home/clearing/derivatives/clearing_systems

59

No. Country Name of

Organization


requirement.

16 Sri Lanka SEC Central Depository Systems (Pvt) Ltd (CDS) is the sole Clearing House in Sri Lanka which is a fully owned subsidiary of

the Colombo Stock Exchange. The CDS provides depository facilities and clearing services for securities traded on the

CSE. It also provides a safe keeping facility and an electronic record of all listed securities that are dematerialized.

Settlement

For Equity on T +3

For debt securities investors have a choice of doing trades on two separate settlement boards.

•TOM Board - Settlement on T+1(Early Settlement)

•SPOT Board - Settlement on T+2(Normal Settlement)

Accordingly, cash settlement can be done on T+1 or T+2 and Debt securities settlement is on DVP (Delivery versus

Payment) basis.

17 Taiwan TSA All payment and settlement operations for securities traded on the Taiwan Stock Exchange or through Taipei Exchange

shall be handled on a centralized basis by Taiwan Depository & Clearing Corporation (TDCC). TDCC‘s major services

includes:

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.

In Taiwan, the settlement day is T+2. In case of block trade, investors can choose the settlement day to be T+2 or T.

18 Thailand ASCO The Thailand Clearing House Co. Ltd. (TCH) serves as the central counterparty to all securities and derivatives traded on

SET, MAI, BEX and TFEX. TCH is governed by SEA for equity, bond and the Derivatives Act of 2003 (DA), and is

under the supervision of SEC.

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 of transactions using

the ―Delivery Versus Payment: DVP‖ settlement procedure and the settlement date convention is T+3.

Bond

Clearing and settlement of government bond are done on DVP procedure and 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.

19 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 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. The institutional investors‘ government

debt holdings are registered at Takasbank. 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.

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.

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.

60

No. Country Name of

Organization


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 İstanbul 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.

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 İstanbul issues confirmations to both parties and to Takasbank. Takasbank multilaterally nets all

trades for each Borsa İstanbul‘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).

20 Vietnam1 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, dividend payments.

The settlement period for stock transactions is T+3; for bond transactions is T+1.

21 Vietnam2 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 the trading bonds by EBT system. This system is very convenient

and efficient that can facilitate electronic negotiation, payment by BIDV and settlement by VSD.

Bond-Trading operation process as in Timely Basis

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 as

for ensuring cash availability or checks with VSD to make sure that bonds are available for selling.

•Transactions, confirmation 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 period sometimes. 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 key in dealing details, as put through, into the Electronic bond trading system (EBT).

Settlement date (T+ 1)

•The EBT will automatically notify the BIDV and VSD to make the payment and transfer securities.

Processing timing for bond dealing, confirmation, payment, and settlement depends on agreement among the parties and

has to be done within office hours of three main organizations, i.e., HNX, BIDV and VSD, which are summarized in the

61

No. Country Name of

Organization


following table, and before entering deals into the EBT system to prevent a failed settlement.

Organizations involving in Bond Trading in Exchange

Hanoi Stock Exchange (HNX) BIDV for Cash payment Vietnam Security Depository (VSD)

Duties: Electronic Bond Trading

(EBT)

Duties: Cash settlement of

payment

Duties:

Securities Registration and Depository

Securities Clearing and Settlement

Trading Date: T Payment time:

T+1 before 11:00 am

Settlement date:

T+1

Trading Time:

8:30 am - 11:00 am

13:00 pm - 14:15 pm

Working Time:

8:30 am - 16:00 pm

Morning Working Time

8:30 am - 11:30 am

Afternoon Working Time

13:30 am - 17:00 am


62

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

No. Country Name of

Organization

Current Status of Off-Exchange Transaction (including PTS, ATS, MTF, etc.)

1 Cambodia SECC n/a

2 Hong Kong HKSA Off-exchange transaction is not a common practice in Hong Kong, yet the dark pool system exists among large financial

institutions. However, once there is transaction done by dark pool, the institution must report to the Exchange

immediately and it will be recorded accordingly by the same.

Except the dark pool transactions, some of the bonds and funds (authorized & unauthorized mutual funds) are also traded

off-exchange.

3 India ANMI Off-Exchange transactions are few in number. 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.

4 Indonesia APEI Bond trading in Indonesia is mostly on Over The Counter (OTC) basis. All OTC trading is required to report to the IDX

through Central Trading Platform (CTP) within 30 minutes of transaction.

5 Japan JSDA Since the 1998 abolishment of the obligation to trade stocks on exchanges in Japan, off-exchange transactions have been

gradually increasing.

However, in Japan, unlike US and European market, most stock orders are still executed through the stock exchanges and

market fragmentation is not so notable.

Having said that, the PTS (proprietary trading system) operators are gradually entering the Japanese market as order

placement through DMA, algorithm trading, etc. grow.

<PTS Operating Companies: 2, but 7 in terms of number of PTSs >

Company

Name

Started

PTS

Pricing

Method

Transaction

Time

Target

Customer Remarks

SBI Japan Next

Securities (First

Market:

J-Market)

Aug.20,

2007

Order

Matching

Method

8:20-16:00

19:00-23:59

Securities

Companies

- Continuous Matching of Limited

Orders

- In principle, benchmark price

and price range being set up

similarly to those of exchange

- Tick size is 1/10th

of that of

exchange

SBI Japan Next

Securities

(Second Market:

X-Market)

July 2,

2012

Order

Matching

Method

8:20-16:00 On-line

Securities

Companies

(Individual

investors)


Orders

- In principle, benchmark price,

price range, and tick size being

set up similarly to those of

exchange

SBI Japan Next

Securities (Third

Market:

U-Market)

May 2,

2015

Order

Matching

Method

8:20-16:00 Institutional

Investors

(e.g., Investment

banks)


Orders




- Tick size varies in line with the

price change

SBI Japan Next

Securities (JNX

Cross)

Apr. 22,

2013

Market Price

Trading

Method

8:00-17:00 Securities

companies

- Provide crossing (Matching with

exchanges‘ whole day VWAP)

Chi-X Japan

(Chi-X PTS)

July 29,

2010

Order

Matching

Method


companies,

Institutional

investors


Orders





price change

Chi-X Japan

(Chi-Match)

Sept. 1,

2014

Market

Price

Trading

Method


companies,

Institutional

investors

- Provide crossing (Corresponding

with exchanges‘ whole day

VWAP, morning session VWAP

and afternoon session VWAP

calculated by Chi-X based on the

trading data in exchange )

Chi-X Japan

(Chi-Select)

June. 8,

2015

Market

Price

Trading

Method


companies,

Institutional

investors


Orders





price change

63

6 Kazakhstan NBK As an emerging markets country, Kazakhstan just on the way to develop market relationships, including stock market

operations and Other-The-Counter (OTC) financial instruments. Currently, there are no direct rules or instructions

regulating Over-The-Counter (OTC) operations, as well as ATS (Alternative trading system) and MTF (Multilateral

Trading Facility). In most cases, professional members of stock market prefer to operate with traditional trading systems

in the centralized securities exchange market operated by a stock exchange.

7 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. At the end of 2014, a total of 117 corporations were being traded on the

K-OTC, with a market capitalization of KRW 12.7bn. The average daily trading volume since the launch of the K-OTC

was KRW 2.4bn.

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 in April 2010.

As of May 2015, approximately 600 issues on average are posted daily on BondMall, indicating that securities firms are

actively using BondMall as a major distribution channel.

8 Laos LSCO n/a

9 Malaysia ASCM Equities, derivatives and Exchange traded bonds transactions 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.

10 Mongolia MASD There is not off-exchange transaction.

11 Myanmar SECM n/a

12 Nepal SEBON SEBON has approved the Over the Counter Bylaws of the Stock Exchange. Hence the facility for the trading is there,

however, no trading has taken place in the Over the Counter Market

64

13 Pakistan SECP There are no cases in our jurisdiction indicating presence of brokers or others operating alternative trading systems on

which actual deals can be made.

Off market deals in listed equity securities and listed and unlisted debt securities must be reported to the stock exchange

(through its negotiated deals reporting system) or NCCPL on the same day and then made available to the SECP before

the market opens on the next day. Although such off-market trades are not subject to pre-trade transparency, their

information is also made available on the exchange‘s terminals indicating the volume, price and member‘s code for the

transaction. Such deals are made directly between the buyer and seller, off market and settled directly between the

counterparties.

During the period from January 01, 2015 to November 15, 2015, off exchange transaction volume was equivalent to

5.03% of the Ready Market Trading volume of the Karachi Stock Exchange which is the largest (volume wise) stock

exchange of Pakistan.

14 Philippines PSE No data

15 Singapore SAS Off exchange transactions are reported to the SGX and comprises about 4% of shares traded and 8-9% of value of shares

traded.

16 Sri Lanka SEC Off-Exchange Transactions of Listed Securities are done with the prior approval of the SEC. The OTC markets are not

regulated by the SEC.

17 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 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.

Under current law, securities listed on the Taipei Exchange (TPEx) can be traded off-market. But, 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 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 close, the Taiwan Stock Exchange (TWSE) also provides paired block trades and

auction and tender offer systems in which securities prices are negotiable to satisfy various investors‘

demands.

18 Thailand ASCO n/a

19 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.

20 Vietnam1 VASB Current Status of Off-Exchange Transaction (Including PTS, ATS, MTF, etc.):

All off-exchange transactions are required to settle via VSD

FY 2014 Volume Value (VND mil.)

Off-exchange

694,949,000

6,949,490,000

Exchange

44,351,010,000

653,120,718,656



65

IV –6. Share of On-line Trading

No. Country Name of

Organization

Share of On-line Trading

1 Cambodia SECC n/a

2 Hong Kong HKSA 9.3% of total market turnover, 38.2% of total retail investor trading volume.

(source: cash market survey 2013/14 by HKex)

3 India ANMI All transactions in India take place online through the exchanges. There is no floor trading in India. The exchanges offer

connectivity to its trading members through V-SAT connectivity or through leased lines. 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 broker using his computer link directly executes transactions on the exchange.

Besides Brokers are permitted to offer internet based trading to their clients. Securities and Exchange Board of India

(SEBI) in August granted the brokers registered with SEBI to provide Internet-based trading are eligible to provide

securities trading using wireless technology (Mobile based trading). This is the next push forward to encourage increased

retail participation and has started in India.

4 Indonesia APEI Basically, all trades that go into the exchange are sent remotely, 75% of the retail houses has on-line programs with most

of them having mobile trading platform - 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 using on-line. There are a few things which

make it not a 100% workable:

1. Limited internet access including 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. The home internet penetration is even worse.

2. The need for face-to-face meeting with potential client. This requirement is another dampener in the expansion of

retail clients. Somehow the excessive worries of criminal phenomenon in mature markets such as Money

Laundering is applied too early in the infant market of Indonesia.

5 Japan JSDA Japan has witnessed a rapid increase in the number of Internet users and the PC market penetration rate since the latter

half of the 1990s. In addition, in October 1999, the Japanese stock market entered a new era of complete liberalization

of commissions and fees in the stock brokerage business. these two factors have led to the birth of online brokers in

Japan.

Since then, competition among online brokers has been severe. Most of them cut commissions and fees in stock trading

significantly to increase their customer base. In October 1999, there were around 300,000 internet brokerage accounts in

Japan, and this number had reached 20.8 million accounts in March 2015.

Sept.2013 Mar.2014 Sept.2014 Mar.2015

Number of member firms engaged in

Internet trading 58 61 60 61

Number of Accounts (million) 19.0 19.7 20.2 20.8

Stock Trading Amounts

(billion Yen) 215.5 168.7 146.3 171.1


7 Korea KOFIA The share of transaction through on-line is 84.22% in KOSPI market(‘15.1.1~‘15.11.10). The trend that percentage of

HTS decreases while that of wireless phone(smart phone) increases continues.(data from KRX).

[KOSPI]

% Securities

Company

Terminals

Wire terminal

(telephone)

Wireless terminal

(smart phone,

PDA)

HTS

2011 21.82 0.68 8.83 68.67

2012 14.41 0.59 15.44 69.56

2013 17.29 0.61 20.11 61.98

2014 20.49 0.58 22.67 56.27

2015.1.1~11.10 15.77 0.53 27.99 55.70

8 Laos LSCO To support and expand investor base especially foreign investors, LSCO had issued the Regulation on Home Trading

System (HTS) in July 2013 and this system has been officially operated by the Lao Securities Exchange (LSX) since

November 2013. LSX commenced HTS as provide investors with more convenience and optional channel of trading.

Present, number of usage HTS is three securities company providing this service.

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No. Country Name of

Organization


9 Malaysia ASCM Bursa Malaysia does not publish statistics on online transactions traded at the Exchange.

10 Mongolia MASD Securities brokerage companies have two options to trade securities on Mongolian stock exchange, trading on the

exchange floor or trade from their offices through VPN connection to exchange program.

11 Myanmar SECM n/a

12 Nepal SEBON

13 Pakistan SECP Approximately 35-40% of the trading activity at the stock exchanges is online. On-line trading is being measured in terms

of trading through terminals connected by the stock exchanges‘ with their automated trading software through internet

connectivity gateways.

14 Philippines PSE Since 2009, online accounts have grown significantly. For 2014, base on a survey by SAS, online accounts comprises

about 43% of total customer accounts. .

15 Singapore SAS Statistics provided by SGX showed that less than 50% of all trades in are online trades

16 Sri Lanka SEC At present 28 Stock Broker Firms provide internet facilities for Investors. On-line trading is not very popular but volumes

have grown in comparison to previous years.

17 Taiwan TSA

Year No. of Transactions

(Million)

Percentage of Total

Transaction (%)

Total Amount

(NT$ Billions)

Percentage of

Total Trading

Value (%)

2011 440.21 33.90% 53,991.41 26.75%

2012 367.67 34.11% 41,577.05 27.36%

2013 368.47 34.43% 39,206.66 27.47%

2014 416.59 36.35% 46,086.57 29.53%

2015 (Aug.) 356.40 46.95% 38,138.72 42.74%

18 Thailand ASCO Share of internet trading in SET (stock market) grew steadily in the past few years, from 20.9% in 2009 to 37.4 % in

August 2015.

Share of internet trading in TFEX (Derivatives market) grew from 21.9% in 2009 to 37.16 % in August 2015.

67

No. Country Name of

Organization


19 Turkey TCMA Share of On-line Trading:

In Turkey, brokerage firms are allowed to trade in each type of markets. On the other hand, banks are allowed to trade

both in derivatives (excluding equity linked contracts) and bonds & bills markets. The table shows the only the brokerage

firms‘ transactions.

The share of internet is the major channel of equity, futures and FX trading. As of 1H15, the share of internet is around

39% in FX and 34% in futures trading. It has 24% share in equity trading.

Internet Transactions of Brokerage Firms

2013 2014 2015/06

Equities

No. of Active Internet Investors 338,716 326,241 257,182

No. of Trades 49,393,739 47,044,408 29,091,459

Internet Trading Volume (mn. US$) 395,035 410,472 262,356

Bonds and Bills

No. of Active Internet Investors 75 63 25

No. of Trades 479 365 108

Internet Trading Volume (mn. US$) 2.183456 1.694657 0.766992

Futures


No. of Trades 5,706,629 11,979,095 4,981,531

Internet Trading Volume (mn. US$) 225,787 288,165 191,198

Leveraged FX Trading


No. of Trades 13,458,556 17,601,754 21,431,532

Internet Trading Volume (mn. US$) 1,894,077 2,720,599 2,939,995

Source: TCMA

20 Vietnam VASB From Jan 2009, online trading has been implemented officially in stock market. Almost transactions take place online

through HSX and HNX stock exchange.

HNX introduced the 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.

21 Vietnam VBMA HNX lauched an electronic Bond Trading System (EBTS) on June 26, 2015 to enable domestic and foreign investors to

easily access and the Government bond market.

22 Asia Region ASIFMA n/a

68

V. Safety Net for Investors Protection

No. Country Name of

Organization

Existence of Investor Protection Fund

1 Cambodia SECC SECC is in process of making this and Regulation on Compensation Fund

2 Hong Kong HKSA Investor Compensation Fund was established in 2003 in accordance with SFO, the source of fund 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 (ICC) which is wholly own 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.

3 India ANMI The SEBI has such a fund which is utilized for the purpose of investor protection subject to the norms laid down in that

behalf. The exchanges also have a similar process.

4 Indonesia APEI OJK has established the Investor Protection Fund Institution which was operational in September 2013.

Currently, the funds put aside is still contributed by the SRO‘s (IDX, KPEI, KSEI).

5 Japan JSDA Japan Investor Protection Fund (JIPF) was established in 1998 as a private & independent organization, authorized and

supervised by the Japanese Prime Minister and the Minister of Finance.

JIPF collects contributions among its members and compensate investors up to 10 million yen per customer when a

bankrupted member cannot return customers‘ money and securities because of its misconduct or other reason. JIPF

manages and invests the fund. It can audit its members, but has no supervision powers.

JIPF‘s members are supervised by the Finance Bureaus.

Mandatory membership for all securities companies.

250 member institutions as of March 31, 2015

JIPF is the only organization to compensate securities investors in Japan, and does not provide DGS service.

6 Kazakhstan NBK There is no Investor Protection Fund.

7 Korea KOFIA n/a

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

Auction in line with increasing daily price change limit from ±5% to ±10% of a previous day‘s closing price to ensure

price stability and reduce the impact of price fluctuation to protect domestic investors.

The investor protection fund in Laos has yet established. However, securities firm has to separate securities accounts and

cash accounts for each client from its own accounts, LSCO also requires a securities firm to report an aggregated account

of its clients‘ assets on a monthly basis.

Currently, there is a risk protection fund in which the member firms of LSX (i.e., securities companies) are required to

contribute a certain amount of money into such fund. This is to reduce risks associated with members‘ default.

9 Malaysia ASCM The Capital Market Compensation Fund Corporation (CMC) was established through the amendment of the Capital

Markets and Services Act 2007 (CMSA) which became effective on 1 October 2012.

The primary objective of CMC is to manage and administer the Capital Market Compensation Fund (the Fund) and

process and handle claims for compensation by individual investors who have suffered loss due to fraud, defalcation or

mis-selling which had led the Capital Markets Services Licence (CMSL) holder to become financially insolvent.

CMC applies to the individual investor of the following CMSL holders:

(i) Participating Organisations in relation to their investments on the stock exchange, i.e., Bursa Malaysia Securities;

(ii) Trading Participants in relation to their investments on the derivatives exchange, i.e., Bursa Malaysia Derivatives;

(iii) Private Retirement Scheme (PRS) providers in relation to their investments in private retirement schemes; and

(iv) Trading Participants who invest in a specified exchange as provided for in Section 105 of the CMSA.

CMC Fund is a one-stop centre which will provide an efficient settlement of claims by individual investors in order to

enhance investor protection and confidence in the Malaysian capital market.

CMC will declare an event of default with prior consent of the SC, after which, it will compensate eligible investors

within the specified time. An event of default is where the CMSL holder is unable or is likely to be unable to meet

financial claims arising out of fraud, defalcation or mis-selling which leads to insolvency.

10 Mongolia MASD Currently, there is no such scheme to protect investors.


12 Nepal SEBON We have provision for investor protection fund in our Act but till now not in operation.

Administrative and criminal action for market misconduct.

13 Pakistan SECP In order to preserve market integrity, maintain investor confidence and secure interests of the market participants, each

stock exchange must maintain an investor protection fund (IPF) for settlement of investor claims in case of broker default.

All IPFs are maintained in the form of trusts separate from the balance sheet of the exchange. A portion of the trade fee

collected by the stock exchanges goes into the IPF and contributions from the trust are determined in accordance with the

Investor Protection Fund Regulations framed by the stock exchanges with the prior approval of the SECP.

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No. Country Name of

Organization

Existence of Investor Protection Fund

14 Philippines 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 (US$455) 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.

15 Singapore SAS Retail investors are protected from default by their brokers by the SGX Fidelity Fund, with a cap of $50,000 limit on

individual investor claimant. The SGX Fidelity Fund has some $59 million in net assets, as at June 2015.

16 Sri Lanka SEC In Sri Lanka, the Compensation Fund came into operation with the establishment of the SEC in 1987 under the Securities

and Exchange Commission of Sri Lanka Act No.36 of 1987 for the purpose of granting compensation to any investor who

suffers pecuniary loss as a result of any licensed stock broker or licensed stock dealer being found incapable of meeting

his contractual obligations.

In addition there is a Settlement Guarantee Fund (SGF) to settle clearing and settlement failures.

17 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, an organization 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 (31.24 million US dollars) when the Center was established. Donors

to the fund: the Taiwan Stock Exchange, Taiwan Futures Exchange, Taipei Exchange, 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 Taipei Exchange to contribute each month to the fund.

18 Thailand ASCO Securities Investor Protection Fund (SIPF)

SIPF originated from cooperation between The Stock Exchange of Thailand (SET) and 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.

Investors who are clients of SIPF members can receive their assets back or be compensated from this fund under the

conditions outlined below.

Investors Protection

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.

Compensating to Investors

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 investors will get no more Baht 1 million per one SIPF's member

broker.

How to Request this Protection

Investors are automatically protected when they open a trading account as long as their broker remains a SIPF member.

Moreover, investors need not apply for this protection or pay anything.

Requesting this Protection

When a fund member fails to return an investor‘s assets, the investor has the right to request protection from the Fund

through Member Services Department at SET.

19 Turkey TCMA The Investor Compensation Centre that was converted in 2013 from the previous Investor‘s Protection Fund covers not

only equities, but «all» capital market instruments including Forex transactions and cash. The maximum coverage amount

of all settlement obligations is TL 114,437 (~$ 40,000) for the year 2015.




http://sgx.com/wps/portal/sgxweb/home/mygateway/inv_protection

70

VI. Challenges for Securities and Capital Market

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

No. Country Name of

Organization

Major Recent Incidents and/or Challenges in Securities and Capital Market as a whole

1 Cambodia SECC Among dozens of challenges in Cambodia Securities and Capital Market, small number of listed companies is the Major

issues which are caused by some main reasons:

•Transparency and Governance Concerns…Having to open up their business and its operations for the public to see is

simply not an idea that Cambodian business owners believe has any merit. They can only see the disadvantages of this.

•Lack of Knowledge of Listing Benefits …There is still a lack of real knowledge among many companies of the

attractions and benefits of a listing as both a vehicle of wealth creation as well as, and in addition to, a fund raising

technique compared with a bank loan. It was surprising the number that claimed they had not been visited by a security

firm.

•Lack of knowledge of the National benefits of a securities market to Cambodia in many Government

Departments…Many opportunities exist when granting exclusive licences or concessions to local and overseas investors

to insist that over time a percentage of the company/project subsequently be listed on the CSX . In this manner the

Cambodian people can share in the resulting wealth. These opportunities have not been availed of.

2 Hong Kong HKSA 1. There are more and more companies from mainland China being listed in the Exchange, 54% of the Hang Seng

Index (HIS) is constituted by these Chinese companies;

2. Shanghai-Hong Kong Stock Connect;

3. Market volatility in China has more and more impact in Hong Kong Stock market;

4. The structure of the investors are also changing;

5. The economic data is having very obvious effects in Hong Kong.

3 India ANMI The operations of the National Spot Exchange of India (NSEL) which was essentially facilitating transactions in the

Commodities Market were suspended by the Regulatory Authorities last year when certain irregularities were noted. The

matter is under investigation by the Regulatory Authorities.

4 Indonesia APEI The main challenge in securities market are:

1) Increasing the public knowledge of the Capital Market so that the public know:

a) Which of the investment product is actually of capital market and supervised by the authority.

b) The benefit of investing in capital market.

c) That investing in capital market is not the same as gambling – a practice forbidden in the generally Muslim

population of the country.

d) That investing in capital market is not limited to rich investors only.

2) Enforcing the rules and regulation to monitor the securities firms, the investors and also 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 it.

5) Shortage of licensed professionals in the capital market

6) Low number of product range available for investors

7) Fluctuating currency which always discourage foreign investors.

8) Synchronization of rules between OJK, Tax Office and Bank Indonesia.

5 Japan JSDA -Strengthening functions and competitiveness of the capital market underpinning the Japanese economy

-Supporting individual investors by expanding and promoting financial and economic education

6 Kazakhstan NBK Major Challenges in 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;

- deficit of financial instruments.

7 Korea KOFIA The FSC (Financial Services Commission) has been thriving to reform and bring innovation in the financial sector during

2015. In line with such efforts, the FSC launched a so-called ‗3+1 Initiative‘ to set detailed directions for the financial

reform drive based on the opinions of the financial market players in July 2015.

1. Reform supervisory practices

2. Vitalize KONEX market

3. Boost derivatives market

4. Strengthen infrastructure for unlisted over-the-counter trading

5. Foster Fintech

6. Ease regulations for personal identity verification

7. Introduce electronic securities system

8. Improve rules for insurance business license

9. Improve regulations for corporate public disclosure

10. Facilitate usage of Big Data

11. Vitalize tech finance

12. Introduce internet-only bank

71

No. Country Name of

Organization


13. Reform financial regulations

14. Establish security system in financial IT sector

15. Strengthen competitiveness of financial holding companies

8 Laos LSCO 1. Inadequate legal and regulatory framework;

2. Limited choices products.

3. Lack of human resource in the field and inadequate IT.

4. Limited investors base from local, institutional and foreign investors.

9 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 cost of doing business in Malaysia is gradually increasing whilst the

regulators and the Exchange has been introducing new fees. Further to this scenario, 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 size 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 on 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 or other 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.

10 Mongolia MASD On July 10th, 2015, Mongolian Association of Securities Dealers Association has been recognized as the first

Self-Regulatory Organization by the Mongolian Financial Regulatory Commission. Due to such changes, the MASD not

only serves its members interest but also protects investors and sustain the integrity of capital market. Our SRO‘s initial

focus is to bring other market participants as our members such as exchanges, depository house and other market

participants. Secondly, the MASD will be focusing on strengthening its capacity and develop better professional courses.

11 Myanmar SECM n/a

12 Nepal SEBON Massive earthquake (8.1 recter) incident in our coutry dated 25th

April 2015. Aftermath the country only one Stock

Exchange has been shut down for 16 days.

Partial automation of the trading system and paper based clearing and settlement system.

Absence of real sector companies and dominance of banks and financial institutions has increased the sectoral risk of

the market.

Lack of institutional investor and the dominance of the individual investor causing high volatility in the secondary

market.

13 Pakistan SECP Promulgation of the Securities Act, 2015:

For effective regulation of the securities market, the Securities Act, 2015 has been promulgated in May 2015 following

extensive stakeholder consultation and deliberations on various levels and approval by the Parliament and receiving

Presidential assent. The Act replaces the Securities and Exchange Ordinance, 1969 and provides a comprehensive modern

law with the intention to cater for deficiencies in the earlier law and cover developments in securities market over time. It

incorporates global benchmarks of securities regulation and investor protection and will improve integrity, credibility and

efficiency of the capital market by establishing and enforcing principles which ensure fairness and promote investor

confidence. The Act also requires the SECP to frame subsidiary legislation to cater for the various regulated activities

covered thereunder, which includes implementation of the revised broker regime.

Integration of Stock Exchanges:

The SECP has been actively engaged in facilitating a thorough consultative process amongst the stock exchanges for

developing consensus regarding their integration under the Stock Exchanges (Corporatisation, Demutualization and

Integration) Act, 2012 (the ―Act‖). As a result, the Karachi Stock Exchange, Lahore Stock Exchange and Islamabad Stock

Exchange entered into a Memorandum of Understanding (MOU) on August 25, 2015 for integration into one single

trading platform under the name of ―Pakistan Stock Exchange‖. The stock exchanges have formally submitted a scheme

of integration to the SECP as required under the Act. While integration provides numerous benefits given the present

stage and structure of our market, it also poses various challenges in the areas that are to be concluded by the stock

exchanges and SECP for providing a sustainable integrated exchange model. The SECP and the stock exchanges are

looking at several areas such as the ideal treatment for employees of the two exchanges which are surrendering their

license as stock exchanges for being integrated into the Karachi Stock Exchange. The treatment for market and investor

protection funds, listed companies (including companies with default of regulations and payment of fees), treatment of

creditors, treatment of brokers and trading right entitlement certificate holders, pending arbitration and investor

complaints, ongoing litigations of the stock exchanges surrendering the license and their brokers etc.

14 Philippines PSE Small investor base

Create an enabling market infrastructure that can cope with structural changes

72

No. Country Name of

Organization


Limited products

Impact of ASEAN integration to the stock market

15 Singapore SAS There are a few major challenges in the Securities Markets, as follows:

a) One challenge in the securities market is the low levels of retail participation arising from :

i) Regulatory challenges, e.g., the fact that opinions are advice under Guidelines on Conduct of Business

for Execution Related Advice of the Financial Advisers Act (FAA-G08) discourages trading

representatives to give their opinions to clients to facilitate their trading. At the same time, the

classification of some stocks, e.g., certain ETFs with derivatives as Specified Investment Products

(SIPs) means that investors must have the necessary educational, trading or working experience to be

able to trade such stocks, or they would have to pass certain knowledge tests before they are qualified to

trade SIPs. This significantly reduces the number of investors trading SIPs.

ii) Lack of investor knowledge. The SGX is trying to increase the investor base by bringing more retail

investors into the market. Many Singaporeans are highly risk adverse, preferring to put their monies into

fixed deposits, rather than equities.

b) Another challenge the Securities market faces is the replacement of the current SGX CAS clearing and

settlement system which lacks scalability and straight-through processing.

c) There is also the issue of S Chips stocks governance, which are mainland companies listed on the Singapore

Exchange, which usually trades at low valuations because of perceived poor corporate governance.

In addition, the S$8 billion penny stock rout in 2013 triggered the largest securities fraud probe, while

investigations into the white-collar crime are still on-going. The penny stock saga brings to the fore

issues of systemic risk brought about by contra trading for which no collaterals are posted.

16 Sri Lanka SEC - Lower Liquidity in the market

- Lack of financial literacy which is also a hindrance on the Unit Trust Industry

- Reducing transaction costs and expanding the use of internet trading

- Broadening/diversifying the (sound) product range available to Investors

- The capacity of regulators and market participants need strengthening to meet the challenges and sophistication that

comes with capital market development

- Requirement of a CCP

17 Taiwan TSA 1. Promoting Taiwan to move toward the offshore financial center

2. Assisting the securities industry in expanding overseas operations in Asia

3. Create a digitized financial environment to enhance the financial sector‘s competitiveness

18 Thailand ASCO 1) ASEAN Economic Community (AEC)

Regional economy integration includes human resources development and capability building; recognition of professional

qualifications; closer consultation on macroeconomic and financial policies; trade financing measures; enhanced

infrastructure and communications connectivity; development of electronic transactions through e-ASEAN; integrating

industries across the region to promote regional sourcing; and enhancing private sector involvement for the building of

the AEC. The AEC will transform ASEAN into a region with free movement of goods, services, investment, skilled labor,

and freer flow of capital.

2) The impact of currency exchange rate volatility

Since the 2014, the world financial markets have encountered volatility in the equity and foreign exchange markets.

Adding to the turbulence; particularly for emerging markets was the US Federal Reserve‘s quantitative easing (QE)

tapering over the past year. Many began to worry that the situation would lead to something similar to the 1997 financial

crisis, widely-known as Tomyam Kung Crisis that had started in Thailand.

The currency trading rush that pushed trading volumes to a two-year high should subside as fading prospects of a US

monetary tightening this year bring stability to the baht. The baht has rallied 1.9% from a nine-year low of 36.67 a dollar

on Oct 2, 2015 as futures traders in March 2016 as the most likely date for a US Federal Reserve interest rate increase.

Foreign-currency trading by commercial banks in Thailand, including spot, swaps and options, rose to US$252.5 billion

in August, the most since January 2013, according to the latest central bank figures. Importers and some international

investors had been "scrambling for dollars" after the exchange rate breached 35-36.

The Bank of Thailand lowered its 2015 outlook to 2.7% from 3% on September 25, the third cut this year, as exports and

domestic consumption weakened. The government plans to spend 128 billion baht on economic stimulus measures in the

fourth quarter to help boost the economy.

One-month implied volatility in the baht, a measure of exchange-rate swings used in pricing options, has dropped to

8.71% from a four-year high of 9.63% on September 30. It has averaged 5.65% in the past five years.

The foreign-exchange rate will continue to be more volatile amid the uncertainty over Fed rate policy and the global

economic slowdown.

The continued strength of the US dollar and the weak gold price have led to the baht depreciating to a six-year low,

trading at Bt34.84. This is faster than the depreciation of other currencies in the region, which have depreciated 0.3-1.5

per cent. The capital outflow from Thailand's stock markets is also contributing to the weakening of the baht. While the

baht dropped to a six-year low yesterday, gold prices are now at a five-year low, trading at $1091 on July 22.

3) Fed Funds Rate Hike – Effect on Assets

From the meeting on 16-17 September 2015 of Federal Open Market Committee (FOMC) meanwhile, global markets are

already anticipating the outcome. In particular, many speculate whether or not the US Fed Funds rate will be raised during

http://www.mas.gov.sg/~/media/resource/legislation_guidelines/fin_advisers/fin_advisers_act/guidelines/G08.pdf

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No. Country Name of

Organization


this meeting period by the schedule is 27-28 October and 15-16 December 2015, or whether the Fed will only send a

signal of rate increase that will continue the current volatile status quo, similar to previous meetings. It is worth noting

that since the US Fed terminated their quantitative easing (QE) program in October 2014, markets have been predicting a

rate hike; now it seems that this change will happen at their FOMC meeting. It still have many question how such a move

of the Fed will affect assets; in other words, which assets will be worthy of investment, and which should be avoided

amid a probable interest rate uptrend.

The overview is based on the current situation. If Fed funds rate actually increase, the impact on each asset may vary

beyond these expectations. Nonetheless, volatility in global money markets is certain to occur, so we should be prepared

to adjust portfolios for consistent yields and minimal losses.

The external factor is driven by market speculation that the US Federal Reserve will hike its policy interest rate within

this year based on the Fed's comments and recent positive US economic data while the price of gold has dropped below

US$1,100 per ounce, which has led to increased demand for the precious metal and demand for the US dollar as well.

The Stock Exchange of Thailand Index has dropped by 3.33 per cent from the beginning of the year, with capital outflow

of Bt35.82 billion to date, including about Bt20 billion in August 2015. Short-term factors from foreign speculation and

the strengthening of the US dollar had pushed the baht go beyond Bt36 per dollar.

4) Capital Flows Relaxation of Bank of Thailand

Bank of Thailand (BOT) announced additional measures to relax foreign exchange regulations under the Capital Account

Liberalization Master Plan. The measures received approval in principle from the Minister of Finance and relevant

notifications and circulars will be subsequently announced during 2015-2017. The BOT also plans to relax other

regulations including Thai baht transactions by non-residents (NRs) and corporate treasury centers. Such relaxation aims

to deepen Thailand‘s financial markets by allowing greater flexibility and diversification for residents and NRs, and

subsequently support the growth and development of the Thai economy.

Foreign exchange regulations on residents

The BOT plans to relax foreign exchange regulations to facilitate residents‘ holdings of foreign assets as well as to

increase the participation of non-banks in foreign exchange business as follows;

(1) Foreign currency deposit (FCD) with domestic financial institutions: to allow residents to freely purchase foreign

currencies for deposit up to an outstanding limit of USD 5 million.

(2) Purchase of immovable properties abroad: to raise the limit for purchase of immovable properties including

leasehold properties abroad to USD 50 million per year.

(3) Portfolio investment :

3.1 residents to invest in securities abroad through onshore banks.

3.2 qualified investors to directly deposit foreign currencies abroad and invest in securities abroad within a certain

limit without the need to go through local intermediaries.

3.3 residents to invest in foreign exchange-linked products issued in Thailand such as structured products linked to

exchange rates (FX/THB).

(4) Foreign exchange licensing for securities companies: to allow securities companies to buy and sell foreign

currencies with their customers within the scope of their brokerage business.

(5) Corporate treasury centers : to relax regulations on corporate treasury centers to facilitate multi-national and Thai

corporations in their foreign exchange management, such as foreign currency deposit, Thai baht borrowing from

subsidiaries abroad and requirement on documents.

(6) Authorized money changers and authorized money transfer agents: such as telecommunication companies to

provide cross-border remittance services and money changers to have a higher limit on the amount of transactions

with customers.

5) Decrease of deposit protection’s ceiling

Under the time frame of the Deposit Protection Agency (DPA), the deposit guarantee ceiling will be halved to 25 million

baht per depositor per commercial bank starting from Aug 11, 2015 and The gradual decline of deposit guarantee ceiling

to 1 million baht per person per commercial bank in August 2016.This could lead to deposits flowing out of banking

system for other investment alternatives.

Liquidity in the local banking system is expected to tighten next year in the wake of a lower maximum of guaranteed

deposits, an economic rebound and other investment instruments attracting yield-hungry savers.

Private banks will face stiffer deposit competition from state-owned banks and other savings instruments starting next

year.

19 Turkey TCMA Istanbul Stock Exhange was demutualised and Borsa İstanbul was founded as incorporated company in April 2013

according to the new capital market law. Borsa İstanbul brought together all the exchanges operating in the Turkish

capital markets (derivetiaves exchange and gold and precious metals exchange) under a single roof.

NASDAQ OMX Group and Borsa Istanbul have concluded a wide-ranging agreement, which includes the delivery of

market-leading technologies and advisory services to Borsa Istanbul, and NASDAQ OMX taking an equity stake in

Borsa Istanbul.

Through pension reforms that took place at the beginning of 2013 government contribute 25% of premium paid in

order to support and expand the pension market.

The Prime Ministry released a strategy and action plan for ―Financial Access, Financial Education and Financial

Consumer Protection‖ in June 2014.

Electronic Fund Distribution Platform of Turkey (TEFAS) began to operate in January 2015. TEFAS allows access to

all investment funds authorized by the Capital Markets Board and active in the capital markets through a single

platform, thus offering investors the ability to make comparisons between funds and alternative investment

instruments. TEFAS aims to increase the competition in fund portfolio management and consequently the fund

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performances.

In May 2015, European Bank for Reconstruction and Development (EBRD) entered negotiations to acquire a 10 per

cent stake in Borsa İstanbul, in a landmark deal which will support Turkey‘s efforts to reshape its capital markets.

Current market applications contained within Borsa İstanbul are being renewed under the name of BISTECH product

family, within the framework of strategic alliance agreement signed between Borsa İstanbul A.Ş. and NASDAQ.

Equity Market will go-live on BISTECH systems on Nov 30, 2015.


21 Vietnam2 VBMA The Government issued Circular No. 21/2012/TT-NHNN dated 18 June 2012 which is effective on 1 September 2012 to

govern the interbank lending.

22 Asian Region ASIFMA 1. Over-reliance on bank loans

2. Fragmented markets with distinct legal systems and market structures

3. Pension fund and insurance reform to broaden the institutional investor base in the local capital

markets

4. Lack of well-developed electronic systems and connectivity

5. Unnecessary restrictions and requirements that are either complex or bring unintended consequences, which serve as

impediments to investment

6. Cybersecurity threats and business continuity management

7. Improvements to conduct and risk culture in financial institutions

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V – 2. Specific Challenges in Equity Markets

No. Country Name of

Organization

Specific Challenges in Equity Markets

1 Cambodia SECC - There are costs relating to compliance and listing, such as the cost to appoint independent directors, external auditors,

additional personnel to manage corporate matters in the Company and annual listing costs, for example. As a result,

IPO candidates believe that these additional costs would make them less competitive vis-à-vis their competitors.

- Financial literacy amongst Cambodian public is still limited and needs widely participants

- Image concerns resulting from the poor trading to date on the CSX…The fall in share price of both PPWSA and GTI

from their IPO price makes it hard to convince business owners that their own appearance as good companies as would

be shown by their share price on the CSX if listed may also be seen as negative and reflect on them.

-

2 Hong Kong HKSA 1. The economic data and market volatility are having more and more impact over Hong Kong stock market;

2. The GEM board is becoming a speculating tool;

3. There are too many funds in the market and many of them are not authorized.

3 India ANMI - Enhancing investors confidence in the Capital Market

- Enhancement of participation by Retail Investors

- Investor education process in non-metro area including developed rural areas

- Enhancing levels of governance in the Capital Market

- Enhancing the overall image of the market intermediaries

- Finding pragmatic solutions to current issues facing the capital/stock market.

4 Indonesia APEI Low liquidity in the market

Brokerage and underwriting fee‘s war

An easier, more transparent and more public IPO process starting with Government Related Companies.

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.

5 Japan JSDA - Developing infrastructure for settlement of stocks

- Developing new methods to foster startup and growth companies

(Please refer to the ―Specific Measures introduced/implemented for the Securities Market‖ 3. and 5.)

6 Kazakhstan NBK Kazakhstan‘s stock market, including emerging companies, remains sluggish. Joint stock companies don‘t release shares

in a free trade.

7 Korea KOFIA n/a

8 Laos LSCO The specific challenges in Lao Equity Market are:

Encourage more listed companies in Lao Stock Exchange.

Encourage to have more securities intermediaries in appropriate and sufficient quantity.

Introduce new regulations to facilitate the market.

9 Malaysia ASCM Malaysian equity market continues to be inflicted by issues of truncated participation from foreign funds and retail

investors. In terms of market demographics, foreign investments had fallen to 23% by trading value in 2014 as compared

to 25-26% level in the past several years. Participation from retail investors was also flat at 25% of total trading value in

2014, similar to the past several years.

10 Mongolia MASD - Capital Market infrastructure is inadequate

- There is no reliable front and back office system for securities companies

- Decline in equity trading

11 Myanmar SECM Education for investment

12 Nepal SEBON Lack of Real Sector Companies

Provision of issuing shares at par

Concentration of BFIs

Regulatory body is yet to be powerful.

13 Pakistan SECP As also elaborated above implementation of the Securities Act, 2015 (along with its subsidiary legislation) and effectively

concluding the integration exercise remain the major current challenges.

1. The equity segment has seen substantial growth in the past. Among other reforms, the market witnessed the

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introduction of derivative products, separate automated systems for trading of equity and debt instruments,

introduction of SME counter, various leverage mechanisms, book-building mechanism for initial public offerings,

market making etc. However, continuous efforts need to be made to expand and broaden the product portfolio in line

with international trends to enhance investment opportunities. Efforts are required for utilizing the potential of the

market to the maximum in terms of new listings and for bringing in fiscal reforms including tax rationalization to

incentivize and facilitate new listings.

2. Out of the total number of incorporated companies, very few are listed. Our fiscal structure works against

corporatization as income tax rate on companies is higher when compared with other business structures like

partnership or proprietorship. This coupled with presumptive tax regime and various tax exemptions discourage

documentation and general culture of corporatization in trading, industrial and agriculture sectors.

3. While the cash market in Pakistan is relatively mature, the derivatives segment has not performed to its fullest. The

range of derivative products offered at the stock exchanges is relatively limited. Diversified derivative instruments

need to be launched to enable investors to better manage their portfolios and risks.

4. Accelerated efforts are required for increasing financial literacy- educating existing and potential investors about their

rights, roles and responsibilities in the changing marketplace. Expanding market outreach is also a major challenge

when it comes to investor awareness, which needs to be dealt with by expanding branch network of the market

intermediaries, capital market infrastructure institutions and by making use of technological innovations for targeting

geographically remote investor base. The Pakistani capital market as compared to other markets has a very small

investor base. The low number of investors has an adverse impact on liquidity and market efficiency and small

number of active investors leads to problems like low volumes, difficulty in fund raising by companies seeking

capital, inefficient price discovery and consequently impaired investor confidence.

5. Apart from low saving rate and awareness about the stock market, surplus funds available with the retail investors are

going into real estate because of its perception of being a safe haven, ease of documentation/transaction and on

account of being unregulated. Banks are still the preferred option for majority population and banks have monopoly

over the financial sector, because of their popularity, ease of outreach and acceptability to the general public.

During the short to medium term we are also focusing on the following challenges for our equity market:

1. Measures for ensuring robust brokerage houses:

a. A revised broker regime to replace existing requirements which shall include enhanced eligibility requirements,

categorization/classes of brokers and capital requirements, business conduct, issue of contract notes and customer

assets, and accounting and audit requirements.

b. The already prevailing Base Minimum Capital (BMC) requirement to be gradually phased out and replaced with

a deposit based regime accompanied with stringent capital requirements for brokers.

2. Measures to enhance risk management:

a. NCCPL to maintain a consolidated Settlement Guarantee Fund (SGF) which shall comprise the respective

amounts in the stock exchanges‘ clearing funds transferred to the SGF to the extent of actuarial valuation.

NCCPL to also start functioning as a Central Counterparty (CCP) based on the concepts of novation and

continuous net settlement.

b. The entire Risk Management System of the stock exchanges to be transferred to NCCPL.

3. Broker Association:

In future, the SECP is considering allowing TREC holders to establish a brokers‘ association. However, the role,

structure, composition etc. of the association are being worked out.

4. Index based Market Halts:

Gradual phase out of scrip wise circuit breakers to be replaced with index based market halts.

5. Centralized Know Your Customer (KYC) Organization:

Groundwork on establishment of a Centralized Know Your Customer Organization which would verify all customers‘

information and maintain a databank for the same has been completed. SECP is in the process of framing rules to

provide regulatory cover for the organization.

14 Philippines PSE Please see answer to ―Major Recent Incidents and/or Challenges in Securities and Capital Market‖

15 Singapore SAS See challenges above

16 Sri Lanka SEC - Lack of liquidity

- Relatively small size (Market Capitalization as a % of GDP is 30.5%)

- Low financial literacy as against 92% literacy rate in the country

- Low retail investor confidence

- Lack of instruments (products) to trade

- Only 294 companies listed on the CSE

- Low level of knowledge of Investment Advisors

- Unavailability of a Clearing Corporation/ CCP

- Lack of a Demutualized Stock Exchange

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17 Taiwan TSA 1. In order to increase efficiency of the market, the Taiwan FSC announced a program to boost securities market,

including widening daily share price fluctuations to a maximum 10 % from the previous 7 %. The new trading rules

are expected to increase daily turnover by about 10%.

2. Taiwan will be opening a cross-border stock trading platform with Singapore. To encourage the development of

start-ups and SMEs, Taipei Stock Exchange launched the Go Incubation Board for Startup (GISA) and the financing

platform, paving their way to head for registration on Emerging Stock Market or listing on Taipei Stock Exchange.

18 Thailand ASCO 1) Liberalization of securities business

Liberalization of brokerage commission fees - the commission rate is expected to be driven down further by more severe

competition and Liberalization of securities business creates a stronger competition and allows for newcomers in the

business. Many securities companies look for diversifying business income apart from stock trading commission to other

opportunities.

2) Increase in the number of internet users

Thailand has increase in the number of Internet users Account and Thailand stock market entered a liberalization of

commissions and fees in the stock brokerage business. And these two factors have led to the birth of online brokers in

Thailand.

Since then, competition among online brokers has been severe. Most of them cut commissions and fees in stock trading

significantly to increase their customer base. In October 2008, there were around 146,553 internet brokerage accounts in

Thailand, but by September 2015, this number had reached 914,386 accounts.

3) Reduction brokerage fees from brokerage industry

The Securities firm in the brokerage industry need to deal with the stiffer competition, so the brokerage houses need to

adjust, providing developed products and services to fit the changes in their clients' lifestyle and needs driven by

technology because a technology reduces the brokerage fees and personal number of securities houses and that would be a

decline in the number of securities firms resulting from mergers and acquisitions, for several reasons.

First, government has reduced its support for the industry, letting it decline or grow as a function of the market

mechanism, after demand from investors for services and products in the capital market rose.

Second, technology will reduce the need for sales and marketing personnel, as there will be many kinds of applications

helping clients understand sophisticated financial products more than the marketing people do.

Moreover, artificial-intelligence technology is likely to become a medium for matching shares on the stock market instead

of humans as the new generation of investors who tend to be unwilling to meet with other people increases.

Third, institutional investors needs have changed, as they demand direct access to the stock market without having to go

through traders and researchers. This means brokerage fees will be bargained down to very thin margins.

"In short, the industry can survive, but its shape will be changed," so the brokerage firm should go along with the global

technology-driven trend.

4) Fed funds rate hike – Effect on stock market












The Stock Exchange of Thailand Index has dropped by 3.33 per cent from the beginning of the year, with capital outflow

of Bt35.82 billion to date, including about Bt20 billion in August 2015. Short-term factors from foreign speculation and

the strengthening of the US dollar had pushed the baht go beyond Bt36 per dollar.

As For “Stocks”, if a rate hike occurs, the sentiment-driven corrections that would have a broad-based effect on both

developed and emerging markets. Nonetheless, if we take a look at the last six rate hikes, US stock markets saw positive

corrections five out of six times after a rate hike, typically within one year after the US key rate was raised. It is logical to

assume that over the long run as an economy normalizes, the business sector should be able to cope with rising costs and

resume stable profit growth.

Meanwhile, stocks in developed and emerging nations may face short-term volatility. The impact on Thai stocks would

likely include initial pressure coming from fund outflows from emerging markets.

19 Turkey TCMA n/a

20 Vietnam1 VASB - Vietnam market is a frontier market with moderately low evaluation. Emerged challenge is to grow to be an emerging

market and raise market price to a reasonable level.

- Equity market is characterized by a large number of listed companies with low average capitalization. Government

companies and corporations need to be equitized and become listed companies on the stock market in order to increase

transparent spirit and efficiency of management. In addition, security market has more qualitative companies‘ stocks.

- 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, prioritize in setting principles of investment.

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- It is needed to develop new derivative products for risk management purpose 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 thing is still impractical in the situation of lacking derivative tools.


22 Asian Region ASIFMA 1. 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.

2. Scarce capital and collateral: cross-margining between cash, futures, options and OTC derivatives as well as flexible

collateral management may help Asia markets face the capital-short environment.

3. 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. Block trading could be a potential approach for

reducing implicit costs.

4. Volatility controls and circuit breakers mechanisms: Circuit breakers should adopt well-designed structures and

protocols to maintain investor confidence while promoting market efficiency and facilitating price discovery.

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V – 3. Specific Challenges in Bond Markets

No. Country Name of

Organization

Specific Challenges in Bond Markets

1 Cambodia SECC n/a

2 Hong Kong HKSA Most of the Bonds are OTC traded and lack of transparency to the public investors;

The listed bonds, except few government bonds, almost none of them have transactions during trading hours.

3 India ANMI The Bond Market as compared to the Equity market is smaller in portion with identified participants like Government,

Corporate, Financial Institutions, Mutual Funds etc. The following will provide the overall current scenario.

4 Indonesia APEI Low liquidity in the market.

Bringing bond to the general masses.

Creating a better and more transparent bond price reference.

Enhancement of the bond transactions reporting (through CTP system), though KPEI has a clearing system for bond

trading transaction, many of the participants deals directly among themselves without reporting.

5 Japan JSDA -Developing infrastructure for settlement of bonds

-Vitalizing the corporate bond market

(Please refer to the ―Specific Measures introduced/implemented for the Securities Market‖ 3. and 4.)

6 Kazakhstan NBK Major Challenges in a bond market are low level of demand, especially after creation one single governmental pension

fund (against 10 private pension funds).

7 Korea KOFIA n/a

8 Laos LSCO Laos is still in a preliminary stage of bond market development. Currently, there are only two types of Government

bonds issued in Laos including treasury bills (T-bills) issued by Ministry of Finance and BOL bonds issued by Bank of

the Lao PDR. Majority of T-bill are sold to commercial banks, and these banks also work as an agent in the sale or

transfer of T-bill. However, there is no law supporting the above function. As to corporate bond, it has yet been issued in

Laos.

9 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. The role of the government in stimulating the growth of the bond markets should be now

shifted toward encouraging more diversity. In order to promote risk diversity, significant measures should also be taken to

increase competition on the demand side.

10 Mongolia MASD - Bond market only consists of Government treasury bills

- Buyer side is mainly local commercial banks

11 Myanmar SECM Under construction of infrastructure such as DVP, CSD system. Most of the people are more preferring other investment

types such as real estate, gold, and commodity .

12 Nepal SEBON Low number of companies isssuing bonds

Major investors are institutions

Lack of knowledge

13 Pakistan SECP Government Level

1. A significant portion of the federal government debt is not securitized and exists in the form of a deposit structure

known as the National Savings Schemes (NSS). This significantly inhibits growth of the debt market and price

discovery by limiting availability of government debt in the market. This is one of the primary reasons the benchmark

yield curve is relatively flat considering that the deposit returns are fixed by the government rather than being

determined by the market.

2. The benchmark yield curve has also not been able to develop due to lack of the government‘s ability to be a

price-taker at the long-end of the yield curve as the primary market for issuance of government debt is still primarily

quote driven.

3. Issuance of corporate bonds is limited due to lack of market appetite for such debt and also regulatory requirements

imposing high costs such as stamp duty imposed by provincial governments on the total value of issued debt.

SECP Level

1. The pricing of corporate debt securities is a major issue considering illiquidity in the debt market at the stock

exchanges and otherwise. Establishment of a bond pricing agency is in the pipeline.

2. There is an absence of foreign credible rating agencies operating in Pakistan.

3. If mutual funds are encouraged to approach corporates directly for issuance of corporate bonds in which they commit

to invest, the captive market dominated by banks will give way to a broader investor base that would in turn

contribute to a deeper and more liquid bond market.

4. For secondary market liquidity and efficient risk management, derivative products like interest rate swaps and futures

need to be introduced. This would enable institutions to hedge their risk leading to increased activity.

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Organization


SBP Level

1. It should be considered to broaden the number of Primary Dealers or tiering them to enhance wider distribution.

2. The Held-to-Maturity category should be revised or phased out to be replaced with mark-to-market.

14 Philippines PSE n/a

15 Singapore SAS Based on MAS‘ corporate debt market review, the market capitalisation was about SGD357 billion in 2011, of which

about two-thirds were in SGD and the rest mostly in US dollars. The SGD bond market is made up of Singapore

Government Securities (SGS), quasi-government bonds, corporate bonds, and structured securities.

Base on anecdotal feedback from some practitioners, current challenges in the bond markets are:

a) Lack of liquidity in the secondary bond trading market, which is required to create more depth in the corporate and

government bond market.

b) Use of ratings in bond issues – more than 50% of bond issues do not have credit ratings from accredited rating

agencies.

16 Sri Lanka SEC - Widen and broaden issuer and investor bases

- Increase market liquidity and improve the price discovery mechanism

- Improve market access

- Development of a secondary market

- Strengthen the regulatory framework

- Enhance market infrastructure and improve the transaction environment

- Improve education and awareness of investors and issuers

17 Taiwan TSA Taiwan‘s offshore RMB bond market is growing rapidly after investment was opened to domestic insurers. In the first

quarter of 2015, issuance totaled 11.35 billion yuan, up 132% from 1.5 yuan billion a year earlier, according to Standard

Chartered. Formosa bonds are issued in Taiwan and listed on the Taipei Stock Exchange (formerly the GreTai Securities

Market), which provides an over-the-counter system for trading.

The upper end of that forecast matches the 60 billion yuan target set by the Taiwan FSC in June 2014. If the goal is

reached, Taiwan would become the world‘s second largest offshore trading market for yuan-denominated bonds,

surpassing Singapore.

A broad swath of international banks has been selecting Taiwan as an alternative offshore renminbi-funding destination.

Issuers are coming from a number of newly appointed offshore yuan hubs, including France, Germany, the U.K., South

Korea, and Malaysia.

The speed of the turnaround in the Formosa bond market is striking. It had been anemic in its first two years of existence,

with little primary market issuance and just 21 deals. The catalyst for the market‘s takeoff came in May 2014 when the

FSC removed onshore foreign-currency bonds from life insurers‘ 45% overseas investment ceiling. Under the revised

regulation, insurance investors can count a foreign-currency bond listed in Taiwan as a domestic investment even if the

issuer is based offshore and the security is cleared outside Taiwan.

18 Thailand ASCO 1) ASEAN economic community (AEC)

Regional economy integration includes human resources development and capability building; recognition of professional

qualifications; closer consultation on macroeconomic and financial policies; trade financing measures; enhanced

infrastructure and communications connectivity; development of electronic transactions through e-ASEAN; integrating

industries across the region to promote regional sourcing; and enhancing private sector involvement for the building of

the AEC. The AEC will transform ASEAN into a region with free movement of goods, services, investment, skilled labor,

and freer flow of capital.

2) Fed Funds Rate Hike – Effect on Bond market












Relative to ―Bonds‖ it is notable that one year after the US Fed raised their key rate, the US government 10-year bond

yield increased five out of six times. Higher interest rates evidently weigh on bond prices (bond prices move in the

reverse direction to yields). However, even though it would be quite ambitious to definitively state how great a

subsequent US government bond yield rate might change — as of August 14, 2015, the yield rate was at 2.20 percent

—the movements during 2015 have ranged between 1.68 percent and 2.50 percent, and because the US 10-year bond

yield rate has decreased from 2.37 percent to 2.20 percent (as of August 14, 2015) since the end of their QE program, it is

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Organization


likely that the yield will rise higher than the Fed Funds rate after any hike. Therefore, bonds will become less promising

from an investment perspective.

19 Turkey TCMA n/a


21 Vietnam2 VBMA - The National Assembly‘s Resolution 78/2014 put the government and MOF into a dilemma. At the time when the

resolution was released, in October 2014, there were problems with the government‘s debt structure: the short-term

government bonds issued accounted for 52 percent in 2014 and 80.3 percent in 2013 (which will mature in 2016). This

led to the National Assembly‘s decision to stop issuing short-term bonds. Only long-term bond issuance is allowed.

The implementation of the resolution immediately had impact on the government bond market

- Circular 36 supplemented regulation on the restricted rate of short-term capital used for purchasing government bonds,

which is stated in detail as following:

15% for state-owned commercial banks;

35% for joint-stock commercial banks, joint venture, foreign-owned banks;

15% for foreign bank branches;

5% for non-bank credit institutions;

40% for cooperative banks.

22 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. Regulatory uncertainty, particularly jurisdiction-specific limits on issuance or bond guarantees (i.e.,

Indonesia’s foreign currency hedging requirements, China’s prohibition on onshore entities

guaranteeing bonds unless registered with NDRC/SAFE).

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V –4. Specific Measures introduced / Implemented for the Securities Market

No. Country Name of

Organization

Specific Measures introduced / Implemented for the Securities Market

1 Cambodia SECC - Financial Sector Development Strategy (FSDS) 2011-2020

- Sub-decree on Tax Incentives in Securities Sector, 2015

2 Hong Kong HKSA SFC is taking steps to have a closer look at the Bond and Fund market especially to the Fund market. SFC is having its on

going consultation paper.

3 India ANMI Periodic Changes/modifications aimed towards development and investors protection

Simplifications in procedural areas like: Collections of Investors details called as ―KYC‖ process which is ―Know

your customer‖

Modifications to the process of raising funds from the Capital market like Initial Public Issue (IPO); follow – up IPO;

other modes of raising Funds

Emphasis on enhancing ―governance‖ in the Capital/Stock Market

Focus on investors education

Focus on Investors protection

Focus of speedy grievance redressal process for investors

4 Indonesia APEI Growing the market capitalization through addition of more and more publicly listed companies – including more

Government Related Company.

Continuing education, to the public: General and University level. Through this cooperation between OJK, IDX and

Brokers, all sides understand the difficulty 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.

5 Japan JSDA 1.Increasing Japan’s Status and Enhancing International Competitiveness in Capital Markets

In September 2014, JSDA collaborated with other related industries to organize the Council for Tokyo Global

Financial Center Promotional Activities and discussed issues and necessary measures in the aim of analyzing

Japan‘s advantages, expected roles, and challenges as a global financial center among international financial and

capital markets.

JSDA took several steps toward establishing a comprehensive exchange, which will enhance Japan‘s financial

competitiveness. JSDA established a special committee to discuss and examine issues surrounding the realization of

the comprehensive exchange. As a result of the discussion, in November 2014 the committee published an extensive

report recommending that JSDA extend the scope of its self-regulatory rules and membership to facilitate the

establishment of the comprehensive exchange and protect future investors.

2. Establishing Confidence in Securities Firms and Market

Since December 2013, JSDA has applied a new rule to its members to protect elderly customers. The rule requires

members to set up in-house rules stipulating products eligible for sale to elderly customers, methods for explanation

and acceptance of orders, and other key points for investor protection. JSDA has inspected its members‘ compliance

with the new rule. To further discuss the issues and examine an appropriate Internet trading system for elderly

customers, JSDA organized a study group on Self-Regulation for Internet Trading in June 2014 and published its

interim report in December 2014.

Meanwhile, JSDA‘s Working Group on Segregation Audit of Customer Assets considered an audit process for

segregation of customers‘ assets and disclosure of audit results. Based on discussions, the working group published

its report in April 2015.

3. Developing Infrastructure for Settlement of Bonds and Stocks

JSDA‘s Working Group on Shortening of the JGB (Japanese Government Bonds) Settlement Cycle finalized

discussion on the development of infrastructure for JGB settlement and published a report in November 2014. The

report discussed a grand design to shorten settlement cycles and achieve T+1 for outright JGB transactions (T+0 for

general collateral (GC) repo transactions). JSDA held a meeting to explain this grand design and exchange opinions

with its members. In June 2015, this working group published another report and announced JSDA‘s target to

achieve T+1 for outright JGB transactions during the first half of FY2018.

In July 2015, Working Group on Shortening the Stock Trading Settlement Cycle (to T+2) was set up to discuss

about practical measures and challenges to achieve T+2 for the stock trading. The working group is composed of

various parties including securities firms, banks and trust banks, institutional investors, market infrastructure

providers and others. The Tokyo Stock Exchange, the Japan Securities Clearing Corporation and JSDA have been

acting as secretariat. The working group is now planning to publish a report on working progress toward T+2 by

the end of 2015.

4. Vitalizing the Corporate Bond Market

To enhance the corporate bond market, JSDA finalized discussion on the protection of corporate bondholders. A

JSDA Working Group on Market Infrastructure for Corporate Bonds issued its report for public consultation in

March 2015. The report dealt with new measures to protect corporate bondholders, and particularly discussed the

establishment of an information notification system for bondholders and the setting up of a Bond Administrator

system.

JSDA has launched the new system in November 2015 with a view to promoting corporate bond market

transparency. The new system will publish real contract prices of OTC corporate bond transactions. JSDA has

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cooperated with securities firms and other market-related organizations to prepare the new system, which is

expected to stimulate corporate bond transactions.

5. Developing New Methods to Foster Startup and Growth Companies

In May 2015, JSDA revised and enacted self-regulatory rules to promote financing for startup and growth

companies and ensure liquidity of those companies‘ stocks. The revision introduced an ―equity-based crowdfunding

system‖ and a ―shareholders community system‖ aiming to protect investors in unlisted stocks. The equity-based

crowdfunding system is a framework that links new and growing companies with investors through the Internet, and

facilitates their financing by enabling small equity investments from a wide range of investors. The shareholders

community system is a regulatory framework to allow securities firms to solicit investors who participate in a

shareholders community. The system was launched in response to needs for transaction and liquidation of stocks

issued by unlisted companies, including regional companies.

6. Promoting NISA, the Tax Exemption Program for Investments by Individuals

JSDA is promoting and advertising NISA to individuals, focusing on those who have no experience investing in

financial instruments. JSDA ran a wide range of advertisements through TV commercials and the Internet, setting up

an original NISA website and making pamphlets and posters. To answer questions and inquiries from individuals,

JSDA is operating the NISA Enquiry Call Center.

JSDA made efforts to increase the ceiling for tax-free annual NISA investment, simplify the NISA scheme, make

NISA a permanent system, and establish the Junior NISA, another new scheme to encourage asset formation by the

next generation. As a result, the NISA schemes were incorporated in the Outline of Revisions to the Tax System in

Fiscal 2015, which includes: increasing the ceiling for annual NISA investment from ¥1 million (approximately

US$8,322) to ¥1.2 million (approximately US$9,986), creating a Junior NISA scheme, and simplifying and

expediting NISA account opening procedures. In December 2014, to promote workplace NISA, which encourages

company employees‘ continuous investment through the NISA system, JSDA issued guidance and provided a

sample application form for the scheme.

6 Kazakhstan NBK The NBK's activities concerning the regulation of the securities market in years 2014 and 2015 were directed at the

following:

-developing of the securities market infrastructure;

-strengthening the mechanisms of the protection of interests of consumers of financial services;

-taking action which will contribute to strengthening the financial state of organizations having the licenses to conduct

professional types of activities in the securities market;

-strengthening the mechanisms of supervising and control of the activity of organizations having the licenses to conduct

professional types of activities in the securities market;

-strengthening requirements of submission the information from securities market organizations, increasing the

transparency of the information;

-strengthening the mechanism of prevention the possibility of fraud including manipulating the securities market;

-strengthening requirements to the prospectus of bond emission.

7 Korea KOFIA The KRX announced that trading of Mini KOSPI200 futures and options started smoothly by having 3,132 contracts and

6,814 contracts, respectively, on its listing date of July 20, 2015.

In terms of investors, trading volumes by institutions and individuals stand out as being bigger than the others. It is likely

that demands for deliberate trading by institutional investors and interests of small-scale individuals were increased.

Korea Exchange (KRX) plans to list KOSDAQ 150 futures on the derivative product market on November 23, 2015 as

Financial Services Commission (FSC) has granted the authorization on October 21, 2015.

* KOSTAR index futures will be delisted on November 23, 2015 (Nov. 20 is the last trading day)

Through the listing of stock price index futures that takes KOSDAQ 150 index as underlying asset, the KOSDAQ market

can achieve the qualitative and quantitative growths by providing risk management tool and supporting for the

government‘s creative economy.

It is necessary to respond to the growing demands for risk management instruments and derivative products in line with

the growth of the KOSDAQ market.

8 Laos LSCO The Strategic Plan on the Lao Capital Market Development (2016-2025) has been approved by the government

with 8 objectives as follows:

1) To create all necessary and favorable conditions for enterprises to raise fund through capital market to increase

the quality and quantity of products and services;

2) To have market instruments and mechanism readily to support the reform of enterprises;

3) To have comprehensive regulatory framework in compliance with Lao PDR‘s current conditions & international

standards;

4) To ensure that the exchange, CSD, and securities intermediaries are operated smoothly with limited risks and be

able to integrate with regional and global markets;

5) To ensure that the ICT development is suitable with the size of capital market expansion and up to date;

6) To increase public participation, investor base and balance between individual & institutional investor

involvement;

7) To have adequate capital market regulators, experts and professionals in both quality and quantity;

8) To enable Lao Capital Market to integrate with regional and global markets.

Development Strategies (12 Program 38 Projects) outlined in the Strategic Plan on the Lao Capital Market

Development (2016-2025) :

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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 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).

9 Malaysia ASCM There are several initiatives implemented to further strengthen the market structure and efficiency.

1. Introduction of ASEAN Post Trade Services - The ASEAN Post Trade services allows any Participating

Organisation (PO) performing outbound trades into any of the participating exchanges in the ASEAN Trading Link to

clear, settle and hold the securities listed at those exchanges. The introduction of this new service reduces settlement

risk while streamlining the post trade procedures pertaining to outbound trades of securities. In effect, this reduces the

turnaround time while improving the efficiency of cross-border clearing and settlement. We are the first of the three

participating exchanges to offer post trade services for all outbound trades to our POs.

2. Closure of dormant CDS accounts – Bursa Malaysia (Bursa) had instituted the automatic closure of CDS accounts

that have been designated as dormant, i.e., those that contain no securities and have had no credit or debit entries for

the past seven years. The closure of the dormant CDS accounts has optimised our use of resources and mitigated the

risk of unauthorised use of these accounts. Bursa closed approximately two million dormant CDS accounts in 2014.

3. Enhancing the Bursa Trade Securities 2 (BTS2) engine - the initiatives to further enhance trading engine saw the

introduction of additional trading and market control features, including the Good-Till-Date, Fill-Or-Kill and Last

Price Limits. These enhancements expand the trading features available on our exchange that facilitate trading by our

participants.

4. Non-Trade Matching Service - The introduction of the Non-Trade Matching Service facilitates matching for

non-trade related instructions during the book building exercise for an IPO. This service offers a more efficient and

effective method to move securities and funds on a Delivery Versus Payment basis and expedites book entry transfer

of securities between book builders and their clients.

8. Increasing the number of securities eligible for securities borrowing and lending - Bursa updated the list of

eligible securities for SBL increasing the size of the pool to 227 stocks from 171 previously. The widened pool will

further increase the breadth and depth of the SBL market as well as facilitate better price discovery through more

RSS activities. Outstanding SBL loans grew to RM2.4 billion by the end of 2014 from RM1.7 billion in 2013.

10 Mongolia MASD Recognizing MASD as the Self-Regulatory Organization

On July 10th 2015, Mongolian Association of Securities Dealers Association has been recognized as the first

Self-Regulatory Organization by the Mongolian Financial Regulatory Commission.

On November 11th, MASD has signed Memorandum of Understanding with Financial Regulatory Organization which

included work plan that consists of three main areas such as capacity building for MASD as a SRO, capacity building for

its members and development of capital market.

11 Myanmar SECM Setting up the stock exchange, under process to issue underwriter license

12 Nepal SEBON SEBON has licensed a Credit Rating Agency; it has started its operations. Mutual fund has recently been introduced into

the market. Soon Nepal Stock Exchange Ltd will be in full automation system and it will help to operate the fully online

trading system.

13 Pakistan SECP Reforms Introduced in the Securities Market since January 2015:

Promulgation of the Securities Act, 2015: For effective regulation of the securities market, the Securities Act, 2015 was

framed which has replaced the Securities and Exchange Ordinance, 1969. The Act is a comprehensive modern law drafted

with the intention to cater for deficiencies in the earlier law and cover developments in securities market over time. It

incorporates global benchmarks of securities regulation and investor protection and will improve integrity, credibility and

efficiency of the capital market by establishing and enforcing principles which ensure fairness and promote investor

confidence.

Improved compliance with IOSCO Principles: Significant improvement was made with regards to the level of

compliance with the IOSCO benchmark principles of securities regulation – the compliance percentage for Pakistan has

gone up from 37% in the year 2004 to 62% in the year 2015. Pakistan has been able to achieve fully-compliant or

broadly-compliant status in relation to 23 IOSCO principles out of 37. Efforts are being made for achieving full or at least

broad compliance with regards to the remaining principles, by the end of the financial year 2015-16.

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Efforts for Pakistan upgrade to MSCI Emerging Market Index: As a result of continuous efforts of all stakeholders,

MSCI Pakistan Index has been included in the 2016 Annual Market Classification Review for a potential reclassification

to MSCI Emerging Markets (EM). For a successful inclusion of Pakistan in the EM Index, the SECP and KSE have been

continuously engaged with MSCI for the purpose and a detailed strategic plan is being devised with clear tasks and

responsibilities assigned to stakeholders and milestones set to be achieved. Further, regulatory reforms such as

promulgation of the Securities Act, 2015 has paved the way for effective regulation of the securities market in line with

international best practices. The SECP together with the stock exchanges and other stakeholders is pursuing a robust

reform agenda for the securities market to boost investor confidence and create a fair and efficient marketplace.

Strategy for Action against Defaulting/Non-Performing Companies to Protect Minority Shareholders: The policy

devised earlier by the SECP pertaining to dissemination of information and treatment of companies that have been

delisted or are in defaulters‘ segment of the stock exchanges, is being revised with a view to protect the minority interest.

In this respect, a cross-departmental committee has been constituted for conducting detailed analysis of all such

companies and to devise way forward for each company on a case by case basis.

Measure to Improve Liquidity in the Market– Minimum Free Float Requirement: For active trading in the

secondary market, one of the most important factors is availability of reasonable number of shares for trading which can

be referred as ―free-float‖. Presently, the illiquid listed securities at the stock exchanges having insufficient free float

make the price discovery mechanism inefficient. Therefore, it has been decided that the listed companies at stock

exchanges shall be required to ensure minimum 25% free float within a period of one year. However, companies having at

least 5 million free float shares will be allowed to enhance free float upto 25% within a period of three years. It is

expected that introduction of minimum free float requirement will encourage companies to issue more shares thereby

enhancing liquidity in the stock market and meet the SECP‘s objective of enhanced investor confidence in the local

capital market.

Regulations for Research Analysts: To address the need to bring standardization and enhance integrity of the research,

analysis and insight offered by research analysts, the SECP has framed a set of regulations for regulating activities of

research analysts and persons disseminating investment recommendations to the general public. The objective is to make

such activities subject to pre-defined standards, policies and procedures that enable a greater level of reliance,

accountability and enhanced investor confidence. The regulations, which have been framed in line with the IOSCO

Objectives and Principles of Securities Regulation, prescribe certain minimum entry standards for analysts and require

them to follow disclosure requirements and establish policies and procedures to avoid conflict of interest.

Commodity Market Development: To fulfill hedging requirements of investors in the commodities market, approval

was granted to PMEX Milli Tola Gold Futures Contract and Gold (milli ounces) Futures Contract denominated in USD,

EUR, JPY and GBP and settled in Pakistani Rupees. The approved contracts are expected to attract notable interest from

investors wishing to take exposure in gold by investing in small sized contracts. Approval was also granted for Brent

Crude Oil Contract and Mill Specific Sugar Contract. Further, in order to strengthen PMEX‘s agricultural product basket,

contracts related to red chilli have been approved for trading at PMEX. The approved contracts will offer an alternative

for trading in red chilli, currently traded in spot market, through the unified electronic market of PMEX. The participation

of large number of buyers and sellers will enhance the price discovery process and will help farmers get a better price for

their produce.

Prohibition of Payment from and to Third Party from Broker Account: In order to ensure effective implementation

of Anti-Money Laundering regime and remove any potential impediments in conducting investigation of unethical market

practices, the KSE regulations have been amended to ensure that all proceeds of the investors worth Rs. 25,000/- and

above shall be made through a designated bank account which is mentioned in the CDC Sub Account form and is duly

verified by the bank whereas all payments worth Rs.25,000/-and above by brokers to the clients must be through cross

cheques in the name of the investor or his nominee only. The said practice shall result in a clear money trail and

identification of actual beneficial owner.

Asset under Custody Regime: To enhance investors‘ confidence and curtail unlimited custody of investors‘ assets with

the brokers, regulatory framework has been approved for the CDC to introduce Asset under Custody regime, considering

the threat and uncertainty faced by an investor in the event of default by the broker. Under the said regime, a broker shall

be allowed to keep client assets up to 25 times of its Capital Adequacy Level. Non-compliance with the said regime will

result in disciplinary proceedings against the said broker which may lead to restriction and suspension.

Launch of web-based investor complaint system: In order to enable the investors to lodge and keep track of their

complaints through the internet, a web-based investor complaint system was launched through the platform of the stock

exchanges. This measure will facilitate the investors and create transparency and efficiency in the resolution of investor

complaints against brokers.

Web Access/Online Transactions Facility: In order to eliminate the need of submitting a physical Transaction Order for

movement of securities, Investor Accountholders at the CDC have been provided with an online transaction facility.

Through such facility Investor Accountholders can move their securities by transmitting electronic instructions and also

have access to timely and updated information regarding their securities in the CDS.

Fortnightly reporting of clients' asset segregation by brokers: In order to safeguard clients‘ assets and promote

investors‘ confidence in the capital market, KSE‘s compliance and enforcement capacity has been strengthened by putting

in place appropriate mechanism to monitor the brokers‘ compliance with the requirement of segregation of clients‘ assets.

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The reporting format requires the broker to reconcile client balances available in the broker‘s back office with the balance

available in the clients CDS account.

Integration of Stock Exchanges: The SECP has been actively engaged in facilitating a thorough consultative process

amongst the stock exchanges for developing consensus regarding their integration under the Stock Exchanges

(Corporatisation, Demutualization and Integration) Act, 2012 (the ―Act‖). As a result, the Karachi Stock Exchange,

Lahore Stock Exchange and Islamabad Stock Exchange have entered into a Memorandum of Understanding (MOU) on

August 25, 2015 for their integration into one single trading platform under the name of ―Pakistan Stock Exchange‖. The

stock exchanges have formally submitted a scheme of integration to the SECP as required under the Act. The Scheme has

been published for stakeholder consultation which will be completed by November 22, 2015 as envisaged under the

demutualization law.

Integration of the stock exchanges is expected to provide numerous benefits in terms of reducing fragmentation,

enhancing true competition in terms of best price discovery and order execution, increasing efficiency, improving

governance standards, synergies, economies of scale, and will play a crucial role in attracting strategic partners and

international investors.

14 Philippines PSE Small investor base: market education campaigns mentioned in item 3.

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, On-going

development of the PSETradex Mobile App, as well as the launch of the PSE EDGE Mobile App.

Limited products: developing new products and services such as exchange traded funds, enhancements to short

selling rules, regulatory framework for private pension and index futures, development of the shari‘ah index,

acquisition of the shares of the Philippine Dealings System Holdings Corporation.

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.

15 Singapore SAS Specific measures implemented by the regulators include:

a) The regulators are reviewing the FAA G08 guidelines with a view to carving out advice given under such

dealing in Securities as advice incidental to trading and therefore not regarded as ―advice‖ under the

Financial Advisers Act, provided that disclaimers are made to clients and there is a reasonable basis to the

opinions expressed.

b) SGX is tying up with member companies to conduct seminars to educate the investing public.

c) To encourage retail participation, the SGX also undertook several measures such as Continuous All Day

trading in 2011, Reduced Board Lot sizes to 100 shares were implemented in 2015 to encourage investors,

and Minimum Trading Prices of 20 cents per share were implemented over 2015-2016. New order types

were also introduced in the SGX trading engine such as price triggered orders (stopped loss orders).

d) The archaic mainframe clearing and settlement system CAS is being replaced by API and decentralised

backoffice system for each member company, which the exchange implements a new Post Trade Settlement

(PTS) system to interface with each member company‘s backroom clearing and settlement system. The PTS

2 system would also have the ability to allow member firms to sight share balance in a customer account, so

as to improve risk management and facilitate higher trading limits.

e) The SGX tries to resolve the issue of poor S-chip corporate governance by requiring listed mainland

companies to be qualified by the China Securities Regulatory Commission before listing in Singapore.

f) The MAS and SGX have since required a 5% collateral requirement to be implemented once the PTS 2

system is being implemented.

16 Sri Lanka SEC - The SEC has implemented a comprehensive plan to reposition the market to play an important role in capital

formation and development of the economy. These initiatives include Demutualization of the CSE, Amendments

to the SEC Act, implementation of Risk Management System (RMS), Delivery vs Payment (DVP) and the

establishment of a Central Counter Party (CCP), development of a Corporate Bond Market, development of New

Products, development of the Unit Trust Industry, enhance Education and Awareness, increase new Listings

(Public and Private Sector), attract new Funds (Local and Foreign) and develop Infrastructure – Broker Back

Office Systems (BBO).

- As part of the initiatives of the SEC to increase the liquidity in the market, a mandatory minimum public float

requirement was introduced for Public listed companies following a practice that has already been adopted by a

large number of international and regional jurisdictions. The minimum public float in addition to increasing

liquidity in the market is also expected to facilitate a better price discovery mechanism.

- A special mechanism of listing by ―Introduction‖ with necessary safeguards to protect the integrity of the

investors and the Capital Market was re-instated in order to facilitate the efforts by the CSE to increase the

number of listed entities by attracting new companies. This will have a positive impact on the market

capitalization and liquidity too.

17 Taiwan TSA Taiwan FSC stated that the substantial deregulation that allowed banks to set up offshore banking units (OBU) to expand

the scope of business and the securities brokers to set up offshore securities units (OSU) has yielded considerable results

in 2014. In 2015, FSC has conducted comprehensive reviews on the liberation of domestic financial services and products

and set it as a priority. The initial results of the Securities and Futures Industry are as follows:

1. Taiwan FSC allowed securities firms to loan funds to foreign invested enterprises for a greater flexibility in use of

funds, which will assist securities firms expand their presence in Asia. In April, FSC opened up private sector to

operate equity model crowdfunding to allow creative individuals to more conveniently raise funds through online

platforms.

http://sgx.com/wps/wcm/connect/sgx_en/home/higlights/news_releases/SGX-to-launch-new-order-types-for-Securities

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2. Expanding functions of settlement accounts of securities firms: With permission from a client, a securities firm may

retain the client‘s settlement amount in the firm‘s settlement account. The firm shall also provide account-related

functions to increase the ease of trade for investors and lower the business risk for the firm.

3. At present time online transactions of securities and futures account for approximately respectively 30% and 80% of

all transactions. Taiwan FSC will further deliberate on opening up online operations such as account set up and

applications.

4. Taiwan FSC will devise incentive measures to encourage investment trust businesses by easing restrictions or

simplifying procedures for investment trust businesses that are financially sound and have no significant deficiency in

internal control.

5. Taiwan FSC has planned RMB Exchange Futures to increase diversity of products in the domestic futures market and

to improve internationalization and competitiveness of our futures market.

18 Thailand ASCO 1) Mergers between TFEX and AFET

TFEX-AFET announce merger to drive Thailand agricultural futures exchange. Thailand Futures Exchange PCL (TFEX)

- under the Stock Exchange of Thailand (SET) group, together with The Agricultural Futures Exchange of Thailand

(AFET), The Office of the Agricultural Futures Trading Commission (AFTC) and The Securities and Exchange

Commission (SEC) have joined hands to consolidate Thai agricultural futures exchange under TFEX‘s management

following the government‘s policy, ensuring more efficiency and minimizing trading cost, while aiming to expand

internationally.

Under the merger plan, AFET, currently operating Thailand‘s agricultural futures market, will be merged with TFEX,

offering a fully integrated trading, clearing, settlement and depository services of derivatives products. This aims to form

one single futures market for all, in order to enhance the efficiency and provide benefits to investors in doing one-stop

trading markets for all futures products. Under the merger plan, AFET would become a unit of TFEX, acting as a single

futures market to serve all types of derivatives products, Previously, TFEX had served all types of futures trading except

agricultural futures, which were traded by AFET.

2) FATCA

Foreign Account Tax Compliance Act (FATCA) issued by USA with the main purpose to prevent tax avoidance by U.S.

person through opening accounts or investing in Foreign Financial Institutions.

FATCA requires foreign (i.e., non-U.S.) financial institutions("FFIs"), including commercial banks, to report information

about accounts held by U.S. individuals and U.S. owned juristic entities and income credited to such accounts and in

some cases to withhold tax on withholdable payments paid to certain accounts and remit the withheld taxes to the U.S.

Internal Revenue Service (IRS).

FATCA requires that FFIs, usually referring commercial banks, saving policy issuing insurance companies, asset

management companies and securities companies—including entities under Stock Exchange of Thailand— either agree to

participate in the FATCA program by entering into an agreement with the IRS to report information on financial

transactions of their U.S. individual or U.S. owned juristic customers to the IRS on an annual basis or be subjected to

withholding tax prescribed under FATCA.

Thailand Securities Depository(TSD) as a FATCA participant in SET group is obligated to perform due diligence on

issuer accounts to find United States person through use of various TSD forms in connection with these issuer accounts

and other forms as maybe requested by TSD to cure indicia of U.S. status if found. In such case, TSD customers will be

notified of the details in the letter to request information from TSD.

3) New Depository and New Cash Equity Clearing Systems

The Stock Exchange of Thailand (SET) rolls out its new clearing and depository systems, which are ready to start

operation on August 24, 2015. This will accommodate growing demand in the capital market as the new engine would

enhance overall Straight-through Processing (STP) in the market, risk management, and increase operational efficiency in

order to build infrastructure and quality services for all member.

4) Thai bourse moves towards digital economy

The Stock Exchange of Thailand (SET) is ready to reach out to larger mass through a combination of online resources.

The new website (www.set.or.th) was recently launched, along with new smartphone applications. The exchange this year

celebrates the 50th anniversary.

One such strategy, which has been in line with Thailand‘s strategy toward a digital economy, is to increase greater

efficiency and reach a vast amount of investors. SET has launched its new website (www.set.or.th) with fully integrated

online resources for investors.

This new website emphasizes modernized design and supports displays via all current smart phones and tablets without

any limitations to any operating system or platform. SET has also introduced a new content ‘Investor classroom‘ which

features online resources for potential investors and with more than 3,000 video clips as well as sections on post trade

services incorporated by Thailand Securities and Depository as well as Thai Clearing House. This newly integrated

website can provide a convenient one stop service for all investors.

In addition to the new website, SET has also unleashed remarkable new applications called the ‘SET application‘ which

also runs on both iOS and Android devices. Investors can access listed companies information, video sessions with listed

companies from the ‘Opportunity day‘ events where listed companies meet and interact with analysts and investors.

Investors can access all information at the convenience of their fingertips. Another great advantage of the service is that

investors will be able to use the same username for all SET digital channels after they have registered.

Apart from the new website and applications, SET has also successfully leveraged with all main social media outlets via

Facebook, Twitter, and YouTube with more than 500,000 subscribers to date.

5) Association of Thai Securities Companies(ASCO) wants stricter rules for share transfers

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Association of Thai Securities Companies (ASCO) is seeking stricter regulations related to the transfer of stocks through

securities firms in order to prevent fraud.

The call came after fraud was suspected in the transfer of about Bt300 million worth of late construction tycoon Chuwong

Saetang's shares. The billionaire was killed in a car crash under suspicious circumstances in late June.

His family has been pushing for closer investigation into the businessman's death, which came just days after he allegedly

transferred the shares to two women, who claim they were intimately involved with him.

Pattera Dilokrungthirapop, chairwoman of the Association of Thai Securities Companies (ASCO), said that the brokers'

group wanted to see some changes to the current regulations.

She said that only customers with legitimate accounts should be allowed to transfer their shares through brokerage

companies, and the transfer of shares to anybody other than the shareholder's legal spouse or child should be prohibited.

Evidence of family relationships should also be required along with the request for share transfers, she said.

Pattera acknowledged that existing regulations were already strict, with every transfer signature being examined by two

brokerage officials and the transfer being confirmed on telephone with the account holder. However, judging from the

suspicions surrounding Chuwong's case, "there are still risks that could lead to problems", she warned.

She also called for tougher examination by the brokerage firms' internal auditors, particularly in cases where marketing

officials in these companies get large amounts of shares transferred to their accounts.

19 Turkey TCMA n/a

20 Vietnam VASB - Vietnam needs to study new values and concepts of the securities market. Developing the derivatives market is the

SSC‘s effort towards that orientation. As a new segment of the securities market, the derivatives market is to prevent

risks for the securities market and other fields of the economy, making investors feel assured when participating in the

securities market, helping it operate in a more stable and sustainable manner and perform better its‘ the functions of

mobilizing and distributing capital and determining values.

- The bond market should be continued to develop with its leading role in the capital market, and to become the main

channel of capital mobilization for the State budget. To that end, the Deputy Minister raised a number of orientations

for the development of the market in the future, such as: to continue the institutional improvement for the market,

including the rules and standards of the market operations; to restructure the operation of the bond market, including

the restructuring of commodities and introduction of new ones, restructuring debt instruments; to develop the investor

base by expanding the base of institutional investors, investment funds, insurance funds, voluntary pension funds; to

introduce derivative products, gradually putting the derivative market into operation, preventing risks, facilitating the

capital flows; to continue improving the infrastructure for trading, depository, clearing and settlement; to implement

the mechanism of the settlement of securities transactions through banks and to develop credit rating agencies.

21 Vietnam VBMA The Ministry of Finance of Vietnam prepares is implementing the roadmap to develop zero coupon bond, floating rate

bond and bond future


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V – 5. Measures to Invite Foreign Investment (De-regulation, Promotion Activities, etc.)

No. Country Name of

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Measures to Invite Foreign Investment (De-regulation, Promotion Activities, etc.)

1. Cambodia SECC -Providing incentives likes tax exemption (WHT) on dividend for foreign investors. Being considering more on the

incentives.

- Amended Prakas on Public Issuance of Equity Securities to reduce some requirement

- Amended Prakas on the Implementation of Listing Rules to reduce some requirement

- Conduct seminar and workshop as well as to the public and establish elite group of potential listed companies.

2 Hong Kong HKSA Besides the QFII (Qualified Foreign Institutional Investor) that allows foreign funds investing in China financial market,

the Shanghai-Hong Kong Stock Connect was successfully launched in the 2015, and it provides a good channel for the

foreign funds investing in China Stocks via HKex. Also, the mutual recognition of mutual funds was also become

effective in July, 2015.

Financial Development Council, a funded organization was established in 2014, for the purpose to promote financial

services in Hong Kong.

Meanwhile, Hong Kong has been graded as the freest city in the world for running business. The Hong Kong

Government tends to make Hong Kong to be the best place for business operation especially in the financial sector.

3 India ANMI Steps to accelerate the process of further Economic growth and development

Provide a conducive environment for investment

Clarity in various laws governing the investment

Speed in according various approvals

Ensure required infra-structure to support the development process

4 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.

5 Japan JSDA The JSDA has regularly been holding ―Japan Securities Summit‖ since 2008 in any of the world financial centers such as

London, New York, Hong Kong and Singapore to appeal the benefit of Japan capital market and to promote foreign

securities investment into Japan. In addition to the case of Japanese public bonds, the overseas investors are exempt from

withholding tax on the Japanese corporate bonds for eternity (this preference measure is called ―J-BIEM‖). Japan is

leading the discussion of ASEAN+3 Bond Market Forum (under ABMI) in order to facilitating the cross-border issuance of

and investment into the bonds in the region by standardizing and harmonizing the market rules, practices and market

infrastructures.

6 Kazakhstan NBK 1. Ensuring Protection of Rights and Interests of Investors in the Securities Market, Including Counter-Acting

Misconduct in the Securities Market.

With a view to protect interests of investors which use the services of brokerage organizations, a set of measures will be

taken to provide investors with a full and permanent access to information about balances and movements of financial

instruments and money they own which are maintained at personal accounts opened with brokerage organizations. Such

measures will allow investors to exercise on-line control over operations conducted by brokers across their personal

accounts.

In order to enhance measures aimed to ensure proper conduct in the securities market, including measures of punishment

for price manipulations and other kinds of abusive practices in the securities market, and increase their timeliness, a

comparable system (scale) of punishments for abusive practices in the securities market needs to be provided. This

objective needs to be implemented through revision of the amounts of administrative (criminal) penalties and transition

from fixed amounts of penalties to indexed ones. This implies that indexation of the amounts of penalties for

manipulations will be used in relation to such indicators as the amount of made transactions, amount of generated profit

or damage caused as a result of made transactions.

In addition to that, with a view to increase investors‘ confidence in the stock market, a possibility of introducing the

compensation system for ―unqualified‖ investors especially individuals will be considered; such compensations will be

provided for damages caused as a result of illegal use of monies of such clients and other unlawful actions on the part of

brokers, similar to the international practice.

The issue of required refinement of legislation on the securities market will be considered tentatively in 2016 – 2020.

2. Extending the List of Services Offered by the Stock Exchange.

The stock exchange will continue implementing strategic projects aimed to ensure flexibility of the stocks exchange‘s

response to the market needs as well as to increase activity of the stock exchange members, by way of:

1) further development of the user services, new software products that will provide additional technological

opportunities to the Kazakhstani and foreign investors for trading at the stock exchange via the Internet;

2) development of a remote membership at the Kazakhstan Stock Exchange, that will help legal entities incorporated and

acting pursuant to the laws of the states other than the Republic of Kazakhstan to obtain membership of the stock

exchange with respective access to trading in certain financial instruments provided they comply with the

requirements of the laws of the Republic of Kazakhstan and internal regulations of the stock exchange;

3) increasing capacities of the brokerage companies and investors to have a direct access to the sectors of the stock

market and the financial derivatives market of the stock exchange as well as to establish a direct access to the foreign

exchange market of the stock exchange;

4) introducing the deferred payments system (on the base of T+2) at the stock market with partial security, clearing and a

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proper risk management system;

5) introducing a clearing system and a settlement system at the stock exchange that will be complying with international

standards with a view to inrease operating efficiency, reduce the number/volumes of settlement transfers and expenses

at the stock exchange, minimize risks and protect the market players from defaults, including by using services of the

central counterparty.

7 Korea KOFIA n/a

8 Laos LSCO 1. Currently, LSCO has encouraged the 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 to attract more foreign

investors;

3. LSCO together with Lao Securities Exchange and market participants have co-organized the investment promoting

campaign to enhance securities investment for potential local and foreign institution and individual investors to

participate in such events;

4. Granting a reduction of corporate tax of listed companies by 5% of normal rate for the period of four years as from

the date of listing in the Lao Securities Exchange (effective at the end of 2010);

5. Exempting capital gain tax of individual and institutional investors from previously 10% (effective in 2012);

6. Exempting dividend tax of listed companies from previously 10% (effective in 2012);

7. In 2013, public interest entities are required to implement the reporting of their financial statements in compliance

with IFRS to increase investor confidence.

9 Malaysia ASCM The annual Invest Malaysia (IM) programme, which is the industry‘s flagship platform for engaging fund managers

and institutional investors, continued to set new records in 2014. Investors and fund managers with total assets under

management (AUM) worth a record of almost USD55 trillion attended our IM events held in Kuala Lumpur, Tokyo,

New York, London and Hong Kong.

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. In this respect,

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.

10 Mongolia MASD Mongolian Financial Regulatory Commission, Central Bank and Ministry of Finance are working jointly to draft

Financial Market Strategy 2025.

11 Myanmar SECM Wait and see for the enactment of new Myanmar Company Act.

12 Nepal SEBON n/a

13 Pakistan SECP Market Accessibility Criteria

Openness to foreign ownership

No distinction is made between local and foreign investors in Pakistan and they are treated at par with local

investors across all sectors without any special registration and/or licensing requirement.

There are no foreign ownership limits in Pakistan and foreign investors may purchase up to 100% shareholding

in a listed security through the secondary market. However, prior approval of the relevant regulator will be

required for purchase of securities of companies in the financial sector, beyond a certain threshold. In case

holding exceeds 10% of the outstanding securities of a listed company, only reporting is required for all investors

irrespective of their categories in accordance with relevant regulatory requirements.

Foreign investors are given equal treatment in respect of economic and voting rights. As per the market norms,

all information including corporate actions is generally disseminated in English language.

Ease of capital inflows / outflows

Non-residents are required to open Special Convertible Rupee Account (SCRA) with any Authorised Dealer in

Pakistan.

These accounts can also be credited with dividend income. Transfers from one such account to another may also

be made in case of transfer of shares between the two account-holders.

The funds available in SCRA can be transferred outside Pakistan or credited to a foreign currency account

maintained in Pakistan at any time without prior approval of the State Bank.

Non-residents are allowed to trade freely in securities including debt instruments and other derivatives products

available for trading on the stock exchanges of Pakistan.

Foreign investors are free to invest and move out capital, capital gain on investments and dividends easily at their

discretion without bearing additional cost in the form of tax on foreign outflows or expropriation of funds by the

government.

In order to develop Pakistan as a viable investment destination for foreign investors, the SECP is continuously involved in

improving the quality and image of Pakistan‘s capital market. The SECP is a member of international regulatory standard

setting bodies for the securities, insurance and pension sector, i.e. the International Organization of Securities

Commissions (IOSCO), international Association of Insurance Supervisors (IAIS) and International Organization of

Pension Supervisors (IOPS) respectively.

The SECP is actively involved on various IOSCO forums through its role as IOSCO Board member; member of IOSCO

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President Committee, Growth and Emerging Markets (GEM) Committee and Asia Pacific Regional Committee (APRC).

Further, being elected member of IOSCO Board, the SECP is also a member of GEM Steering Committee and has also

opted membership of Assessment Committee and Committee on Regulation of Market Intermediaries as vice chair of

Policy Committee 3.

During last year the SECP concluded its country assessment in terms of the IOSCO Principles and Objectives of

Securities Regulation and exercise for which it volunteered as a member of the IOSCO Assessment Committee and the

results and future actions for which are explained above.

The SECP is a member of the South Asian Securities Regulators‘ Forum and chair of the Standing Committee for

Economic and Commercial Cooperation (COMCEC) Capital Market Regulators Forum established by the Organization

of the Islamic Cooperation (OIC). The SECP has also entered into MOUs for cooperation and exchange of information

with various counterpart organizations across the world.

The SECP is also encouraging the stock exchanges to identify Strategic Investor (SI) for divestment of shares as required

in terms of the Stock Exchanges (Corporatisation, Demutualization and Integration) Act, 2015 (the ―Act‖). The stock

exchanges have been in contact with various international exchanges for divestment of stake to SI and/or technical

collaboration. As per the Act, a SI would be a stock exchange, depository company, derivative exchange or a clearing

house which has been approved by the SECP in accordance with the criteria prescribed under the Demutualization

Regulations.

14 Philippines PSE In 2014, the PSE conducted a roadshow for large capital listed companies in partnership with DBP-Daiwa Capital

Markets held in Japan on February 14 to 15, where 11 listed companies met with top asset management companies. The

PSE also participated in Bank of America Merrill Lynch (BAML)‘s ASEAN Stars Conference held from March 5 to 7 in

Singapore. Through the partnership between the Exchange and BAML, 12 Philippine listed companies participated in the

three-day conference.

Further, the PSE conducted the Tokyo Listing Forum last February 14, in partnership with Takara Printing Co., Deloitte

Touche Tohmatsu and DLA Piper. This is a five-year initiative, beginning in 2013, which aims to encourage Japanese

firms in the Philippines to list their Philippine subsidiaries or conduct a dual listing in the PSE. Takara Printing has also

translated and printed our listing kit to Nihongo.

Most recently, the PSE was a participant in the Philippine Economic Briefing in Japan: Sustaining Inclusive Growth

through Infrastructure and Capital Market Development held last October 8 and 9, in Tokyo.

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 enumerating the investment areas or activities that are open to foreign

investors subject to percentage limitations and those reserved to Philippine nationals.

15 Singapore SAS SGX, together with Malaysia and Thailand, have set up the ASEAN trading link in 2012. This is to facilitate cross border

trading of shares listed in the exchanges of the three countries, as a step towards closer integration of the ASEAN

markets. It involves the creation of an electronic order routing system which allows clients in each country to trade in

other exchanges.

SGX has also expanded membership on the securities market to foreign based brokers abroad. These brokers, regarded as

remote trading members will observe their home rules and trade only for foreign investors. This is another means to

attract cross border investments and expand the pool of international participation. It will allow foreign investors to deal

into the Singapore markets with greater convenience and ease, which will lead to increased liquidity in the Singapore

market.

16 Sri Lanka SEC The SEC together with CSE recently concluded successfully investor forums/road-shows in Zurich (Switzerland) and

London to attract foreign investors.

17 Taiwan TSA Taiwan Free Economic Pilot Zone program has been passed by government, showing a new wave of economic

deregulation. The finance industry is also included in the planning of the Free Economic Pilot Zone, which focuses on

wealth development and asset management businesses. Through the concept of virtual offshore, Offshore Banking Units

(OBU), Offshore Securities Units (OSU) and Offshore Insurance Units (OIU) will be the main sales channels, providing

all kinds of financial products and services to non-residents.

In operating OSU, securities firms aim to use the capital and operational knowhow of parent companies to attract

overseas investors to the OSU to conduct all sorts of securities investment. The OSU is focused on overseas investors and

transaction counterparts. By offering regulation relaxation on business and tax incentives for the financial industry to

expand scale. OBUs, OSUs, and OIUs platforms can be able to attract foreign investment to invest in Taiwan‘s financial

products.

18 Thailand ASCO 1) SET launches roadshow in New York City

The Stock Exchange of Thailand (SET) has teamed up with Auerbach Grayson and Co and KT Zmico Securities to

organize a roadshow event in New York City 5-7 October 2015. The "Thailand's New Economy" will showcase the

strengths and potential growth potential of ten Thai listed firms to institutional investors.

"The key topics of the roadshow will be Thailand's economy and the effectiveness of the Thai stock market, as well as the

strengths of the ten listed companies," said Kesara Manchusree, the SET president. "These companies will present

information directly to investors in one-on-one meetings and group meetings."

The companies are Amata Corp, Central Pattana, Gunkul Engineering, Intouch Holdings, IRPC, Krung Thai Bank,

Krungthai Card, Nok Airlines, PlanB Media and Srisawad Power 1979.

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2) Thai bourse to boost investor confidence at upcoming Singapore roadshow

On July 7, 2015 -The Stock Exchange of Thailand (SET) has joined hands with DBS Vickers Securities (Thailand) Co.,

Ltd. to host "The Pulse of Asia Conference", on July 9, 2015 in Singapore with 15 Thai listed companies to present their

strengths and potential growth to global institutional investors.

The event is honored to have Deputy Minister of Transport Arkhom Termpittayapaisith to present the government's

policies, aiming to give insights of Thailand's infrastructure development direction and gain more confidence on

Thailand's economy as well as listed firms‘ potential.

SET President Kesara Manchusree said that this year‘s outbound roadshow plan has focused on financial hubs in Europe,

USA and Asia as part of SET‘s fifth decade‘s direction to attract all investor groups. "The Pulse of Asia Conference"

would bring 15 listed companies to present information directly to the fund managers with insightful information, led by

the Deputy Transport Minister to highlight significant progress of Thailand‘s policy, especially the infrastructure

megaprojects, accelerating the Thai economy. Significantly, Singapore was Asia‘s largest foreign holdings of Thai shares,

accounting for seven percent of Thai bourse‘s total market capitalization.

Thai listed companies with strong performance joining this roadshow are Aeon Thana Sinsap (Thailand) pcl (AEONTS),

AP Thailand pcl (AP), Bangkok Airways pcl (BA), BJC Heavy Industries pcl (BJCHI), Charoen Pokphand Foods pcl

(CPF), Delta Electronics (Thailand) pcl (DELTA), The Erawan Group pcl (ERW), Group Lease pcl (GL), Minor

International pcl (MINT), Muangthai Leasing pcl (MTLS), Plan B Media pcl (PLANB), Samart Corporation pcl

(SAMART), Sansiri pcl (SIRI), Tipco Asphalt pcl (TASCO), TRC Construction pcl (TRC), with a combined market

capitalization of THB 699 billion (approx. 20.5 billion USD) (as of July, 6 2015).

3) Thai bourse kicks off 2015 outbound roadshow in London

On June 15, 2015 - The Stock Exchange of Thailand (SET), has joined hands with Credit Suisse Securities (Thailand)

Limited to organize ―SET-Credit Suisse London Roadshow 2015‖, during June 16-17 in London, the United Kingdom

(UK). This year‘s first outbound roadshow will lead six distinguished Thai listed companies to present their performance

and potential growth to foreign investors.

SET President Kesara Manchusree said that to have our market in the radar screen of investors, SET is not only providing

easy access but also expanding quality investor base by organizing roadshows both in Bangkok metropolitan and

provinces as well as outbound roadshows. This would be an opportune time to address Thai listed companies‘

performance right after the end of first-quarter financial statement announcement, and present their business directions

directly to foreign institutional investors which would help boost up confidence among foreign funds.

―The six listed companies, with upbeat performance and promising growth, joining this outbound roadshow are Bangkok

Airways pcl (BA), Bangkok Bank pcl (BBL), Bangkok Dusit Medical Services pcl (BDMS), Charoen Pokphand Foods

pcl (CPF), CP ALL pcl (CPALL), Singha Estate pcl (S), with a combined market capitalization of THB 1.3 trillion

(approx. 39.4 billion USD) (as of June 12, 2015), accounting for nine percent of the total market value. The one-on-one

meetings by these strong firms could draw a great deal of interest from investors in the UK, a key investment hub in

Europe. Significantly, this is an attractive source of fund, as the figures showed the proportion of investment fund in Great

Britain investing in Thai equities representing 13 percent of the Thai bourse‘s total market capitalization,‖ Kesara added.

4) Thai bourse rolls out first training program for GMS executives

On Mar 25, 2015 – The Stock Exchange of Thailand (SET) reinforces its role as Greater Mekong Subregion (GMS)

investment connector by initiating an exclusive training program for executives in GMS capital market, or so called CMA

GMS Program, to update information, exchange views and experiences. This marks an important milestone for the strong

collaboration among GMS capital markets, a good start for SET to progress into the fifth decade this year.

The program will be held at SET‘s Capital Market Academy, Bangkok, during March 27 - April 12, 2015, participated by

more than 50 GMS executives from both public and private sectors.

SET Chairman Sathit Limpongpan stated that this program would help enhancing practical knowledge among capital

market executives in response to the dynamic economic and social growth among GMS countries, resulting in both direct

and indirect investment in the region. With emphasis on education development, SET has launched this program via

CMA, an education institution under the SET corporate umbrella. Well-known for the annual training program for Thai

top executives from both private and public sectors for over ten years, CMA would be a unique platform for these

executives to exchange views, build network and create significant benefits to the GMS markets as well as the global

markets as a whole.

SET President Kesara Manchusree said that GMS‘s rapid economic growth needs more capital market leaders to cope

with the increasing demand. GMS markets are getting more and more attractive among international firms and investors.

Currently, there are more than 100 Thai listed firms operating businesses in GMS, with plenty of opportunities to expand

the market and benefit from the region. Therefore, leaders and decision makers in this region should enhance capabilities,

creativity and regional connection to drive GMS‘s prosperity towards sustainability. This program is another ―first‖ for

SET to build strong collaboration among the GMS exchanges, as such moving forward towards the next decade in

becoming GMS investment connector.

The CMA GMS Program will be participated by executives from both private and public sectors of GMS capital markets,

as well as academic staff and media, totaling 50 participants from six GMS countries, consisting of Cambodia, China's

southern provinces of Yunnan and Guangxi, Laos, Myanmar, Vietnam and Thailand. The sessions are scheduled every

Friday-Sunday for three weeks from Friday March 27 to Sunday April 12, 2015.

19 Turkey TCMA n/a

20 Vietnam1 VASB Decree No.60/2015/ND-CP which took effect on September 1st 2015 provides amendments and supplementation to a

number of contents related to foreign ownership caps in the securities markets of Vietnam; private and public offering;

overseas offering; redemption and tender offer of shares of public companies; securities listing and trading; securities

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business organizations; and a number of regulations on real estate investment funds. These new contents have basically

met the market requirements in accordance with international practices and Vietnamese legal system, especially after the

new Law on Enterprises and Law on Investment took effect on July 1st 2015. The details are as follows:

- The proportion of foreign ownership in the Vietnamese securities market: Except the sectors with foreign ownership

ratio stipulated by investment legislation or international treaties, the Decree extends the cap to up to 100% in public

companies subject to their decision. The regulation ensures conformity with international treaties to which Vietnam

is a member, and consistency with the provisions of law on investment as well as other related regulations.

- The securities offering: The Decree 60/2015/ND-CP narrows the scope of governance of the private placement

provisions stipulated in Decree 58/2012/ND-CP, which now covers public companies and securities

business organizations only so as to conform to Article 123 of the 2014 Enterprise Law. In addition, to protect the

legitimate rights and interests of investors, the Decree supplements regulation on: Private placement of shares in

exchange for debts or equity and capital contributions in other enterprises; improvement of regulations to prevent the

law circumvention in private placement, and the organization of public offering to tacitly acquire a business;

additional provisions for binding accountability of issuers before the shareholders‘ general meeting on the use of

capital raised from investors; completion of provisions on the public offering of a joint stock company formed after

the merger/acquisition to meet the current requirements of the business restructuring process in Vietnam, etc.

- Registration for securities trading and listing: the Decree regulates on the registration for securities trading and

listing in the spirit of associating the company going public and equitization with trading registration in order to

protect investors and bring the Vietnamese securities market closer to international best practices. In addition, the

Decree also amended some regulations on securities listing to match the real situation, reduce the number of

administrative procedures and protect the investor legitimate rights and interests.

- The restructuring of the securities market: Decree 60 extends the proportion of foreign ownership in securities

business organizations so as to push their restructuring process. Besides, the Decree adds with regulations allowing

securities business organizations to issue shares to raise their capital from the capital surplus obtained after during

their tranches of offerings or issuances, or from the differences between the selling price and the buying prices of

treasury shares, or from retained earnings and other legal sources of the equity.

- 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.

- In addition to the above items, the provisions on redemption of shares, sale of treasury shares; tender offer of shares

of public companies have also improved with the decree, to be in line with the Law on Enterprises, international

practices and practical implementation.

After taking effect, Decree 60 is expected to facilitate the implementation of the following objectives:

(1) To strengthen the monitoring of capital mobilization and usage of enterprises; protect the legitimate rights and

interests of investors, boost the process of equitization and state capital divestment.

(2) To complete and make consistent the regulations to institutionalize the international integration commitments, open

up domestic and foreign capital flows, and assist the capital mobilization for businesses and the economy; enhance

the position of the Vietnamese securities market in particular and the country in general among the community of

international financial businesses.

(3) To promote the restructuring process associated with the development of the securities market; to narrow the grey

market and widen the regulated market; Strengthening the publicity, fairness and transparency of the securities

market by associating equitization and share offering with trading registration on the UPCOM or listing on stock

exchanges.

(4) To open the securities services market and add more new products to the market.

21 Vietnam2 VBMA - Vietnam will continue to implement the Resolution 11 in a stable and effective way to reset three macroeconomic indices

of inflation, forex rate and foreign reserves with a view to soliciting foreign investors to invest in Vietnam debt market.

- MOF should consider exempting withholding tax on capital gain/interest for foreign investors for those who invest in

Government bond.

- VBMA frequently holds Investor Conference to open a dialogue with Foreign Investors.

20 Asian Region ASIFMA measures and suggestions to facilitate market development:

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. Elimination of unreasonable hiring requirements for local entities, which raise costs

5. More transparency in rules and regulations (including English translations)

6. More consultation with industry before formulating and introducing new rules and regulations

7. Longer notice periods before introducing new rules and regulations

8. Adoption of best-practices in corporate governance

9. Rigorous cost-benefit analyses for new rules and regulations

10. More streamlined licensing processes in some jurisdictions

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