An Analysis of Malaysia’s Regulatory Framework and Challenges in the Structured Product MarketTools Ling, Eu Meng (2008) An Analysis of Malaysia’s Regulatory Framework and Challenges in the Structured Product Market. [Dissertation (University of Nottingham only)] (Unpublished)
AbstractStructured products are becoming increasingly popular and important to the development of Malaysia’s capital market and had experience impressive growth over the last few years after it was first introduced to the Malaysian market in 2004. Like any industry in its early stage, issues and challenges are expected but for structured products, such challenges require more attention due to the complexity inherent in these instruments. This study uses a qualitative research approach in an attempt to identify the challenges that are faced by some of the industry participants in Malaysia’s structured product market. In doing so, three research objectives have been put forth. The first objective seeks to identify the challenges currently faced by industry participants. The second research objective aims to seek the views of market participants on what possible challenges the structured product market can expect to see as it matures and develops in the future. Finally, the third research objective is to gather views and opinions on what possible tools, both regulatory and non-regulatory, that can be developed to address both current and future challenges facing the structured product market. Some of the major challenges in the market today that have been identified from the study are ethical conduct of product issuers (especially sales personnel), valuation and transparency of transactions, lack of liquidity in the market, lack of uniformity in domestic financial reporting practices due to delays in adoption of the relevant financial reporting standard, lack of guidelines from the tax authority, resource constraints, product complexity and lack of investor awareness pertaining to the structured product market. The findings also suggested that industry players in Malaysia expect a majority of these challenges to continue into the future. To meet these challenges, Malaysia’s regulatory framework has evolved and developed in order to protect the interest of investors as well as to promote market development. Nevertheless, regulation alone is not enough to address all the concerns and therefore, additional tools are required. Some of the tools suggested from the study include on-going reporting and monitoring, continuous learning and development, exercising selfregulation, conducting appropriate levels of due diligence, developing appropriate risk management strategies and encouraging team work amongst industry players to enhance market efficiency.
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