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Fund Management > Fund Management > Flashcards

Fund Management Flashcards

1
Q

What is fund managment?

A

Management of portfolio of securities or derivatives for the purpose of investment

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2
Q

Who can carry out fund management activities without CMSL? (s58)

A
  1. Corporations for benefit of related corp
  2. public statutory corporation
    3 insurance or takaful. if solely incidental to management and and admin of insurance or takaful biz
  3. KAF IB and Islamic banks in acting as investor incl. provision of investment advice, and acquisition or disposal through holder of CMSL

penalty: not exceeding RM10m, or not exceeding 10 years

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3
Q

Fund management companies are typically engaged in?

A

1Management of portfolios of securities such as shares and bonds, disc or nondisc, may unclude asset allocation
2 management of pension funds or other pooled funds like internal ports of insurance cos
3 CIS like unit trusts and close-end funds
4 risk managed-hedging with derivatives
5 provision of investment advice

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4
Q

Ways Malaysia support the fund management industry?

A
  1. Establishment of wholly/majority owned foreign fund management companies with tax concessions for income derived from non-Malaysian activities
  2. Allow foreign FM companies tap local institutional funds to form JVs with max foreign equity share of 70%
  3. Allow major companies to manage own provident funds
  4. Establishment of vision 2020 Fund for all Malaysians
  5. Allow EPF to invest up to 25% of its funds in shares listed on Bursa
  6. Allow eligible EPF contributors to transfer up to 20% of their retirement account for investment in approved FM instis
  7. further liberalisation of the operations of unit trusts (initial size limit, % of foreign investments)
  8. Promotion of Labuan Int’l offshore center as base for management of investment portfolios within the ASEAN region
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5
Q

Advantage of vibrant developed and dynamic FM industry to nation

A
  1. Promotes efficient mobilisation of domestic savings
  2. Provides large and stable source of long term capital for privatisation of infrastructure and projects
  3. Reduces burden of taxation needed to provide retirement and social benefits
  4. Obligates companies to enhance funding efficiency and standards of corporate governance
  5. Develops Malaysia as regional fund management center
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6
Q

Advantage of vibrant, developed and dynamic fund management industry to capital market

A
  1. successful launching of new and more sophisticated products
  2. Allows for development of markets such as the Ringgit bond market
  3. Increases domestic institutional participation in the capital market
  4. Accelerates development of the fund management industry and other capital market related services
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7
Q

Fund structures in Malaysia

A
  1. Provident and pension funds
  2. unit trusts
  3. shariah funds
  4. Insurance funds
  5. Closed end investment companies
  6. Charitable funds
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8
Q

Who are the support service providers for the fund management industry?

A
  1. Performance measurement services
  2. Custodians
  3. investment and asset consultants
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9
Q

Who can be custodians? (s121)

A
  1. Licensed bank under BFIA1989
  2. Licensed merchant bank
  3. trust company Trust companies act 194
  4. Amanah raya berhad
  5. participating organisation
  6. wholly owned subsidiary of any institutions specified in 1, 2 and 4 and provides nominee services
  7. Institution licensed or authorised to provide custodian services outside Malaysia
  8. Any other person as may be specified in writing by the commission
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10
Q

What are the main sources of law?

A
  1. Federal Constitution
  2. 13 Constitutions of the States (each
  3. Federal laws made by parliament
  4. state laws made by state assemblies
    5, federal and state subsidiary legislation
  5. common law
  6. principles of english law suitable to local circumstances
  7. Islamic law
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11
Q

What is the legislative pricess?

A

Parliament and Legislative Assemblies of each State possess the authority to enact laws in respective areas. Federal law is an act, state law is called an enactment, except in Sarawak (called ordinance)

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12
Q

what is Common Law?

A

Judge-made law or precedent. Binding precedent is a judgement, or a decision of a court of law, cited as an authority for deciding a similar set of facts

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13
Q

Why does securities industry have specific laws?

A
  1. establish capital market in which investors can have confidence
  2. define key features of financial system and role of securities market institutions, incl development of new types of market activities
  3. Steer market participants towards adoption of best practices
  4. Create disincentives against behavior that would be detrimental to market
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14
Q

what is the mission statement of the SC?

A

To promote and maintain fair, efficient, secure and transparent securities and derivatives markets and to facilitate the orderly development of an innovative and competitive capital market

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15
Q

What are the sources of current securities industry law?

A

Legislations which affect the securities industry and holders of a CMSL are:

  1. Securities Commission act 1993
  2. Capital Markets and services act 2007
  3. Securities industry (Central Depositaries) act 1991
  4. Companies act 1965

some other acts:

  1. Income tax act 1967
  2. Stamp act 1949 0.3% for contract notes
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16
Q

What are the functions of SC?

A
  1. Advise minister on all matters relating to securities and derivatives industries
  2. regulate all matter relating to securities and derivative
  3. ensure that provisions of securities laws are complied with
  4. regulate takeover and mergers
  5. promote and regulate all matters relating to FM
  6. responsible for supervising and monitoring activities of any exchange holding company, exchange, clearinghouse and central depo
  7. take all reasonable measures to maintain confidence of investors by ensuring adequate protection
  8. promote and encourage proper conduct
  9. supress illegal, dishonourable and improper practices in dealings, and provision of investment advice
  10. consider and make recommendations for reform of law
  11. encourage and promote the development of securities and derivatives markets in Msia
  12. encourage and promote self-regulation by professional associations of market bodies
  13. license, register, authorise and supervise all persons engaging in regulated activities or providing capital market services
  14. promote and maintain integrity of all licensed persons
  15. register or recognise all auditors of public interest entities
  16. take all reasonable measures to monitor, mitigate and manage systemic risks
  17. promote and regulate corporate governance and approved accounting standard of listed companies
  18. set and approve standards for professional qualification for securities and derivatives markets
17
Q

Capital markets and services act 2007

A

An acto to consolidate SCA 1983 and Futures industry act 1993, to regulate and provide for matters relating to activities, market and intermediaries in the capital markets and for, matters consequential and incidental thereto

18
Q

Definition of securites and presription of how they may be trade, according to CMSA

A

debentures, stocks or bonds issued or proposed to be issued by any government, shares in or debentures of , a body corporate or an unincorporated body, or units in a unit trust scheme or prescribed investments, and includes any right, option or interest in respect thereof

19
Q

Trustee act 1949

A

A trust is formed where a person transfers property to another person with the instruction that it be held for the benefit of a third person

20
Q

Role of Bank Negara

A

Licensing and regulatory body over banks and other financial institutions, and provides the stimulus for expansion and growth of the country’s financial sector

resposible for forex administration policy and regulates the insurance industry
controls internal invsetment portfolios of insurance companies by restricting asset classes within which investments may be made

21
Q

Powers of CCM?

A
  1. enforce the filing or lodging with the CCM of accounts or other documents.
  2. register companies by registering the memorandum and articles, and issue certificates of incorporation
  3. Register prospectuses and or grant relief from the prospectus requirements of the CA
  4. take proceedings for any offence against the CA
22
Q

Objectives of FIMM

A
  1. improve the regulatory, fiscal and legal environment for unit trusts
  2. formulate sound and ethical business practives to promote the interest of the unit trust industry and provide investor protection
  3. provide information, assisstance and other services to its members
    4, promote public awareness of the benefits and risks of investing in unit trusts
23
Q

What are the advantages of self regulation?

A
  1. allows market participants to respond to the real demands of participants
  2. best source of innovation in market practices and institutions
  3. can act quickly and decisively when an anomaly arises in the market
24
Q

Potential disadvantages of self regulation?

A
  1. May sacrifice market integrity for short term gain when the interest of members and new clients come into conflict
  2. sometimes act like guilds that only promote the vested interests of their members
  3. may be anti-competitive
25
Q

frontline regulatory organisations appointed by SC

A
  1. Bursa Malaysia securities berhad
  2. Bursa Malaysia Depository Sdn Berhad
  3. Brusa Malaysia securities clearing Sdn Bhd
  4. Burs Malaysia Derivatives Berhad
  5. Bursa Malaysia Derivatives Clearing Bhd
26
Q

CMMSA provisions for self regulatory organisations

A
  1. Fit and proper and satisfies the criteria or standard referred to in s. 64 and s.65 or any rules of the stock exchange or derivatives exchange
  2. has sufficient financial, human and other resources to carry out functions
  3. is able to take appropriate action against its members and any person to whom the rules apply
27
Q

Objectives of MAAM:

A
  1. act as representative body for members and the asset management industry
  2. to promote the asset management industry in Malaysia and to ensure the provision of a high standard of services to investors
  3. to make representations to gov, any regulatory authority or any other person about any matters affecting the asset management industry in Malaysia
  4. to promulgate standards of practice for the asset management industry in Malaysia
  5. to promote resesarch traning and education in connection with the asset management industry
  6. to collect and disseminate statistical and other information relating to the asset management industry in Malaysia and elsewhere
28
Q

What are the industry regulation applicable to CMSL holders who carry biz of FM and reps?

A
  1. investment market rules
  2. securities and commission act 1993
  3. capital markets and services act 2007
  4. securities industry central depositories act 1991
  5. companies act 1965
  6. trustee act 1949
  7. Companies act 1965
  8. laws relating to foreign portfolio investments
  9. taxation laws
  10. labuan international offshore center
29
Q

Under CMSA holder of CMSL carries on biz of fund management entails:

A

undertaking on behalf of any person the management of

  1. portfolio of securities or derivatives or both, by portfolio manager, whether discretionary or otherwise
  2. asset or class of asset in a unit trust scheme by fund manager
30
Q

Providers of FM service

A
  1. Banks
  2. IBs: offer UTs through subsidiaries, IM division or FM Co
  3. Insurance
  4. Stockbrokers
  5. UT management companies
  6. boutique FM companies
  7. Foreign FM companies:
31
Q

How is SCA funded?

A
  1. sums provided by Act of parliament
  2. sums borrowed by the commissions
  3. Levies under section 24
  4. fees or charges imposed by commission
  5. sums payable or vested in the comission in respect of any matter incidental to its functions and powers
  6. monies lawfully received by commission
32
Q

what are the fuinctions of BNM?

A
  1. approval is required to incorporate subsidiary of a licensed financial institutions, such as an asset management company
  2. responsible for forex admin policy and regulates the insurance industry
  3. governs secondary tradin gof bonds )SC governs primary market)
33
Q

what are the regulations enforced by CCM?

A
  1. companies act 1965
  2. trust companies act 1949
  3. kootu funds act 1971
  4. registration of biz act 1956
  5. any subsidiary legislation made under above acts

Fund Management (4 decks)

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