Recommendation 1 Recommendation 2 Recommendation 3 Recommendation 4

Recommendation 5 Recommendation 6 Recommendation 7 Recommendation 8

Market selection

Recommendation 6

Convergence of Securities Systems, both within countries and across borders, should be encouraged where this eliminates operational risk, reduces cost and enhances market efficiency.

1.	Is the depository linked electronically and in real time with other segments of the core market infrastructure (e.g. trading platforms, netting systems, matching platforms, payment systems)?	MCD and SCANS are linked as they perform the depository, clearing and settlement functions for shares listed on KLSE and MESDAQ. The securities system is not linked at this stage to the Real Time Electronic Transfer of Funds and Securities (RENTAS) system, which is a real time gross settlement (RTGS) payment system operated by the Malaysian central bank, Bank Negara Malaysia. SCANS is working with the settlement banks on the possibility to establish a real time link between the existing desktop banking system and the RENTAS system.
2.	Is there one or more depository or settlement system in the market?	There is one depository and settlement system for securities listed on KLSE and MESDAQ. (Note: Settlement of money market instruments between financial institutions is handled via the RENTAS System operated by Bank Negara Malaysia)
3.	If there are several, has a consolidation been considered? If yes, by when?	Not applicable.
4.	Does (do) the securities system(s) allow other domestic or foreign systems to establish direct links on an equal basis to local members?	No. However, the ISS facility is open to all domestically incorporated foreign custodian banks to become members for clearing and settlement purposes.
5.	Does (do) the securities system(s) allow foreign market participants to become direct participants?	SCANS has two categories of members: Trading Clearing Members comprising stockbroking companies and Non-Trading Clearing Members (NTCM's), open to institutional investors and locally incorporated custodian banks including foreign-owned ones. Although it is a requirement for the custodian banks that apply to become NTCM’s to be locally incorporated, many have foreign parent companies, e.g. Citibank, HSBC, Standard Chartered, and Chase. MCD has two categories of members: Authorised Depository Agent (ADA) i.e. local brokers and Authorised Direct Member (ADM), most of the foreign-owned local custodian banks are ADM's.