Bank Negara Issues Exposure Draft of Framework for Electronic Trading Platforms
14 June 2019
Bank Negara Malaysia (‘BNM’) is seeking feedback on the exposure draft of a policy document,
Framework for Electronic Trading Platforms, issued today.
The policy document applies to the following market participants
1
- approved money brokers operating electronic broking platforms; and
- operators of electronic trading platforms2.
The policy document sets out BNM’s requirements and expectations on market participants who offer electronic trading platforms within the Malaysian wholesale financial markets, specifically money and foreign exchange markets.
Amongst others, the policy document sets out the following requirements for operators of electronic trading platforms –
- to obtain BNM’s prior written approval to operate an electronic trading platform and the renewal of such approval;
- to notify BNM in writing prior to offering any additional services;
- to establish and implement prescribed operational requirements, such as –
- effective policies on due diligence for onboarding of prospective users (including processes to facilitate prompt reporting of suspicious activities and in the case of an approved platform operator which is also an approved money broker, compliance with suspicious transaction reporting requirements under the Ant-Money Laundering, Anti-Terrorism Financing and Proceeds of Unlawful Activities Act 2001);
- rules, criteria and procedures for the use of the electronic trading platform;
- information technology security and protection policies for the purposes of the operations of the electronic trading platform;
- record keeping;
- use of cloud services for storage of data;
- business continuity plan; and
- pre-operational and periodic testing of system functionalities and capabilities of the electronic trading platform;
- governance requirements pertaining to roles and responsibilities of the board of directors and management; and
- monitoring and related reporting requirements.
The policy document, when issued, will supersede the Guidelines on Electronic Broking System by Licensed Money Brokers issued on 1 August 2005.
The deadline for submission of feedback is 15 July 2019.
1 A ‘
market participant’ is a person who: (a) issues, sells, purchases, repurchases, borrows, lends or otherwise deals with currencies or other financial instruments traded in the money market or foreign exchange market including over-the-counter derivatives whose price, value or payment obligations are derived from, referenced to or based on interest rates or exchange rates; or (b) arranges transactions in money market or foreign exchange market as an intermediary.
2 An ‘
electronic trading platform’ refers to any facility, system, trading venue, marketplace or organisation through which market participants are able to execute binding transactions electronically based on established methods and standard market conventions and includes an electronic broking platform. BNM has stated in a media release dated 14 June 2019 that electronic trading platforms exclude single-bank platforms.