The establishment of investment banks, in line with the recommendation of the Financial Sector Masterplan, aims to strengthen the capacity and capabilities of domestic banking groups through internal rationalisation so that they can contribute to the economic transformation process and better face the challenges of liberalisation and globalisation. Following the successful rationalisation of the commercial banks and finance companies within the banking groups, the model is now extended to the merchant banks, discount houses and stockbroking companies within the banking groups to achieve greater efficiency and effectiveness. With enhanced capacity, the new investment banks would also play a greater role in developing a more dynamic and efficient domestic capital market.
The framework for the investment bank has been developed by Bank Negara Malaysia (BNM) and the Securities Commission (SC) based on the following principles:
• Enhancing the scope of activities for the merged entity;
• Enhancing capacity for growth and business expansion through industry-wide rationalisation; and
• Minimising unnecessary regulatory burden that may arise from the dual regulatory regime.
The Guidelines on Investment Banks (the Guidelines) are therefore issued jointly by BNM and the SC pursuant to Section 126 of the Banking and Financial Institutions Act 1989 (BAFIA) and Section 158 of the Securities Commission Act 1993 (SCA). It sets out the requirements and processes for the setting up of the investment bank and the regulatory framework within which the investment bank would operate.
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
