Securities Commission and KLSE should set an example of good  corporate governance and uphold transparency and best practices on the  stock exchange computer crash on Monday and the licensing of new stockbroker Borneo Securities


Media Statement
by Lim Kit Siang
 

(Petaling Jaya, Thursday): The Securities Commission and the Kuala Lumpur Stock Exchange (KLSE) should set an example of good corporate governance and uphold transparency and best practices by giving a full accounting of the stock exchange computer crash on Monday and the licensing of a new stockbroker Borneo Securities Sdn. Bhd. six weeks after the policy announcement on April 21 to consolidate and reduce the 63 stockbroking companies to 15 universal brokers.

Both the Securities Commission and the KLSE had been advocating good corporate governance.  Recently, for instance, KLSE established  a Taskforce on Internal Controls responsible for the formulation and issuance of the guidance to assist public listed companies report the state of their internal controls in their annual reports in order to promote greater transparency by public listed companies.

The Securities Commission on its part has been promoting the Code of Corporate Governance to shift to a full-disclosure regime by the year 2001 so that companies can re-invent the corporate enterprise to efficiently face the challenges of emerging global competition.

However, the KLSE had failed to  live up to the best practices of giving full and proper accounting for Mondayís stock exchange computer crash, which resulted  in the suspension of trading during the morning session and cost stockbroking companies an estimated RM10 million from potential brokerage fees.

Can the KLSE give an assurance that there would not be  a recurrence of computer glitches shutting down the stock exchange and damaging Malaysiaís international reputation as a financial centre?

Why didnít the Securities Commission intervene to require an independent expert study to be undertaken to ensure that there could be no recurrence of such stock exchange crashes as a result of computer breakdowns?

Both the Securities Commission and KLSE should also explain why Borneo Securities Sdn Bhd was admitted as  a  new 64th member of the exchange on June 6, 2000 when six weeks earlier, the Securities Commission had announced the new government policy to consolidate the 63 companies to 15 universal brokers and that stockbroking companies without firm merger agreements by Dec. 31 this year could stand to lose their licences.

On April 21, the Securities Commission announced a comprehensive framework for the consolidation of the stockbroking industry and the reduction in transactions costs with the aim to strengthen the domestic capital market, making it more efficient and to  position the country as a competitive market in the region.

Upon completion of the consolidation exercise, everyone of the 15 universal brokers will be required to:
 

 
The credibility of the Securities Commission has come under question for its issue of a new stockbroking licence when it was in the midst of consolidating the industry, even though the Dec. 31 deadline was  subsequently lifted, and the Securities  Commission Chairman Ali Abdul Kadir owes to the Malaysian public a full and proper explanation for such an inconsistent and indefensible decision.

Such an explanation from the Securities Commission is all the more imperative in view of the  market talk that a senior  politician who was defeated in the recent general election is involved in the new brokerage company.

(29/6/2000)


*Lim Kit Siang - DAP National Chairman