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  • MIE-A.4 MIE-A.4 Division of Responsibilities

    • MIE-A.4.1

      While dealing with cases relating to contravention of the CBB Law, rules and regulations, or other applicable laws, rules and regulations, a clear division of responsibilities between the CBB as the securities regulator and the licensed exchanges or the licensed market operators as a self-regulatory organization (SRO) is required:

      (a) To achieve greater efficiency and transparency in the enforcement of the laws, rules and regulations;
      (b) To maximise the regulatory effectiveness;
      (c) To permit flexibility to the licensed exchanges or the licensed market operators in their functioning;
      (d) To minimise the regulatory cost; and
      (e) To maintain market integrity and investor confidence.
      Amended: July 2021

    • MIE-A.4.2

      As a regulator, CBB's role is as follows:

      (a) Regulatory supervision, including the licensing, inspection, investigation and enforcement and regulatory oversight on the licensed exchanges, licensed market operators, licensed clearing houses and depositories and other SROs and other capital market service providers;
      (b) Maintaining and promoting fairness, efficiency and transparency within the capital market;
      (c) Acting as an enforcement agency with powers to investigate and take administrative, civil or criminal actions as it may deem appropriate;
      (d) Approving the rules, by-laws and business rules of the licensed exchanges or the licensed market operators, licensed clearing houses or depositories, whereby any change in the rules, by-laws and regulations of the SROs would need prior approval of the CBB; and
      (e) Ensuring that the licensed exchanges and licensed market operators, licensed clearing houses and depositories, members of SROs and other capital market service providers have appropriate systems and procedures for detection of unlawful transactions and contraventions of the CBB Law, rules and regulations and report the same to the CBB at the earliest stage possible.
      Amended: July 2021

    • MIE-A.4.3

      The licensed exchange or the licensed market operator or licensed clearing house or central depository established as an SRO must comply with the requirements laid down under the CBB Law, rules and regulations, this Module and the other applicable laws and regulations.

    • MIE-A.4.4

      As an SRO, the main objective of the exchange or the operator or the clearing house would be to:

      (a) Actively perform market surveillance as a front-line regulator;
      (b) Promote fairness and investor protection;
      (c) Promote fair access to market facilities and information;
      (d) Promote the provision of timely and accessible market information;
      (e) Promote the efficient regulation of its members;
      (f) Maintain fairness of price discovery mechanism and ensure prices are determined by the genuine forces of supply and demand;
      (g) Monitor the trading and market on a continuous basis;
      (h) Report any irregular transactions or irregular market behaviour or suspected cases of market abuse or market manipulation, or any contravention of the CBB Law, rules and regulations;
      (i) Identify irregular transactions and take appropriate enforcement actions;
      (j) Take disciplinary action for contraventions by market participants and listed companies through an SRO's Disciplinary Action Committee(s).

    • MIE-A.4.5

      Apart from the obligations of the licensed exchanges and market operators under the Markets & Exchanges (MAE) Module, and the obligations of the licensed clearing houses and depositories under the Clearing, Settlement and Central Depository (CSD) Module, these SROs shall:

      (a) Provide such assistance to the CBB in the manner required by the CBB for the purposes of the CBB's market surveillance, investigation and enforcement functions;
      (b) Provide such reports as the CBB may require for the purposes of this Module;
      (c) Conduct inspections or investigations as the CBB may require the SRO to do and submit its Inspection and Investigation Report, along with the facts, documents and evidence supporting the outcome of such inspection or investigation;
      (d) Implement the decisions or measures or actions decided by the CBB, both at the market level and at the level of the individual security or issuer, or member or market participant level in the manner required by the CBB;
      (e) Promptly implement such enforcement actions determined by the CBB against the members and issuers, through the SROs Disciplinary Action Committees.

    • Role of Other Capital Market Service Providers

      • MIE-A.4.6

        All capital market service providers in general, and members of the SROs in particular, must have the necessary infrastructure and systems to identify and report any irregular transactions or suspected cases of market abuse or market manipulation, or suspected cases of contravention of the CBB Law, rules and regulations, or any other relevant laws, rules and regulations, which they come across in the normal course of business, to the CBB in the format given in paragraph MIE-A.4.7. This reporting shall be done immediately on becoming aware of such incidences or contraventions, or suspected cases.

    • Reporting of Irregular Transactions

      • MIE-A.4.7

        Persons subject to the obligations to report irregular transactions to the Capital Markets Supervision Directorate (CMSD) shall report in the following standard format:

        Description of the transaction(s)
        Details of the securities, including the code of the security (ISIN Number); the market(s) concerned; the original order's entry date/time, price and size; the times and sizes of the transaction(s); the type and characteristics of the order, etc.
        Reasons for Suspicion
        Reasons for suspecting that the transaction(s) might constitute insider dealing/market abuse/ market manipulation
        Identities of persons carrying out transaction(s)
        Names, addresses, telephone number, location, account number, client identification code used by the firm, etc.
        Identities of any other persons known to be involved in the transaction(s)
        Names, addresses, telephone number, location, relation to person carrying out transaction, position held, role played, etc.
        Capacity in which the person performing the transaction(s) acts
        e.g. broker, underwriter, agent, investment/fund manager, auditor, insider.
        The ownership of securities before and after the execution of the transaction (of the concerned parties carrying out the transactions).
        Any information which may be of significance (along with a list of any accompanying documents/evidence)
        Details of the person making notification
        Name of person, name of firm, position held within firm, contact details, etc.
        Signed ........... (person making report)

        Dated ........... (date of report)
        Amended: July 2021

      • MIE-A.4.8

        Where the information specified to be reported is not available at the time of reporting, the report shall include at least the reasons why the reporting persons suspect that the transactions might constitute contravention of the CBB Law, rules and regulations. All remaining information shall be provided to the CMSD as soon as it becomes available.

        Persons making reports therefore, do not need to have all the required information before reporting to the CMSD. If the case is one which (the persons subject to the reporting obligation consider) needs to be brought to the attention of the CMSD urgently, then the person(s) concerned shall make the first contact quickly. This can be done by telephone if appropriate, giving the basic details and reasons for suspicion, followed by written confirmation. The other information may be supplied subsequently.

    • Records of Telephone Conversations and Electronic Communications

      • MIE-A.4.9

        In addition to meeting the book-keeping and record-keeping requirements as per the applicable laws, rules and regulations, all capital market service providers must maintain records of telephone conversations and electronic communications, including facsimile, email and other instant messaging devices relating to their activities in the securities market and particularly the following activities:

        (a) Receiving client orders;
        (b) Executing client orders;
        (c) Arranging for client orders to be executed;
        (d) Carrying out transactions on behalf of the capital market service provider, or another person in the capital market service provider group, and which are part of the capital market service provider's trading activities, or the trading activities of another person in the capital market service provider group;
        (e) Executing orders that result from decisions by the capital market service provider to deal on behalf of its client;
        (f) Placing orders with other entities for execution that result from decisions by the capital market service provider to deal on behalf of its client;

        that are required to be maintained by the capital market service provider as per the CBB rules, regulations and directives.

        Amended: July 2021

      • MIE-A.4.10

        All capital market service providers must take reasonable steps to retain and protect the records referred to in rule MIE-A.4.9:

        (a) Apart from complying with various requirements relating to record keeping, as per CBB Law, rules and regulations and other applicable laws, rules and regulations, the recordings of telephone conversations and electronic communications, including facsimile, email and other instant messaging devices relating to their activities in the securities market must be retained for a period of at least twelve months from the date the record was created;
        (b) [This subparagraph was deleted in July 2021];
        (c) In a medium that allows the storage of the information in a way accessible for future reference by the CBB, and so that the following conditions are met:
        (i) The CBB must be able to access the records readily and take copies;
        (ii) It must be possible for any corrections or other amendments, and the contents of the records prior to such corrections and amendments to be easily ascertained;
        (iii) It must not be possible for the records to be otherwise manipulated or altered.
        Amended: July 2021