Malaysia: Segregated account structure for RENTAS debt securities

15.01.2018

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 

i.e. 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

i.e. 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

i.e. 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

i.e. ABC Pension Fund

5

Insurance company

Insurance company level

6

Corporate entity

Corporate entity level

7

Banking institution – own position only

Entity level

i.e. 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.

This Marketflash is intended to provide customers with general information gathered from different sources that are generally believed to be reliable. Clearstream Banking S.A. does not guarantee the accuracy or completeness of the information and does not undertake to keep it up to date. Use of the information made available in this Marketflash is at the customer’s own risk and Clearstream Banking S.A., its subsidiaries and affiliates expressly disclaim any liability for any errors or omissions reflected herein. The information in this Marketflash does not constitute legal or tax advice.