GUIDELINES FOR FUTURES BROKERS AND

FUTURES BROKERS REPRESENTATIVES

UNDER THE FUTURES INDUSTRY ACT
1993
Revised Date 28 October 2004
1.0 INTRODUCTION

1.1 The Futures Industry Act 1993 (FIA) provides that the Securities Commission is
responsible for the licensing and regulation of Futures Brokers. These Guidelines
have been formulated with the objective of setting out pre-licensing
requirements to facilitate applications for a Futures Brokers licence under
Section 16 of the FIA and a Futures Brokers Representatives licence under
Section 18 of the FIA. These Guidelines also set out various continuous
requirement and conditions to be complied with by Futures Brokers and Futures
Brokers Representatives.

1.2 An applicant shall also fulfill any additional requirements under any legislation,
regulations or guidelines applicable to it or in respect of its activities.

2.0 DEFINITIONS

For the purposes of these Guidelines:

Futures Broker or Futures Broking Company means a company licensed

under Section 16 of the FIA to carry out futures broking activities;

Exchange means Bursa Malaysia Derivatives Berhad;

Securities Laws has the same meaning as assigned to that expression in the
Securities Commission Act 1993.

3.0 FUTURES BROKERS LICENCE REQUIREMENTS

3.1 Minimum financial requirement

The applicant shall fulfill the minimum financial requirement required under the
Futures Industry Regulations 1995 and the Rules of the Exchange.

3.2 Shareholding composition

A Futures Broker is encouraged to maintain a shareholding composition that is in

accordance with the economic policy of Malaysia.
3.3 Approval in Principle from the Exchange

The applicant shall obtain an approval in principle from the Exchange to be a

Trading Participant.

3.4 Readiness Report from the Exchange

The applicant shall obtain a readiness report from the Exchange, which covers
its risk management system, financial credibility, management appraisal and
capital adequacy.

3.5 Compliance Officer

A Futures Broker is required to have a Compliance Officer to ensure compliance

with the relevant laws, regulations, rules and guidelines.

3.6 Compliance Department

A Futures Broker is required to set up a compliance department within the

company.

3.7 Board of Directors Composition

A Futures Broker is encouraged to maintain a Board of Directors composition

that is in accordance with the economic policy of Malaysia.

3.8 Futures Brokers Representatives Composition

A Futures Broker is encouraged to maintain a futures brokers representative

composition that is in accordance with the economic policy of Malaysia.

3.9 Employee composition

A Futures Broker is encouraged to maintain an employee composition that is in

accordance with the economic policy of Malaysia.

3.10 Licensed Person

The following categories of persons in a Futures Broker need to be licensed as a

Futures Brokers Representative:

(a) Executive Directors; and

 (b) Any person who is in the employment of, or acting for or by arrangement
with, a Futures Broker and performs for that Futures Broker any of the
functions of a Futures Broker, other than work ordinarily performed by
accountants, clerks or cashiers.

3.11 Appointment of Futures Brokers Representative

An application for a Futures Brokers licence shall be submitted together with at

least one (1) application for a Futures Brokers Representatives licence.

3.12 Local Participants

Local Participants are not required to be licensed but shall be registered with the
Securities Commission.

3.13 Dual licences

Dealers Representatives who are licensed under the Securities Industry Act
1983 are also allowed to hold a Futures Brokers Representatives licence under
the FIA. However, unless otherwise permitted by the Securities Commission, a
Dealers Representative will only be considered for a dual licence if:

(a) The Dealer with which the Dealers Representative is attached with has
merged with at least one other entity pursuant to the stockbroking
consolidation policy and is licensed as a Futures Broker; or

(b) The sponsoring futures broking company is:

(i) A subsidiary of the holding company of the Dealer; or

(ii) A separately incorporated company held by the individual

shareholders of the Dealer.

A Dealers Representative who is granted a Futures Brokers Representatives

licence is allowed to trade in futures contracts, including advising customers on
futures contracts and to accept and execute orders for customers on futures
contracts.

3.14 Locally Incorporated

The applicant shall be locally incorporated.

3.15 Fit and Proper Criteria

The applicant shall be a fit and proper person.

4.0 FUTURES BROKERS LICENCE - PROCEDURES FOR APPLICATION OF

LICENCE

4.1 Form 1- Application for Futures Brokers Licence

An applicant is required to file a duly completed Form 1 Application for Futures

Brokers Licence with the following documents attached:

(a) A copy of the directors report on the financial standing, affairs, current
assets and contingent liabilities of the company to be signed by a director
and a company secretary.

If the company has been in operation for more than six (6) months prior
to the date of the application for licence, a copy of the latest profit and
loss account and balance sheet of the applicant which have been audited
by an independent auditor and certified by a director and a company
secretary should be enclosed;

(b) Approval in principle from the Exchange to be a Trading Participant;

(c) References from two (2) individuals for all principal officers*;

(d) A certified true copy of certificates evidencing academic and/or

professional qualification for each principal officer;

(e) A certified true copy of the identity card (for Malaysian citizens) or
passport (for non-Malaysian citizens) of each principal officer;

(f) A detailed Curriculum Vitae for each principal officer;

(g) A recent passport-sized coloured photograph of each principal officer;

(h) A statutory declaration filed by all principals officers as prescribed in

Appendix I;

(i) A copy of the applicants Memorandum and Articles of Association;

 (j) Forms 9, 24 and 49 of the Companies Act 1965;

(k) Form 13 or 32A of the Companies Act 1965 if there is any change to the
name or transfer of shares of the company;

(l) An application for registration of a Compliance Officer;

(m) A copy of the documents to be forwarded to clients pursuant to section

53(1)(a) and (b) of the Futures Industry Act 1993;

(n) A copy of the applicants Operational and Compliance manual;

(o) A copy of the applicants profile and organisational structure depicting

related, subsidiary, associate and holding companies with the percentage
of shareholding in each category;

(p) A list of employees employed by the applicant; and

(q) A processing fee of RM50.00 payable to the Securities Commission.

*Where specified, principal officers mean a director and secretary of the

company, and an officer who occupies or acts in a managerial position in
the company as defined under Regulation 2 of the Futures Industry
Regulations 1995.

4.2 Licensing Fee

A licensing fee of RM2,000 shall be made payable to the Securities Commission

upon approval of an application.

4.3 Registration with the Exchange

Once the Futures Brokers licence is granted, the applicant shall register as a
Trading Participant with the Exchange and notify the Securities Commission
(Licensing Department) accordingly.

5.0 FUTURES BROKERS REPRESENTATIVES LICENCE - REQUIREMENTS

5.1 Qualification and Experience

The applicant shall possess:

 (a) a degree from an institution recognised by the Government of Malaysia;

(b) a diploma in the relevant field of study, including finance, economics,

accounting or commerce, from an institution recognised by the
Government of Malaysia;

(c) a diploma in fields other than those in paragraph 5.1(b) above, with two
(2) years relevant working experience in the capital market; or

(d) five (5) years direct and relevant experience in the capital market and
been licensed in a recognised jurisdiction to undertake futures broking for
at least three (3) years.

In exceptional circumstances, the Securities Commission may consider an

applicant with the Sijil Pelajaran Malaysian (SPM)/Malaysian Certificate of
Education (MCE) or its equivalent, if the applicant has at least four (4) years
relevant working experience in the capital market.

5.2 Age

The applicant shall be at least 21 years old.

5.3 Fit and proper criteria

The applicant shall be a fit and proper person.

5.4 Industry Examination

The applicant shall pass Modules 1, 13 and 14 of the Securities Industry

Development Centre (SIDC) examinations, or any other examination as
determined by the Securities Commission from time to time.

5.5 Approval in principle from Exchange

The applicant shall obtain an approval in principle for registration with the
Exchange.

6.0 FUTURES BROKERS REPRESENTATIVES LICENCE - PROCEDURES FOR

APPLICATION OF LICENCE

6.1 Form 3 Application for Representatives Licence

 An applicant is required to file a duly completed Form 3 Application for
Representatives Licence with the following documents attached:

(a) References from two (2) individuals;

(b) A certified true copy of certificates evidencing academic and/or

professional qualification of the applicant;

(c) A statutory declaration filed by the applicant as prescribed in Appendix I;

(d) A certified true copy of the applicants identity card (for Malaysian
citizens) or passport (for non-Malaysian citizens);

(e) A recent passport-sized coloured photograph of the applicant;

(f) A copy of the letter from the Exchange granting approval in principle for
the registration of the applicant as a futures brokers representative;

(g) A copy of the applicants industry examination results;

(h) A detailed Curriculum Vitae of the applicant; and

(i) A processing fee of RM50.00 made payable to the Securities Commission.

6.2 Licensing Fee

A licensing fee of RM200 shall be made payable to the Securities Commission

upon approval of an application.

7.0 COMPLIANCE OFFICER - REQUIREMENTS

7.1 Qualification and Experience

The applicant shall possess:

(a) A relevant degree or professional qualification from an institution

recognised by the Government of Malaysia and a minimum of three (3)
years relevant experience in the capital market; or

(b) A relevant diploma from an institution recognised by the Government of

Malaysia and a minimum of five (5) years relevant experience in the
capital market.
7.2 Age

The applicant shall be at least 21 years old.

7.3 Fit and proper criteria

The applicant shall be a fit and proper person.

7.4 Industry Examination

The applicant who is seeking registration as a Compliance Officer is required to

pass Modules 1, 11, 13 and 14 of the SIDCs examinations or any other
examination as determined by the Securities Commission from time to time.

8.0 COMPLIANCE OFFICER PROCEDURES FOR REGISTRATION

8.1 No person shall be appointed as a Compliance Officer of a Futures Broker unless

the Commissions prior approval has been obtained. For this purpose, the
applicant is required to submit an application to the Securities Commission with
the following documents attached:

(a) References from two (2) individuals;

(b) A certified true copy of certificates evidencing academic and/or

professional qualification of the applicant;

(c) A statutory declaration filed by the applicant as prescribed in Appendix I;

(d) A certified true copy of the applicants identity card (for Malaysian
citizens) or passport (for non-Malaysian citizens);

(e) A recent passport-sized coloured photograph of the applicant;

(f) A copy of the applicants industry examination results (if applicable);

(g) A letter of approval in principle from the Exchange to be registered as a

Compliance Officer; and

(h) A detailed Curriculum Vitae of the applicant.

8.2 Registration with the Exchange

Once approval for the appointment has been granted by the Securities
Commission, the applicant shall proceed to register with the Exchange.

9.0 LOCAL PARTICIPANT - REQUIREMENTS

9.1 Qualification and Experience

The applicant shall possess:

(a) A relevant degree or professional qualification from an institution

recognised by the Government of Malaysia and a minimum of three (3)
years relevant experience in the capital market; or

(b) A relevant diploma from an institution recognised by the Government of

Malaysia and a minimum of five (5) years relevant experience in the
capital market.

9.2 Age

The applicant shall be at least 21 years old.

9.3 Fit and proper criteria

The applicant shall be a fit and proper person.

9.4 Industry Examination

The applicant who is seeking registration as a Local Participant is required to

pass Modules 1, 13 and 14 of the SIDCs examinations or any other examination
as determined by the Securities Commission from time to time.

9.5 Application through Exchange

An application for registration as a Local Participant shall be submitted to the

Securities Commission through the Exchange.
10.0 LOCAL PARTICIPANT PROCEDURES FOR REGISTRATION

No person shall be a Local Participant unless the Commissions prior approval

has been obtained. For this purpose, the applicant is required to submit an
application to the Securities Commission with the following documents attached:

(a) References from two (2) individuals;

(b) A certified true copy of certificates evidencing academic and/or

professional qualification of the applicant;

(c) A statutory declaration filed by the applicant as prescribed in Appendix I;

(d) A certified true copy of the applicants identity card (for Malaysian
citizens) or passport (for non-Malaysian citizens);

(e) A recent passport-sized coloured photograph of the applicant;

(f) A copy of the applicants industry examination results (if applicable);

(g) A letter of approval in principle from the Exchange to be registered as a

Local Participant; and

(h) A detailed Curriculum Vitae of the applicant.

11.0 CONTINUING PROFESSIONAL EDUCATION (CPE) PROGRAMME

All Futures Brokers Representatives shall accumulate 20 CPE points a year in

order to renew their licences.

12.0 GENERAL

12.1 Interview

Where necessary, the Securities Commission may require applicants for a

Futures Brokers Representatives licence and applicants seeking registration as a
Compliance Officer or a Local Participant as well as persons licensed as a Futures
Brokers Representative or registered as a Compliance Officer or a Local
 Participant, to attend an interview to demonstrate credibility and knowledge of
the capital market.

12.2 Exemption From SIDC Examination

Applicants falling under any of the following categories may apply to the
Securities Commission for an exemption from the relevant examination modules:

(a) Individuals with tertiary qualification from recognized institutions, which

meet the content requirement of the relevant examination modules;

(b) Individuals with distinguished service in the securities industry with a

minimum of ten (10) years relevant working experience in the capital
market at the appropriate level. Evaluation of relevant working
experience will take into account experience, expertise, leadership and
achievements; or

(c) Individuals in a managerial capacity for at least five (5) years in a

regulatory body and with the relevant working experience in the capital
market.

An application for exemption shall be accompanied by all relevant supporting

documents. An applicant shall be notified by the Securities Commission upon
approval or rejection of the application. The decision of the Securities
Commission shall be final.

12.3 Notification of change in information submitted

Any material change in the information submitted to the Securities Commission

shall be notified to the Securities Commission within fourteen (14) days from the
occurrence of the change in information.

12.4 Submission of additional information

Where necessary, the Securities Commission may require other relevant or

additional information to be submitted.

12.5 Continuous compliance

A Futures Broker and a Futures Brokers Representative shall comply with the
requirements of these Guidelines at all times. In addition, a Futures Broker and a
Futures Brokers Representative shall comply with all relevant provisions in the
 securities laws and the licensing conditions in relation to the activities of a
Futures Broker.

12.6 Exemption or variation of requirements

The Securities Commission may, where it deems appropriate, allow any

exemption and variation from the requirements of these Guidelines based on the
merits of the case, whether on a permanent basis or for a specified period of
time.

12.7 Submissions

All enquiries, applications and information as required pursuant to these

Guidelines shall be submitted to the Securities Commission at the following
address:

The Head
Licensing Department
Securities Commission
No. 3 Persiaran Bukit Kiara
Bukit Kiara
50490 Kuala Lumpur
Tel: (603) 6204 8000
Fax: (603) 6201 5282