Malaysia: Segregated account structure for RENTAS debt securities
To enhance the domestic settlement infrastructure for greater transparency and to facilitate surveillance in the onshore financial market, the Financial Markets Committee (FMC) together with the Malaysian central bank, Bank Negara Malaysia (BNM), have announced that a segregated securities account structure will be implemented in May 2018 on the Real-Time Electronic Transfer of Funds and Securities System (RENTAS). The globally recognised Legal Entity Identifier (LEI) will be used as an unique identifier in addition to the segregated securities account number.
Impact
The segregated securities account requirement will be applicable to all resident and non-resident investors (the investor types as in the table below) of RENTAS debt securities up to fund manager level, with quarterly reporting on detailed investors. Additionally, all investors (excluding individual investors) are required to obtain a LEI for the segregated securities account opening and reporting purposes.
Resident and non-resident investor types:
No | Type | Code | Remarks |
1 | Asset management | AM | Includes unit trust funds, mutual funds, bond funds, income funds, investment/asset/fund management companies, bank-backed/non-bank backed asset management, wealth management funds, private trust. |
2 | Central bank | CB | Includes central bank, reserve bank or monetary authority. |
3 | Government | GV | Includes sovereign fund, federal fund, state fund, municipal fund, government organisation/council. |
4 | Pension funds | PF | Includes retirement funds, employee provident funds, social security funds, pension scheme, government pension funds, national pension services, pension fund associations, superannuation funds. |
5 | Insurance companies | IC | Includes life/general insurance companies, insurance funds, social insurance organisations. |
6 | Non-financial corporations | NF | Includes associations, non-banking private sectors, foundations, endowment funds. |
7 | Banking institutions/financial intermediaries | BI | Banks own position only. Banks include commercial banks, investment banks, development banks, multilateral development banks, private banks, broker-dealers. Other financial intermediaries include credit union, financial cooperatives, credit corporations, property financier, mortgage corporations, leasing and factoring companies. |
8 | Individual | IN | A person. |
Segregated securities account and quarterly reporting requirements are as follows:
No | Type | RENTAS Segregated Securities Account | Quarterly Reporting |
1 | Fund manager | Fund manager or bond fund level for example, Fund Manager XYZ or XYZ EM Bond Fund | Quarterly reporting of underlying clients is required for fund manager’s separately managed accounts.1 Not required for mutual funds.2 |
2 | Fund trustee | Trustee level or trustee level for specific fund/corporation/individual for example, XYZ Trustee Limited as Trustee for ABC Fund or Fund Level | Quarterly reporting of underlying beneficial is only required if segregated at trustee level. Not required if segregated and registered under trustee level for specific fund/corporation/individual. |
3 | Central bank, government | Entity level for example, Central Bank of Malaysia | Quarterly reporting is not required on underlying funds, contributors, shareholders, individuals, clients or specific banking desk/section. This information will only be requested on an ad-hoc basis. |
4 | Pension funds , private/corporate retirement schemes or sovereign wealth funds | Fund level for example, ABC Pension Fund | |
5 | Insurance company | Insurance company level | |
6 | Corporate entity | Corporate entity level | |
7 | Banking institution – own position only | Entity level for example, XY Investment Bank | |
8 | Individual: 1. Investing via private banking or private trust 2. Self-managed fund | 1. Collectively placed under omnibus account of private bank or private trust 2. Collectively placed under omnibus account of the local ADI under category for “Non-resident/resident” and “individual” |
We are currently analysing the impacts of this new market requirement on our customers and will provide further information when it becomes available.
1. Separately managed accounts refer to a portfolio of securities managed on behalf of an investor by asset manager/fund manager.
2. Mutual funds refer to an investment vehicle made up of a pool of funds collected from many investors for investing in bonds.
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