Bursa Malaysia launches automated settlement system

Source: Bursa Malaysia Securities Clearing

Bursa Malaysia Securities Clearing Sdn. Bhd. today enhanced its settlement service to its Clearing Participants with the introduction of Central Matching Facility (CMF), an automated settlement system which is centralised on Bursa Malaysia's settlement infrastructure.

CMF provides a more effective and faster matching of settlement for institutional trades in line with the exchange's commitment to achieve greater operational efficiency.

Dato' Yusli Mohd Yusoff, CEO of Bursa Malaysia Berhad, said, "CMF is a significant development for Bursa Malaysia Berhad as part of the Exchange's continuous efforts in providing new value-added services to help improve the delivery channel. CMF will certainly provide an efficient clearing and settlement service that is in line with international best practices and standards."

CMF allows Clearing Participants, which comprise of stock broking companies and custodian banks, to automatically and electronically match trade and settlement details which were previously done manually. With CMF, files of the matched record for Depository Transfer and Institutional Settlement Service (ISS) transactions can be produced. Additionally, CMF automates the creation of the instruction and confirmation of ISS transactions. This process improvement benefits the industry at large as the system's features greatly reduces Clearing Participants' workload, minimises settlement errors, eliminates human intervention and provides immediate confirmation of trade details.

Dato' Yusli added, "With CMF, Clearing Participants are able to mitigate unnecessary risk and achieve higher number of matched transactions through the automated processing. In essence, this new matching facility facilitates the straight-through processing for a more efficient trading and settlement environment."

The CMF is a common feature of most developed markets. Various industry consultations were held to formulate the concept and approach for the implementation of this facility to the Malaysian securities market.

In conjunction with the implementation of CMF on 7 January 2008, amendments have been made to the Listing Requirements of Bursa Malaysia Securities Clearing Sdn. Bhd. The amendments are effective from 7 January 2008.

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