Contents
Overview
Module overview
Learning outcomes
Assumed knowledge
Module outline
Using this examination guide to prepare for your examination (Compliance):
independent study
The examination
Examination study guide
Glossary and abbreviations
Other reference
Website
Understanding What is Compliance
An extensive understanding of What is Compliance and its requirements is vital for organisations to navigate the business environment with confidence. Abiding by the protocol can them ensure ethical and responsible business operations.
Compliance refers to conforming to laws, regulations, guidelines, and standards relevant to a particular industry or sector. It entails adhering to prescribed rules and fulfilling obligations to ensure legal and ethical conduct in business operations. Additionally, it is crucial to ensure organisations operate with integrity and accountability…Read more
Overview
Module Compliance examination study guide.
Please read the materials in this section carefully before you begin your studies. It details the objectives, the structure and the outline of the module, and the recommended references to successfully pass the examination.
Module purpose
To provide candidates with an overview of the requirements for compliance in the Malaysian capital market. Candidates will gain a working knowledge of the regulatory framework and principles. The module will allow students to identify the risks and issues to be addressed in establishing a comprehensive compliance programme.
Learning outcomes
Upon completion of this module, you should be able to:
(a) describe the fundamentals of compliance
(b) explain the principles of compliance
(c) elaborate on the roles, functions, responsibilities and duties of Compliance Officers
(d) describe the compliance programme
(e) describe the interaction of roles and responsibilities which create a compliance culture
(f) explain the costs and benefits of compliance
(g) describe the concept of risk management
(h) relate knowledge about risk to workplace activities in terms of assessment and management
(i) explain the structural framework of capital market regulation and compliance
(j) describe the various guidelines and relevant business rules for compliance best business practice.
Assumed knowledge
It is assumed that you have a basic understanding of financial markets and products, prior to undertaking this module.
Module outline
Fundamentals of Compliance
Roles and Responsibilities
Compliance Officers
Establishing and Monitoring Compliance
Risk Management
Costs and Benefits of Compliance and Case Studies
Structural Framework and Principles of Capital Market Regulation
Guidelines for Compliance
Using the Examination Study Guide to Prepare for Your Examination
Independent study
This examination study guide is designed to help you study independently. To successfully pass the module, you should carefully plan your study in the period leading up to the examination, to make sure that you have a sound knowledge of all the required information.
This examination study guide was prepared in October 2013. All rules and regulations are correct at the time of publication. Candidates are expected to keep themselves updated on current rules and regulations, as they will be reflected in the examination.
The related examination
The related examination for this module comprises multiple-choice questions. It is a closed book examination. You may not take the examination study guide or any other written materials into the examination. Examination questions are taken from the following:
Module: Compliance
Specific parts of any acts, regulations, business rules or other documents which are attached or referred to in the examination study guide.
Examination study guide
This examination study guide contains seven topics. An outline of what you will find in each topic is given below.
Preview – This provides an overview of the materials covered in the topic
Objectives – These define clearly what you should be able to do on successful completion of each topic. You should read them carefully before you begin. On completion, use them as a quick quiz to test your
understanding.
Content – The content of each topic is presented in a number of separate sections. In this way, you can build up your understanding through sequential building blocks of information.
Self-assessment exercises – These allow you to test your knowledge on completion of each section. The answers are also provided.
Checklist – This pulls together the main points covered in the topic
Glossary and abbreviations
This examination study guide is written for Compliance Officers in the Malaysian capital market. Therefore, general terms and abbreviations are used as follows:
CMSA – Capital Markets & Services Act 2007
CMSL – Capital Markets Services Licence
CMSRL – Capital Markets Services Representative’s Licence
Exchanges – includes Bursa Malaysia Securities and Bursa Malaysia Derivatives
FIMM – Federation of Investment Managers Malaysia
Firm/firms – includes companies which offer dealings in securities and/or derivatives, provide investment advice, funds management, corporate finance or are involved in the unit trust industry
IOSCO – International Organisation of Securities Commissions
Market – refers to the Malaysian capital market as a whole
Participating – a firm that carries on the business of trading in
Organisation – securities on Bursa Malaysia Securities Berhad’s stock market and is admitted as a Participating Organisation under the Rule of Bursa Malaysia Securities Berhad and includes all the Participating Organisation’s branch offices
Rules – unless specific rules are referenced, rules in general includes the Rules of Bursa Malaysia Securities and Rules of Bursa Malaysia Derivatives
SC – Securities Commission Malaysia
SCA – Securities Commission Act 1993
SICDA – Securities Industry (Central Depositories) Act 1991
Securities Laws includes SCA, CMSA and SICDA
Trading Participant – a firm holding any or all preference shares which shall be referred to as equity financial participant, a non-equity financial participant or a commodity participant (as the case may be) and has been admitted as a Trading Participant in accordance with the Rules of Bursa Malaysia Derivatives Berhad and has not ceased for any reason to be a Trading Participant
Other references for
Glossary and abbreviations
accrued benefits – means the amount of a member’s beneficial interest
in a PRS
auditor – means an auditor registered under section 310 of the
Securities Commission Act 1993
CMSA – means the Capital Markets and Services Act 2007
collective investment schemes – means, for the purpose of this study guide, schemes or any arrangement where—
(a) it is made for the purpose, or having the effect, of providing facilities for persons to participate in or receive profits or income arising from the acquisition, holding, management or disposal of securities, derivatives or any other property (referred to as “scheme’s assets”) or sums paid out of such profits or income;
(b) the persons who participate in the arrangements do not have day-to-day control over the management of the scheme’s assets; and
(c) the scheme’s assets are managed by an entity which is responsible for the management of the scheme’s assets and is approved/authorised/
licensed by a relevant regulator to conduct fund management activities;
and includes among others, unit trust funds, real estate investment trusts, exchange-traded funds, wholesale funds and closed-end funds
contribution – means the amount paid by a contributor to the PRS
contributor – means any person who contributes to a PRS and includes a member or an employer who makes contribution to a PRS on behalf of his employees
core funds – core funds are mandatory funds that must be offered
in each PRS and comprises the conservative fund,
moderate fund and growth fund.
default option – core funds that will be selected automatically for a
member who does not specify his or her fund option upon participating in a Scheme
eligible market – means a market that—
(a) is regulated by a regulatory authority;
(b) operates regularly;
(c) is open to the public; and
(d) has adequate liquidity for the purposes of the fund in question
EPF – means the Employees Provident Fund (Kumpulan Wang Simpanan Pekerja)
EPF Act – means the Employees Provident Fund Act 1991
financial institution –
(a) if the institution is in Malaysia—
(i) licensed bank;
(ii) licensed finance companies;
(iii) Islamic bank; or
(iv) licensed institutions
(b) if the institution is outside Malaysia, any institution that is licensed/registered/ approved/authorised to provide financial services by the relevant banking regulator
forward price – means the price of a unit that is the NAV per unit
calculated at the next valuation point after an instruction or a request is received
fund manager – means a person who holds a Capital Markets Services
Representative’s Licence to carry on the regulated activity of fund management
group of companies – means any company and its related corporations
Government – means the government of Malaysia
independent member – In relation to the board of directors of a PRS Provider, the investment committee of a fund, the Shariah
adviser and the panel of advisers, refers to a person who is free of any relationship with the PRS Provider or the controlling shareholder(s) of the PRS Provider that would otherwise interfere with the member’s or person’s exercise of independent judgment. In any case, a period of six months must elapse before a person who was previously connected to the PRS
Provider or controlling shareholder(s) can be deemed to be independent. The following is a non-exhaustive list of person who would not be considered as an “independent member”:
(a) An officer of the’PRS Provider; _
(b) An officer of the Scheme Trustee;
(c) An officer of any body corporate or unincorporate that has the power to appoint or make recommendations towards the appointment of the board of directors of the PRS Provider, members of the investment committee, the Shariah adviser and the panel of advisers of the fund;
(d) A person related to an officer of the PRS Provider
or Scheme Trustee of the Private Retirement Scheme;
(e) A person representing or perceived to be representing any body corporate or unincorporate with a controlling interest in the
PRS Provider; or
(f) A person who, within six months prior to his appointment as independent member, has derived any remuneration or benefit (other than
retirement benefit) from the PRS Provider or any body corporate or unincorporate that has power to appoint or make recommendations
towards the appointment of board of directors of the PRS Provider, members of the investment committee, the Shariah adviser and the panel
of advisers of the fund IRB means the Inland Revenue Board (Lembaga Hasil
Dalam Negeri)
KWAP – means the Retirement Fund Incorporated (Kumpulan
Wang Persaraan [Diperbadankan])
LTAT – means the Armed Forces Fund Board (Lembaga
Tabung Angkatan Tentera)
member – means an individual who has a beneficial interest under a PRS or an employer-sponsored retirement scheme
NAV per unit – means the NAV of the fund divided by the number of
units in circulation, at the valuation point
net asset value (NAV) – means the value of all the fund’s assets less the value of all the fund’s liabilities at the valuation point.
For the purpose of computing the annual management fee and annual trustee fee, the NAV of the fund must be inclusive of the management fee and trustee fee for the relevant day
non-core funds – refers to the funds under a Scheme that are not core
funds
ordinary resolution – means a resolution passed by a simple majority of votes validly cast at a meeting of members of the Scheme or the fund (as the case may be)
portfolio turnover ratio (PTR) – means the ratio of the average sum of acquisitions and disposals of the fund for the year to the average value of the fund for the year calculated on a daily basis, i.e.
[total acquisitions of the fund for the year + total disposals of the fund for the year] / 2 average value of the fund for the year calculated
on a daily basis
pre-retirement withdrawal – means withdrawals from any fund under a Scheme that occurs prior to a member reaching retirement
age and for the following reasons:
(a) Upon the death of a member; or
(b) Permanent departure of a member from Malaysia; or
(c); Withdrawal of any accrued benefits from sub-account B as maintained by PRS Providers for each member
Principal – in relation to a PRS Consultant, means the PRS
Distributor that the PRS Consultant represents private pension account – means an account opened and maintained by the Private Pension Administrator for each member
Private Pension Administrator (PPA) – means a person who is approved under section 139C of the CMSA to perform the function of record keeping, administration and customer service to members and contributors in relation to contributions made in a PRS and such other duties as may be specified by the SC
Private Retirement Scheme (PRS) or Scheme – means a retirement scheme governed by a trust, offered and provided to the public for the sole
purpose, or having the effect, of building up long term retirement for members
PRS Consultant – means an individual PRS Consultant registered with
FIMM to market and distribute PRS
PRS Distributor – means any one of the PRS Providers, institutional PRS
advisers and corporate PRS advisers registered with FIMM to market and distribute PRS
PRS Guidelines – means Guidelines on Private Retirement Schemes
PRS Provider – means a person who provides and manages a PRS
PRS Regulations – means the Capital Markets and Services (Private
Retirement Scheme Industry) Regulations 2012
retirement age – means the age of 55 years or the compulsory age of
retirement from employment as specified under any written law
SC – means the Securities Commission Malaysia established
under the Securities Commission Act 1993
Scheme Trustee – means a trustee of a PRS
SOCSO – means the Social Security Organisation (Pertubuhan
Keselamatan Sosial)
special resolution – has the same meaning as given under the PRS
Regulations except for the purpose of terminating or winding up a private retirement scheme or fund (where applicable), a special resolution is passed by a majority in number representing at least 3/4 of the value of the units held by members voting at the meeting
sub-account A – refers to a sub-account maintained by PRS Providers
for each member which holds 70% of all contributions
made to any fund under the Scheme which is reflected
in units
sub-account B – refers to a sub-account maintained by PRS Providers
for each member which holds 30% of all contributions
made to any fund under the Scheme which is reflected
in units
vesting schedule – refers to the schedule that determines the entitlement
of an employee’s accrued benefits based on terms of
service