Scribd
Upload
55 views27 pages

Chapter 1 DPF10013

The document provides an overview of the financial structure and regulatory framework in Malaysia. It discusses the roles of the financial system in financial intermediation and payment systems. It describes the key components of the Malaysian financial system including banking institutions, non-bank financial intermediaries, and financial markets. It also outlines the main acts that regulate financial institutions, namely the Financial Services Act and Islamic Financial Services Act. Furthermore, it discusses the characteristics, objectives and factors for the success of Labuan International Business and Financial Centre. Lastly, it explains the roles of the key regulatory bodies in Malaysia, Securities Commission and Bursa Malaysia.

Uploaded by

Shaq Daniel
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as PPTX, PDF, TXT or read online on Scribd
55 views27 pages

Chapter 1 DPF10013

The document provides an overview of the financial structure and regulatory framework in Malaysia. It discusses the roles of the financial system in financial intermediation and payment systems. It describes the key components of the Malaysian financial system including banking institutions, non-bank financial intermediaries, and financial markets. It also outlines the main acts that regulate financial institutions, namely the Financial Services Act and Islamic Financial Services Act. Furthermore, it discusses the characteristics, objectives and factors for the success of Labuan International Business and Financial Centre. Lastly, it explains the roles of the key regulatory bodies in Malaysia, Securities Commission and Bursa Malaysia.

Uploaded by

Shaq Daniel
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as PPTX, PDF, TXT or read online on Scribd
You are on page 1/ 27

DPF10013

FOUNDATION OF BANKING

CHAPTER 1 :
FINANCIAL STRUCTURE
Learning Outcome

 Explain the roles and structures of the financial system in Malaysia

 Explain the laws regulating financial institutions

 Explain the characteristics, roles and objectives of Labuan


International Business and Financial Centre (Labuan IBFC)

 Explain the roles and responsibilities of the regulatory and supervisory


body.
ROLES OF THE FINANCIAL SYSTEM

 There are two roles of financial system:-

Financial Intermediation

Payment System
Financial Intermediation
 A financial structure consists of two major components; financial
institutions and financial markets.
 Financial system act as middle man to facilitate both Institutions
and markets.
 Intermediation function involve with the mobilizations of funds.
 An efficient financial intermediation systems helps channel
resources for productive investment.
Payment System

 A payment system consists of instruments, banking procedures,


and typically interbank funds transfer systems that ensure and
facilitate the circulation of money.

 A payment system essentially refers to a network of services that


facilitate transactions.
FINANCIAL SYSTEM
STRUCTURE
 The Malaysian financial system is structured into two major
categories, Financial Institutions and Financial Market.

 The Financial Institutions comprise Banking System and Non-bank


Financial Intermediaries.

 The Financial Market comprise money & foreign exchange market,


capital / fixed income market, derivatives market and commodity
market
NON-BANK
BANKING FINANCIAL
SYSTEM INTERMEDIARI
ES
FI
NA
CENTRAL BANK - BNM
PROVIDENT &
PENSIONS FUNDS NC
IA
COMMERCIAL BANK INSURANCE COMPANY L
IN
INVESTMENT BANK SAVING INSTITUTIONS
STI
TU
OFFSHORES & DEVELOPMENT TI
FOREIGN FINANCE HOUSE &
REPRENTATIVE BANK OTHERS ON
S
FINANCIAL MARKETS

• MONEY MARKET • BOND MARKET


• FOREIGN EXCHANGE • EQUITY MARKET
MARKET

MONEY & CAPITAL /


FOREIGN FIXED
EXCHANGE INCOME
MARKET MARKET

COMMODITY DERIVATIVES
MARKET MARKET

• Crude Palm Oil • Commodity


• Oil & Gas Derivatives
• Silver & Gold • Equity Derivatives
• Rubber • Financial Derivatives
ACTS THAT REGULATE FINANCIAL
INSTITUTION

There are TWO (2) main acts that regulate financial institutions :-

Financial Services Act (2013) FSA

Islamic Financial Services Act (2013) IFSA


FINANCIAL SERVICES ACT (2013)

 The FSA came into force on 30 June 2013 consolidating the regulatory
and supervisory framework for Malaysia’s banking industry, insurance
industry, payment systems and foreign exchange administration matters.

 Under the FSA, the Bank's principal regulatory objective is promoting


financial stability, which is pursued by fostering the safety and
soundness of financial institutions.
FINANCIAL SERVICES ACT
(2013)
 the integrity and orderly functioning of the money and foreign exchange
markets, safe, efficient and reliable payment systems and payment
instruments, fair and responsible and professional business conduct
of financial institutions.

 to strive to protect the rights and interests of consumers of financial


services and products.
ISLAMIC FINANCIAL SERVICES ACT
(2013)
 Islamic Financial Services Act (IFSA) has been introduced to provide
a stronger legal foundation to spur the growth of Islamic finance
sector.

 The Act provides a legal platform for development of Islamic finance


in Malaysia which is reflected upon a comprehensive regulatory
framework on specificities of the various Islamic financial contracts

 supports on the effective application of Shariah financial contracts in


the offering of Islamic financial products and services.
ISLAMIC FINANCIAL SERVICES ACT (2013)

 An Act to provide for the regulation and supervision of Islamic


financial institutions.

 To provide payment systems and other relevant entities and the


oversight of the Islamic money market and Islamic foreign exchange
market.

 To promote financial stability and compliance with Shariah and for


related, consequential or incidental matters.
LABUAN IBFC

 Labuan was declared as an International Offshore Financial Centre


(IOFC) in October 1990.

 In 2010, Labuan IOFC was rebranded itself to be Labuan International


Business Financial Centre (IBFC)

 To complement the activities of the domestic financial market in


Kuala Lumpur.
LABUAN IBFC

 Strengthen the contribution of financial services to Gross


National Products of Malaysia

 Develop the island and areas within its vicinity.

 Specifically designed legislation and regulations


CHARACTERISTICS OF LABUAN
IBFC

 Flexible and favorable tax treatment and low cost of setting up and
operating in the Labuan IBFC : Attract substantial numbers of
international businesses to domicile in Labuan

 The Labuan IBFC operates in a rapidly changing and increasingly


competitive marketplace.

 Its business environment and business rules of the game have


continuously evolved to become more business friendly.
CHARACTERISTICS OF LABUAN
IBFC

 Regulatory framework is favorable and market driven, it is balanced with


prudential requirements in line with accepted international regulatory
practices and standards.

 Labuan cannot rely on just the offshore financial services industry.

 Labuan needs to develop other complementary industries such as


tourism, manufacturing industries and education.
OBJECTIVES OF LABUAN IBFC

To enhance the attractiveness of Malaysia as an investment centre.

To supplement the domestic financial system in Kuala Lumpur.

To strengthen the contribution of broad financial sector to the


progress of diversified economic growth.

To form part of broad national strategy to spread out and diversify
the growth opportunities of the nation, in terms of industrial and
services (including tourism) development.
FACTORS THAT CONTRIBUTE TO THE
SUCCESSFUL OF LABUAN IBFC

 Political Stability
 Stable Currency
 Banking Secrecy and confidentiality
 Minimum rules and regulations
 Competitive tax regime
 Lower operating cost
 Good infrastructural support facilities
 Professionally qualified and experienced workforce.
REGULATORY BODIES

 Securities Commission (SC)

 Bursa Malaysia
SECURITIES COMMISSION (SC)

 The Securities Commission Malaysia (SC) was established on 1


March 1993 under the Securities Commission Act 1993 (SCA).

 SC is a statutory body entrusted with the responsibility to regulate


and develop the Malaysian capital market. 
SECURITIES COMMISSION (SC)

 Mission : To promote and maintain fair, efficient, secure and


transparent securities and derivatives markets; and facilitate the
orderly development of an innovative and competitive capital
market.

 SC reports to the Minister of Finance and accounts are tabled in


Parliament annually. 
ROLES OF SC

 Registering authority for prospectuses of corporations other than


unlisted recreational clubs;
 Approving authority for corporate bond issues; 
 Regulating all matters relating to securities and futures contracts; 
 Regulating the take-over and mergers of companies; 
 Regulating all matters relating to unit trust schemes; 
ROLES OF SC

 Licensing and supervising all licensed persons; 


 Supervising exchanges, clearing houses and central
depositories; 
 Encouraging self-regulation; and 
 Ensuring proper conduct of market institutions and licensed
persons.
BURSA MALAYSIA

 Based in Kuala Lumpur, Bursa Malaysia is the country’s stock exchange


and operates as a platform which offers a range of exchange-related
products and services for companies, groups and governments to sell
securities to the public.

 The range of products offered by Bursa Malaysia include bonds,


derivatives, equities, trading, settle, clearing and depository services.

 It also offers Shariah-compliant securities which are in accordance with


the Shariah investment guidelines.

 The stock exchange is among the one of the largest in the Asian region.
ROLES OF BURSA MALAYSIA

 Give companies, governments and other groups a platform to sell


securities to the investing public by offering a range of exchange-
related services and products.
 Ensuring that price information for securities trading on the
exchange is disseminated efficiently and that trading is fair and
orderly.
 Provides facilities and infrastructure for capital raising and
investment
 Enforces rules and regulations to ensure an efficient, fair, cost-
effective and orderly market that encourages investor confidence.
THANK YOU

Any Questions

You might also like