Bank Negara’s The Wholesale Market Conduct Practices Guidance Document is a supervisory guidance document that provides practical and operational guidance to market participants in managing policy, procedures and controls surrounding wholesale financial market conduct risk.
This initiative is aimed at closing the gap between wholesale market conduct practices observed in the industry and instilling greater discipline in the identification, management, and control of market conduct and its attendant risk. It complements the principles laid out in the Principles for a Fair and Effective Financial Market for the Malaysian Financial Market and the standards contained in the Code of Conduct for Malaysia Wholesale Financial Markets Policy Document.
Among them are good practices and practices to avoid key wholesale market conduct areas such as Market Abuse and Misconduct Risk Assessments, Governance and Oversight Frameworks, Trade and Communication Surveillance and other internal control and culture aspects.
Bank Negara seeks integrity and professionalism by market participants in the conduct of their business, affairs, and activities as they are key elements in maintaining efficiency and public confidence in Malaysia’s wholesale financial markets. Financial institutions are also responsible in their capacity as market participants to maintain adequate oversight of employees’ conduct in the course of their market activities.
Market misconduct can be perpetrated through various methods and is commonly intended to create false impressions that mislead other market participants, allow market participants to profit from inside information, or circumvent internal controls.
This document makes a general distinction between two categories of market misconduct; market abuse and unauthorised trading. Financial institutions should have mechanisms in place to detect and deter market misconduct. In this regard, an effective surveillance programme is necessary to detect misconduct, while a strong internal control environment serves to deter or prevent misconduct
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