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Bursa Malaysia Securities Allows Part-Timing But Not Two-Timing

11 August 2023

Bursa Malaysia Securities Berhad (“the Exchange”) amended the Rules of Bursa Malaysia Securities Berhad (“Rules”) to remove the requirement for a dealer’s representative (“DR”) to be employed or engaged on a full-time basis by a Participating Organisation (“PO”) with effect from 1 August 2023.1
 
In addition, the Exchange also enhanced the conditions for a DR to engage in other business activities or hold interest in any other business.
 
Rule 3.47(1) of the Rules
 
The obligations of a DR under Rule 3.47(1) of the Rules have been amended by:
 
  1. deleting paragraph (c) which required a DR to be employed or engaged on a full-time basis by a PO;

  2. amending paragraph (b) to clarify that a DR must be employed or engaged to act for only one PO; and

  3. relocating paragraph (g), which prohibits a DR from engaging in or holding any interest in any other business unless the relevant conditions in sub-paragraphs (i) to (iv) of paragraph (g) are satisfied, to Rule 3.47(2) with minor drafting amendments to some of the sub-paragraphs.
 
Rule 3.47(2) of the Rules
 
A new Rule 3.47(2) is introduced to set out five conditions, the relevant ones of which must be satisfied in order for a DR to engage in other business activities or hold interest in any other business. The conditions are as follows:
 
  1. the DR has obtained the PO’s prior approval2;

  2. the engagement or interest of the DR is not in breach of any condition of the Capital Markets Services Representative’s Licence3;

  3. the DR complies with the requirements for engaging in additional regulated activities as set out in the Securities Commission Malaysia’s Licensing Handbook (“the Licensing Handbook”), if engaging in such additional regulated activities – this is a new condition introduced under the amendments;

  4. the DR’s directorship or appointment is non-executive in nature4; and

  5. there is no conflict of duty with being a DR of a PO5.
 
Rule 3.47(3) of the Rules
 
This new Rule imposes a requirement on a PO to approve a DR’s application to be engaged or hold interest in other activities or any other business only if the PO, after assessing and evaluating the application, is satisfied that the DR complies with the requirements in paragraphs (b) to (e) of Rule 3.47(2).
 
Rule 3.47(4)(a) of the Rules (previously Rule 3.47(2)(a))
 
This paragraph has been amended to clarify that “engaged in other business activities or hold interest in any other business” includes engaging in any additional regulated activities in compliance with the requirements set out in the Licensing Handbook.
 
This amendment complements the amendments made to the Licensing Handbook on 14 April 2023 that allow a DR who fulfils the relevant prescribed requirements to undertake one or more of the following regulated activities, namely investment advice, financial planning, restricted dealing in unit trust and dealing in private retirement scheme.
 
Comments
 
The removal of the requirement for a DR to be employed or engaged on a full-time basis by a PO will provide greater flexibility to DRs who may now pursue other opportunities, including but not limited to carrying out other regulated activities. Although the amended Rules allow a DR to be employed or engaged on a part-time basis, the duty of fidelity set out in paragraph (b) of Rule 3.47(1) remains firmly in place to prohibit a DR from two-timing his PO.
 
Article by Phua Pao Yii (Partner) and Tan Wei Liang (Senior Associate) of the Corporate Practice of Skrine.
 
 
1 The full text of the amendments to the Rules can be accessed here.
2 Identical to the deleted sub-paragraph (iv) of paragraph (g) of Rule 3.47(1) of the Rules.
3 Substantially similar to the deleted sub-paragraph (iii) of paragraph (g) of Rule 3.47(1) of the Rules.
4 Substantially similar to the deleted sub-paragraph (i) of paragraph (g) of Rule 3.47(1) of the Rules.
5 Substantially similar to the deleted sub-paragraph (ii) of paragraph (g) of Rule 3.47(1) of the Rules.

This alert contains general information only. It does not constitute legal advice nor an expression of legal opinion and should not be relied upon as such. For further information, kindly contact skrine@skrine.com.

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