SC Licensing Examination Module 17 - Securities and Derivatives Trading: Rules and Regulations (SIDC, Malaysia)

Under which legislation is the Securities Commission Malaysia (SC) established as the primary regulatory body for the Malaysian capital market?

• ACompanies Act 2016
• BSecurities Commission Act 1993
• CCapital Markets and Services Act 2007
• DCentral Bank of Malaysia Act 2009

Under the Capital Markets and Services Act 2007 (CMSA), which of the following licenses must be held by an individual who is employed by a licensed corporation to carry out the regulated activity of dealing in securities?

• ACapital Markets Services Licence (CMSL)
• BCapital Markets Services Representative's Licence (CMSRL)
• CBursa Malaysia Registered Representative Certificate
• DFinancial Planner Representative Licence

Which of the following is NOT classified as a regulated activity under Schedule 2 of the Capital Markets and Services Act 2007 (CMSA)?

• ADealing in securities
• BDealing in derivatives
• CGeneral audit of public listed companies
• DAdvising on corporate finance

When assessing an applicant's suitability for a CMSRL, which document published by the Securities Commission Malaysia outlines the criteria for "fit and proper" requirements?

• AThe Rules of Bursa Malaysia Securities Berhad
• BThe SC Licensing Handbook
• CThe Guidelines on Market Conduct and Partner Relations
• DThe Capital Markets Services Regulations 2007

Under Section 58 of the Capital Markets and Services Act 2007 (CMSA), what is the maximum penalty for an individual convicted of carrying on a regulated activity without holding a valid license or being a registered person?

• AA fine not exceeding RM100,000 or imprisonment for a term not exceeding 1 year, or both
• BA fine not exceeding RM1,000,000 or imprisonment for a term not exceeding 5 years, or both
• CA fine not exceeding RM10,000,000 or imprisonment for a term not exceeding 10 years, or b…
• DA fine not exceeding RM50,000,000, with no option of imprisonment

Which of the following bodies is responsible for administering the dispute resolution framework for retail investors in disputes involving licensed capital market intermediaries in Malaysia?

• ASecurities Industry Dispute Resolution Center (SIDREC)
• BFinancial Services Ombudsman (FSO)
• CBursa Malaysia Corporate Governance Committee
• DTribunal for Consumer Claims Malaysia

A representative licensed to deal in securities is declared bankrupt by the High Court of Malaysia. Under the SC Licensing Handbook, what is the consequence of this declaration on the representative's license?

• AThe license remains valid but the representative must only execute sell orders.
• BThe license is automatically suspended and the SC may revoke the license.
• CThe license is transferred to the representative's employer.
• DThe representative can continue trading if Bank Negara Malaysia provides a letter of clea…

A CMSRL holder intends to change their employment from one Participating Organisation of Bursa Malaysia to another. According to the SC Licensing Handbook, what regulatory action is required?

• AThe representative must apply to transfer their license through the new employer and obta…
• BThe representative can start trading immediately at the new employer and notify the SC wi…
• CThe representative must retake all SIDC licensing examinations.
• DThe representative only needs to notify Bursa Malaysia in writing within 30 days, without…

Under the guidelines of the Securities Commission Malaysia, licensed representatives must complete a minimum number of Continuing Professional Education (CPE) points. What is the primary purpose of this requirement?

• ATo generate registration fees for the Securities Commission
• BTo ensure representatives maintain up-to-date knowledge of market developments, regulatio…
• CTo track the working hours of licensed representatives
• DTo qualify representatives for promotion to director level

Under the Licensing Handbook, within what timeframe must a licensed representative notify the Securities Commission Malaysia of any changes in their personal details, such as a change in residential address or any disciplinary action taken against them by a professional body?

• AWithin 7 days of the occurrence of the event
• BWithin 14 days of the occurrence of the event
• CWithin 30 days of the occurrence of the event
• DAt the time of the annual license renewal only

The Capital Market Compensation Fund is established under the Capital Markets and Services Act 2007. What is its primary function?

• ATo compensate investors for trading losses incurred due to market downturns
• BTo pay out claims to retail investors who suffer financial loss due to defalcation or fra…
• CTo bail out stockbroking companies facing clearing defaults
• DTo fund corporate governance education programs for listed issuers

Which of the following regulated activities requires the representative to hold a CMSRL specifically for "dealing in derivatives" under Malaysian law?

• ATrading in shares listed on the Bursa Malaysia Securities Main Board
• BTrading in crude palm oil futures contracts (FCPO) on Bursa Malaysia Derivatives
• CAdvising a company on a merger and acquisition transaction
• DManaging a portfolio of mutual funds for a corporate client

Under the CMSA, if a licensed representative is found to have provided false or misleading information to the Securities Commission Malaysia in connection with an application for a license, what action can the SC take?

• AThe SC can only issue a private warning letter.
• BThe SC can revoke the representative's license, impose administrative penalties, or initi…
• CThe SC will refer the matter to the Royal Malaysia Police as it has no enforcement powers…
• DThe SC can double the licensing fee for the subsequent year as the sole penalty.

A representative wishes to appeal a decision made by the Securities Commission Malaysia to revoke their CMSRL. Under the Capital Markets and Services Act 2007, to whom must the appeal be submitted?

• AThe Chief Executive Officer of Bursa Malaysia Berhad
• BThe Minister of Finance
• CThe High Court of Malaysia directly
• DThe Securities Industry Dispute Resolution Center (SIDREC)

Which of the following is a primary component of the "Competency" assessment for fit and proper requirements of a CMSRL applicant under the SC guidelines?

• AThe applicant's personal credit score and outstanding bank loans
• BPassing the relevant examinations prescribed by the Securities Commission and administere…
• CThe applicant's social media presence and follower count
• DThe applicant's political affiliations

What are the standard daily trading hours for the Main Market of Bursa Malaysia Securities Berhad?

• A9:00 a.m. to 5:00 p.m. without interruption
• B9:00 a.m. to 12:30 p.m. and 2:30 p.m. to 5:00 p.m.
• C8:30 a.m. to 1:00 p.m. and 2:00 p.m. to 4:30 p.m.
• D10:00 a.m. to 4:00 p.m.

During which trading phase on Bursa Malaysia Securities Berhad are buy and sell orders entered but not matched, allowing the system to calculate the theoretical opening price?

• AMain Trading Phase
• BPre-Opening Phase
• CClosing Phase
• DTrading Halt Phase

An investor places a Limit Order to buy 10,000 shares of Company X at RM2.50. If the current lowest offer in the market is RM2.55, what will happen to the investor's order?

• AThe order will match immediately at RM2.55.
• BThe order will be rejected by the trading system as the price is too low.
• CThe order will be entered into the order book and remain pending at RM2.50.
• DThe order will be automatically executed at RM2.50 by forcing a seller to accept the pric…

Under the Rules of Bursa Malaysia Securities Berhad, which of the following is a mandatory prerequisite for executing a Regulated Short Selling (RSS) order?

• AThe order must be executed by a retail investor using a margin account without borrowing.
• BThe seller must have a valid Securities Borrowing and Lending (SBL) agreement or a confir…
• CThe order must be executed during the pre-closing phase at any price.
• DThe short sale must target a newly listed IPO stock on its first day of trading.

In Malaysia, Intraday Short Selling (IDSS) allows market participants to short sell approved securities. What is the key operational requirement regarding the open short position of an IDSS transaction?

• AThe position must be carried forward to T+2 and settled using SBL.
• BThe position must be closed out with a buy-back order on the same trading day before the…
• CThe short position can only be closed out by physical delivery of certificate shares.
• DThe position must remain open for at least 7 business days.

What price restriction applies to Regulated Short Selling (RSS) orders on Bursa Malaysia Securities to prevent short sellers from driving down a stock's price?

• AShort orders can only be entered at a price 10% above the daily floor limit.
• BThe "at-tick" or "uptick" rule, requiring the short sale price to be at or above the last…
• CShort orders must be priced lower than the best bid in the order book.
• DNo price restrictions apply to RSS orders, as they are matched freely.

For a stock priced at RM5.00 on Bursa Malaysia Securities, what is the standard daily static price limit (maximum percentage increase or decrease allowed in a single trading day)?

• A+/- 10%
• B+/- 30%
• C+/- 50%
• D+/- 100%

If the FBM KLCI (benchmark index of Bursa Malaysia) falls by 10% or more but less than 15% from the previous day's closing level, what is the exchange-level circuit breaker trigger response?

• ATrading on the entire stock exchange is suspended for the rest of the day.
• BTrading on the entire stock exchange is halted for 1 hour.
• CTrading on the entire stock exchange is halted for 45 minutes.
• DOnly short selling is suspended, while normal trading continues.

Direct Market Access (DMA) allows clients to route orders directly into the Exchange's trading system. Under the Rules of Bursa Malaysia Securities, who remains fully responsible for all DMA orders routed under their identification?

• AThe client who entered the order
• BThe Participating Organisation (PO) providing the DMA facility
• CThe software vendor who developed the DMA platform
• DThe Securities Commission Malaysia

Under what circumstances can a Participating Organisation (PO) request Bursa Malaysia Securities to cancel a matched transaction due to an "error trade"?

• AIf the client regrets the transaction due to a sudden price drop
• BOnly if the transaction was executed at a price outside the designated "No Cancellation R…
• CIf the representative forgot to charge the correct commission rate
• DAny trade can be cancelled within 24 hours at the sole discretion of the PO.

What is the function of the "Trade-at-Last" (TAL) phase on Bursa Malaysia Securities Berhad?

• AIt allows execution of orders at the Theoretical Opening Price before the morning session.
• BIt allows execution of orders only at the Closing Price established during the pre-closin…
• CIt is a phase dedicated exclusively to off-market block crossings.
• DIt allows representatives to delete unmatched orders with no penalty.

Under what condition will Bursa Malaysia Securities temporarily suspend Regulated Short Selling (RSS) for a particular security?

• AIf the stock price rises by more than 10% in a day
• BIf the cumulative short position of the stock reaches 4% of the quantity of outstanding s…
• CIf the stock is downgraded by a research analyst
• DIf the company announces a dividend payment

Which of the following describes "tick size" on Bursa Malaysia Securities Berhad?

• AThe maximum number of shares in a board lot
• BThe minimum price variation at which a security can be traded
• CThe time delay between order entry and execution
• DThe maximum daily price limit of a stock

What is the standard regulatory effect on trading when a public listed company on Bursa Malaysia releases a material corporate announcement during trading hours?

• ATrading continues but short selling is suspended.
• BThe Exchange will impose a temporary trading halt (typically for 1 hour or for the remain…
• CThe stock is permanently delisted.
• DTrading is halted for exactly 24 hours.

Under what circumstances may Bursa Malaysia Securities Berhad declare a listed security as a "Designated Security"?

• AWhen the company changes its auditor
• BIf the Exchange is of the opinion that there has been excessive speculation or manipulati…
• CWhen the company becomes a constituent of the FBM KLCI index
• DIf the company fails to pay its listing fees on time

Under the Rules of Bursa Malaysia Securities Berhad, how must a Direct Business Transaction (DBT) be handled by a Participating Organisation?

• ADBTs can be executed privately and do not need to be reported to the Exchange.
• BDBTs must be reported to the Exchange through the trading system within the specified tim…
• CDBTs are only allowed for retail trades under 1,000 shares.
• DDBTs must be matched during the Pre-Opening phase only.

A Participating Organisation (PO) conducts both proprietary trading (trading for its own account) and client trading. Under conflict of interest rules, how must the PO handle client orders relative to its own proprietary orders?

• AProprietary orders must always be executed before client orders.
• BClient orders must be given priority over proprietary orders at the same price.
• CThe PO must charge clients a higher commission if proprietary trades are executed.
• DClient orders and proprietary orders must be pooled and matched at an average price.

Under what authority can the trading on Bursa Malaysia Securities Berhad be suspended in the event of an emergency, such as a major technical failure or civil unrest?

• AThe Board of Directors of the Exchange, with the approval of Bank Negara Malaysia
• BThe Exchange, with the approval of the Securities Commission Malaysia, or by the Securiti…
• CThe Royal Malaysia Police, under national security laws
• DThe Minister of Finance acting unilaterally, without consulting the Securities Commission

Which of the following is prohibited under Malaysian securities law regarding short selling?

• ANaked short selling (selling securities without borrowing or arranging to borrow them)
• BShort selling any index constituent stock
• CExecuting a short sale at a price higher than the last done price
• DA retail investor participating in Intraday Short Selling (IDSS)

Bursa Malaysia Securities Berhad conducts real-time market surveillance. If a Participating Organisation detects unusual trading activity in a client's account, what is its primary obligation?

• ATo close the client's account immediately without notifying the client
• BTo report the activity to the Exchange's surveillance department and conduct internal rev…
• CTo execute opposite trades to cancel out the client's volume
• DTo post details of the client's trades on its public website to alert other investors

Which subsidiary of Bursa Malaysia Berhad operates the derivatives exchange in Malaysia?

• ABursa Malaysia Securities Berhad
• BBursa Malaysia Derivatives Berhad
• CBursa Malaysia Depository Sdn Bhd
• DBursa Malaysia Derivatives Clearing Berhad

Which of the following is the benchmark equity index futures contract traded on Bursa Malaysia Derivatives Berhad?

• AFTSE Bursa Malaysia KLCI Futures (FKLI)
• BCrude Palm Oil Futures (FCPO)
• CFTSE Bursa Malaysia Mid 70 Index Futures (FM70)
• DSingle Stock Futures (SSF)

Under the contract specifications of Bursa Malaysia Derivatives, what is the contract multiplier for one FTSE Bursa Malaysia KLCI Futures (FKLI) contract?

• ARM10 per index point
• BRM50 per index point
• CRM100 per index point
• DRM500 per index point

Bursa Malaysia Derivatives Berhad has introduced night trading sessions (T+1 trading). Which of the following statements correctly describes this night session?

• AIt runs from 9:00 p.m. to 3:00 a.m. and trades are settled on the same day.
• BIt is an after-hours trading session that allows market participants to manage risk in re…
• CIt is restricted to retail investors trading single stock options only.
• DIt runs only on weekends to facilitate commodity hedging.

What is the primary regulatory purpose of imposing "Position Limits" on futures contracts by Bursa Malaysia Derivatives Berhad?

• ATo limit the commissions a broker can earn from a single client
• BTo prevent a single trader or group of associated traders from controlling an excessive s…
• CTo ensure that the clearing house has enough physical storage for commodities
• DTo match the number of buyers and sellers at all times

Under the rules of Bursa Malaysia Derivatives Berhad, if the buyer of a call option on the FBM KLCI decides to exercise their option, how is the contract settled?

• ABy physical delivery of the constituent shares of the FBM KLCI
• BBy cash settlement of the difference between the strike price and the final settlement va…
• CBy converting the option into a futures contract of the subsequent month
• DBy physical delivery of gold bullion

In futures trading, what is the process of "marking-to-market"?

• AAdjusting the initial margin rate based on market volatility
• BThe daily settlement of gains and losses on open futures positions based on the daily clo…
• CPlacing a physical stamp on contract notes for tax compliance
• DComparing the exchange's volume with competitor exchanges

What is the standard daytime trading session structure for Crude Palm Oil Futures (FCPO) on Bursa Malaysia Derivatives?

• A9:00 a.m. to 5:00 p.m. without break
• B10:30 a.m. to 12:30 p.m. and 2:30 p.m. to 6:00 p.m.
• C8:30 a.m. to 12:00 p.m. and 2:00 p.m. to 5:30 p.m.
• D9:00 a.m. to 6:00 p.m.

What type of options contracts are traded on Bursa Malaysia Derivatives in terms of exercise style?

• AEuropean-style options (can only be exercised on the expiration date)
• BAmerican-style options (can be exercised at any time prior to expiration)
• CBermudan-style options (can be exercised on specific dates)
• DAsian-style options (settled based on average prices)

What is the primary role of a "Market Maker" on Bursa Malaysia Derivatives Berhad?

• ATo guarantee that no investor loses money on derivatives trades
• BTo provide liquidity by continuously quoting two-way (bid and ask) prices for specific co…
• CTo inspect the compliance systems of Trading Participants
• DTo clear all client trades on behalf of the clearing house

Under the contract specifications of Crude Palm Oil Futures (FCPO) on Bursa Malaysia Derivatives, what is the unit of trading (contract size) for one FCPO contract?

• A10 metric tonnes
• B25 metric tonnes
• C50 metric tonnes
• D100 metric tonnes

For physical delivery of Crude Palm Oil Futures (FCPO) contracts on Bursa Malaysia Derivatives, which of the following locations is NOT an approved delivery point?

• APort Klang
• BPenang Port
• CPasir Gudang Port
• DSingapore Port