Code of Conduct For Malaysia Wholesale Financial Markets

An orderly functioning of the wholesale financial markets is essential to support confidence, ensure the integrity of financial markets and preserving financial stability.

As the wholesale financial markets continue to evolve, market conduct and practices should be reviewed and updated to maintain the highest standards of integrity. The objective of this policy document is to update and set out principles and standards to be observed by market participants in the wholesale financial markets i.e. money market and foreign exchange market, including over-the-counter derivatives market for interest rates or exchange rates.

This policy document is intended to apply to all market participants who act in the wholesale financial markets based on different capacity (whether as sell-side or buy-side entities) and across various money market and foreign exchange products. Transactions in the wholesale financial markets generally refer to transactions between institutions and do not involve retail transactions (e.g. transactions with an individual customer).

Market participants are required to uphold integrity and professionalism in the conduct of their business, affairs and activities, including all aspects of treasury operations and activities. In particular, market participants are required to observe the principles and standards in this policy document in their dealings in other markets, whether within or outside Malaysia. Furthermore, market participants involved in Islamic dealings are also required to ensure that these dealings are concluded based on Shariah compliant contracts that have been approved by the Shariah Advisory Council.

This policy document sets out the following:
(a) eligibility requirements for dealers and brokers;
(b) market conduct and internal control requirements to safeguard professionalism and integrity of the wholesale financial markets; and
(c) role of industry associations in preserving market integrity.

FMAM shall adopt the standards in this policy document and observe industry developments in the wholesale financial markets on an ongoing basis, including the conduct and professionalism among market participants. FMAM is expected to self-police and investigate cases of financial market misconduct including breaches of this policy document involving its members.

The Bank expects FMAM to investigate and take action against its members for financial market misconduct, breaches of this policy document and contravention of section 141 of the FSA and section 153 of the IFSA and inform the Bank of any action taken. The Bank may share any relevant information with FMAM to assist FMAM in its investigation. FMAM may share information with financial institutions that employ or seek to employ an individual or with another professional body to give effect to the investigation and disciplinary process of its members who may also be members of such professional body.

In addition to the requirements in this policy document, market participants are expected to comply with applicable laws, rules and regulations in the jurisdiction in which financial market transactions are undertaken.

This document belongs to Bank Negara Malaysia (BNM). Full access to the original source is available here: https://www.bnm.gov.my/banking-islamic-banking