Introduction
Due to rapid development in the financial sector, the importance of intermediaries’ presence such as money brokers is key for ensuring that the money market and foreign exchange transactions are carried out in an effective and efficient manner so as to preserve the soundness of the financial system.
Money broking business is defined as the business of arranging transactions between buyers and sellers in the money or foreign exchange markets as an intermediary in consideration for brokerage fees paid or to be paid.
Eligibility
The eligible applicant to carry out money broking business may include:
-an individual with money broking experience with good track records for at least 3 years in carrying out such business
-a regulated money broker or any provider of such services from other juridictions with at least good track records of at least 3 years and a Letter of Awareness or any equivalent written consent has been obtained from its home supervisory authority for conducting money broking business in Malaysia.
-any licensed institutions including approved money broker under the Financial Services Act 2013 with prior approval from the Central Bank of Malaysia.
Permissible money broking activities
In carrying out the money broking business, the licensee is expected to:
-bring together the counterparties on mutually acceptable terms for the same financial products in money or foreign exchange market to facilitate the conclusion of a transaction
-receive payment for its service in the form of brokerage or comission fees. The fees charge must be adequate and appropiate.
-act as mediator and strictly not permitted to act as principal.
Licensing requirements
-Submit a duly completed application form with relevant supporting documents.
-provide a certificate of evidence to certify that the paid-up capital has been deposited
-the persons in control, directors, principal officer and directors of the applicant must be fit and proper persons.
-we may require from the applicant such other information and documents for the purpose of determining the merits of the application.
Operational requirements
-Maintain a paid-up capital unimpaired by losses of at least RM 1 million or its equivalent in any foreign currency. The bank may also exercise its discretion to require additional capital to commensurate with the business operations of the money brokers, taking into account the risk of profile as well as nature, scale, complexity and diversity of their business activities.
-Maintain contingency funds of at least 10% of the money broker’s paid-up capital in respect of its ongoing business obligations to its clients. This fund is intended to ensure that the money brokers have sufficient funds that can be drawn down in the eventuality that they need to provide financial compensation to clients which are dissatisfied with the services rendered.
-The money broker is intended to serve the institutional investors and high-net worths individuals. In this regard, the money broker is expected to impose a minimum leverage limit of 100:1 on its clients’ trading transactions that would translate to a minimum of 1% margin deposit to enable the opening of a trade position.
-Maintain a professional indemnity insurance policy with coverage of no less than RM2.5 Million or its equivalent in any foreign currencies.
-Maintain and operational office in Malaysia, independent from offices of other companies.
-Ensure that the persons in controls meet the fit and proper persons requirements.
-Establish an adequate set of internal policies and controls for its operations, compliances, corporate governance and risk management. These need to be regularly reviewed to ensure that they remain appropiate, relevant and prudent.
-Ensure that the counterparties are regulated by a recognised supervisory or authority.
-A Malaysia approved auditor should carry out an annual audit of its accounts.
-Ensure compliance with the Anti-Money Laundering, Anti-Terrorism Financing and Proceeds of Unlawful Acitivities Act 2001.
-Maintain adequate and proper records and books of accounts in Malaysia.
-obtain prior approval on the following matters:
appointment of its shareholders, directors and principal officer. Changes of its place of business, business plan, ownership and shareholding structure. Establishment of additional office or any outsourcing arrangements.
-Money broker’s business model/customer interface which is exclusively or substantially electronic, proper management of technology risk must be in place.
-Comply with the applicable laws, rules and regulations relevant to the money broking business activity .
Conduct requirements
-The money broker shall abide by the folowing conducts requirements to promote good professionalism and clients’ confidence:
Integrity and fair dealing
Skills, care and diligence
Professional client management
Dispute mechanism and complaint handling
-The money broker that deals in foreign exchange market shall also ensure that is has risk mitigating measures such as stop loss orders that serve as safeguards in preventing undue exposures arising from excessive leveraging and unexpected losses of its clients.
-The money broker shall conduct proper due diligence on its clients, principal broker or liquidity provider as well as the rtading platform providers.
-The money broker is required to keep clients’ monies accounts separate from its own account and marked in the books of the money broker relating to each client’s accounts. Maintain proper records of client’s monies accounts. Client’s monies shall not be available for the payment of debts of the broker.
-The money broker must always make it absolutely clear to its clients, the capacity in which the institution is acting. Written agreement with the clients has to be in place which detailed out its duties and responsibilities.
-The money broker shall disclose the following to its clients:
List of authorised introducing brokers on a website. Risk disclosure and spreads charged for clients dealing in foreign exchange markets and any other fees or charges related to the client’s trading transaction.
-The money broker shall ensure that the clients are well updated on their trading performance on a monthly basis.
Requirements of office
A Malaysian office shall entain the deployment of resources with sufficient kowledge and expertise to deliver the following roles and functions:
Finance and accounting
Statistical submission
Preparation and maintenance of records
Contact person stationed at office
Reporting requirements
The money brokers are required to submit a copy of its audited financial statements to the supervision and monitoring department within 6 months after the closure of each financial year.
Statistics and information may required from time to time.
Annual license fee
|
Incorporation of License Company whose paid up Capital less than Ringgit Malaysia (RM) 1 Million + Name Reservation + Registered Office Address + 1 Bank Account Opening + 1 Year Government Fee + License Application to LFSA |
3,500.00 |
|
LFSA License Application Fee (One Application Fee Only) but do Not include + LFSA Submission Fee + LFSA Annual License Fee |
3,500.00 |
|
Second year annual fee for License Company |
3,200.00 |
|
Incorporation & Annual Fee of a Foreign Registered Company in Labuan whose paid up Capital less than Ringgit Malaysia (RM) 50,000 + Name Reservation + Registered Office Address + 1 Year Government Fee |
3,500.00 |
|
Second year annual fee for Foreign Registered Company |
3,200.00 |