from theory into practice – case studies in addressing ... ifie 2014...securities commission...

© Securities Commission Malaysia

From Theory into Practice – Case Studies in

Addressing Critical Needs

Khairul Ridzwan Abdul Kuddus Securities Commission Malaysia

IFIE-IOSCO Global Investor Education Conference 2014

Presenter

Presentation Notes

Good after

© Securities Commission Malaysia 2

Empowering Malaysian investors to make informed investment decisions in the capital market

Malaysian case study

Presenter

Presentation Notes

Today, I would like to share with you SC Malaysia’s experience in crafting investor education strategies to address the critical needs of the Malaysian investor. Specifically, I would like to demonstrate how the SC Malaysia is evolving its investor education efforts into that of investor empowerment. As the regulator of the Malaysian capital market, investor protection is one of our key mandates. We are of the view that an investor is best protected when he is given sufficient knowledge and the proper tools to make his own informed investment decisions. The “empowerment” of the Malaysian investor involves not just the development of a suitable ecosystem by securities regulator, but is a joint effort from various stakeholders in the capital market.


Agenda

• Successful implementation of investor education

• Strategy for Investor Education and Empowerment

• Recent initiatives by stakeholders in the Malaysian capital market

3


Malaysian Capital Market Institutional Framework

SIDREC Securities Indutry Dispute Resolution

Center

MINISTER OF FINANCE

BROKERS

FUND MANAGERS, UNIT

TRUST MANAGEMENT COMPANIES

INVESTMENT BANKS

BANK NEGARA

MALAYSIA - CENTRAL BANK

BURSA MALAYSIA - EXCHANGE

SIDC Securities Industry

Development Corporation

LISTED COMPANIES

MIBA Malaysian

Investment Banking Association

FIMM Federation of Malaysian

Unit Trust Managers

ASCM Association of Stock broking

Companies

FPLC Federation of Public

Listed Companies

SECURITIES

COMMISSION MALAYSIA

PPA Private Pensions

Administrator

Confidential

Presenter

Presentation Notes

Before I proceed further, allow me to introduce you to the SC Malaysia by placing it within the regulatory framework within which it operates. The two main regulators of the financial and capital markets in Malaysia are Bank Negara Malaysia, our central bank and the SC Malaysia. Bank Negara is responsible for monetary policy and the regulation of financial institutions and the insurance sector. The SC Malaysia’s jurisdiction covers the various participants in the capital market, which include public listed companies, capital market intermediaries and various associations. Our oversight is also assisted by other stakeholders such as the stock exchange, Bursa Malaysia, the Private Pensions Administrator and the Securities Industry Dispute Resolution Center, among others. In our investor education efforts, many of our programmes are run by the Securities Industry Development Corporation (SIDC), which is SC’s training and development arm.


Successful implementation of IE Blueprint Strategy and Financial Literacy Programmes from 2008-2013

Complementing classroom and seminar-type Specific Programmes were Mass Reach initiatives that reached a larger segment of the population - Overall reach was 8.6 mil individuals against a KPI of 1.89 mil

Reach

KPI

2,116 schools

278 teachers

154,712 students

110,000 students

250 teachers

2,000 schools

32,380 participants

27,500 participants

11,993 Participants

55 universities

6,282 participants

10,000 participants

30 universities

5,000 participants

40,210 pax Seminar

/Roadshow

Specific

KPI

Reach 8.4mil Electronic/ Print Media

277 Articles

125 articles 1.14 million hits per mth

120 articles 240 articles

Broadcast media

Mass Reach

1.74mil

Programmes

Presenter

Presentation Notes

In the past 5 years, we have successfully carried out various programmes and initiatives as part of our investor education strategy. These were a combination of specific programmes, that were mainly carried out by our training arm, SIDC, as well as mass-reach initiatives. SIDC programmes targeted specific segments of the Malaysian population, such as schoolchildren, office workers and non-urban population with seminars and classes that catered to their specific needs. We supplemented these efforts with mass-reach initiatives that were carried out through broadcast, print and digital media. Taking into account viewership data as well as in-person attendance at our programmes, we managed to reach 8.6 million individuals through our efforts.


Behavioural changes noted from 2008-2013 efforts

The growth in the number of enquiries received by the SC and corresponding decline in complaints from 2011 to 2013 reflects an increase in awareness to obtain more information before investing

Post seminar follow-ups show that 95% children have started saving or increased their savings

An independent survey found that between 84% - 87% of “Be Money Wise” (BMW) participants became more wary of possible scams when offered investment schemes, developed a personal budget plan and set financial goals after attending the programme

All Specific Programmes received an overall rating of good to excellent from 98.95% participants

-

500

1,000

1,500

2011 2012 2013

Growth proportion - Enquiries

Enquiries Received

Complaints Received The subject matter and content of complaints received reflect an increased level of understanding by investors of their rights and capital market issues in general

Presenter

Presentation Notes

I am pleased to report that our investor education efforts corresponded with notable behavioural changes over the past 3 years. As can be seen in the chart onscreen,


However, more needs to be done

Issues identified: High awareness of savings was not translated to investment Low awareness of investment products, rights and roles of an investor Behavioural biases still prevalent, making investors susceptible to scams Lack of understanding of capital market framework and redress mechanisms

0% 20% 40% 60% 80%

Awareness and Investment Profile

Awareness Actual Investment

Presenter

Presentation Notes


Agenda




8


Investor Education Strategy 2014-2017

Objective: To educate 16.5 million potential and existing investors in order to facilitate more informed retail participation in the capital market

Schools

Rural/ Blue Collar/ Housewives

Universities/ Workplace/

Professional

(‘14-’17) INVESTMENT LITERACY/CAPABILITY

Retail Investors (new and

active, existing)

Financial literacy/capability

Investor Education is a component of the eco-system for Investor Empowerment

(‘08-’13) FINANCIAL LITERACY

Potential Investors Current Investors

Investment literacy and capability


Professional and ethical

conduct

Effective Disclosure of information

Effective

enforcement

Investor Education is a component of Investor Empowerment

Effective supervision

Efficient licensing regime

Empowered Investor

Effective

communication channels

Good corporate

governance

Choice Access

Transparency

Activism / Advocacy

Knowledge

/skills

Effective Investor

Education

Presenter

Presentation Notes

And the ecosystem for investor empowerment is represented by the graphic that you see onscreen at this moment. An investor can only be truly empowered if all components of the ecosystem are functioning smoothly, and he has confidence to invest and participate in the capital market. The regulator typically ensures that there is sufficient and adequate supervision and enforcement of the market. Through laws and regulations, we ensure that good governance is in place for corporates, market participants adhere to high standards of professional conduct and timely and adequate levels of disclosure are in place for product and company information. In addition to these aspects of the ecosystem are those that we inculcate in investors themselves – amongst them, activism and advocacy, so that investors are aware of, and fight for, their rights and an investor. And most importantly, imparting knowledge and skills so that investors can make their own informed investment decisions.


Agenda




11


Bursa Marketplace

• Introduced by Bursa Malaysia, the Malaysian stock exchange • An interactive stock investment platform for new investors aged

between 25 and 35 • Providing online access to comprehensive, objective and accurate

information about the marketplace • Reaching out to younger generation investors through the use of digital

and social media

12


Private Retirement Scheme Youth Incentive

• Malaysia’s voluntary Private Retirement Scheme was launched in 2012. • The PRS Youth Incentive was initiated this year to cultivate a

retirement savings culture among the young.

• Government will contribute a one-off payment of RM500 for every person who has saved RM1,000 within a year

• Applies to individuals aged 20-30 • Effective period – 2014 to 2018. 13

Presenter

Presentation Notes

In the area of pension schemes, Malaysia has long had a mandatory pension fund, the Employers Provident Fund (EPF) for all working Malaysians. However, the voluntary Private Retirement Scheme (PRS) was only recently introduced in 2012, to supplement pensions savings under EPF. This year, a youth incentive scheme was introduced for a 4 year period, whereby the government will contribute a one-off payment of RM500 for every young saver who has accumulated RM1000 in PRS within a year.


SIDREC: Redress mechanism for monetary disputes

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SIDREC’s vision

To be the preferred one stop independent dispute resolution avenue for disputes involving monetary claims relating to capital

market products and services

Mission To provide the investing public and our members, with : a quality, specialised capital market dispute resolution service, through a trusted independent and impartial platform, that contributes to enhancing investor confidence in participating in

the capital market


Thank You

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