PART 4 PREPARING OUR PEOPLE FOR THE FUTURE of non-compliance. ... US Securities and Exchange Commission, ... Commission, the OECD, the Financial Supervisory

PART 4

PREPARING OUR PEOPLE FOR THE FUTURE

SECURITIES COMMISSION MALAYSIAannual report

PART 4 » PREPARING OUR PEOPLE FOR THE FUTURE


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SECURITIES COMMISSION

MALAYSIAannual report



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INTRODUCTION

As technology, innovation and competition continue to transform capital markets, we remain steadfast in our commitment to strengthen organisational capability and effectiveness by growing a workforce that is productive, agile and innovative, and within an ecosystem of high standards of governance that is focussed on compliance, ethical and professional conduct. We also pay close attention to maintaining a positive, conducive and sustainable working environment leveraging our foundational human resource practices and corporate culture. We further ensure that the organisational structures and work culture that enable our people to form collaborative teams and enterprise-level task forces that have delivered strong outcomes for the organisation.

We continue to invest in information gathering systems with improved access to market information and

intelligence and strengthen market analytics capabilities to enable our staff to keep pace with market innovations and properly monitor them. In this connection, resourcing, learning and development programmes are carefully calibrated aligned with the need to deliver on our immediate and future core functions.

REFINING INTERNAL GOVERNANCE

We recognise that good regulatory outcomes depend on more than well-designed rules and regulations. The regulator must provide confidence that its decisions are made in an objective and consistent basis, without conflict of interest, bias or improper influence.

To that end, we have further strengthened our framework for institutional governance to maintain the confidence and trust of those we regulate and the broader community.

PREPARING OUR PEOPLE FOR THE FUTURE




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Strengthening our governance framework

In the year under review, we undertook a holistic review on our governance framework which was primarily effected through the SCA Amendments in 2015.1 These changes sought to strengthen and refine the governance principles of independence, accountability and transparency to provide greater confidence and trust that regulatory decisions were made with integrity.

Given the important position of the Board as the apex of the SC’s institutional governance arrangements, the SCA Amendments provides for clear and objective criteria for the appointment, disqualification and revocation of Board members, in addition to clear tenure for their appointment. These amendments are in line with recommendations by FSAP which was jointly undertaken by the World Bank and International Monetary Fund in 2013.2

These changes aim to provide assurance that the Board in carrying out its functions would act impartially, independently and in the best interest of SC.

Other key amendments are as follows:

1. Better diversity in Board representation specifying the knowledge, skills and experience required to ensure that the SC is best poised to face future challenges brought about by globalisation, increasing competition and rapid technological advances;

2. Refinements to provisions relating to the setting up of Board committees; and

3. Further clarity on powers that are exercised by the Chairman or the Board, enabling greater operational efficiency.

Raising the bar on institutional integrity

Establishment of Internal Compliance Department

We recognise that our decisions and actions have significant financial and market consequences and that the SC’s commitment to a strong culture of compliance, ethics and transparency can provide greater confidence that our decisions are made fairly and free of conflict. Our governance policies and practices are embedded in our policies, codes and best practice. All persons in the organisation know their responsibilities and are aware that these codes and practices must be actively upheld and implemented. The Internal Compliance Department (ICD) was established in June 2015 to steer organisational efforts and raise the bar on culture and conduct through compliance and education programmes. In 2015, ICD had embarked on awareness and education programmes as well as mapping of processes, roles and responsibilities to better monitor compliance and reporting of non-compliance.

A Compliance and Ethics Committee (ComEt) was also formed in July, comprising several Executive Directors and Heads of Departments, chaired by the General Counsel. ComEt acts in an advisory capacity and makes recommendations to the Chairman on how to further improve our compliance culture and address ethics and conflict-related risks.

1 The OECD recognises that strong governance strengthens the legitimacy and integrity of the regulator, supporting the high-level policy objectives of the regulatory scheme and will lead to better outcomes. See The Governance of Regulators, OECD Best Practice Principles for Regulatory Policy, (OECD, 2014).

2 Principle 2 of IOSCO’s Objectives and Principles of Securities Regulation states that “The regulator should be operationally independent and accountable in the exercise of its functions and powers”. This principle was also reiterated in the OECD Public Consultation paper titled Principles for the Governance of Regulators issued 21 June 2013.






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STRENGTHENING TALENT AND DEVELOPING OUR PEOPLE

Our people are our most valuable resource. The human resources strategy aims to continuously develop the skills of our 760 staff, maximising their potential and achieving the highest-possible level of performance. As capital market regulation becomes more globalised, we recognise the need to constantly revitalise our Employee Value Proposition and relevant people practices. Efforts are constantly made to augment our resources and capabilities as we strive for optimum management and operational excellence.

Recruiting the right talent

Our scholarship programme continues to attract young talent who would like the opportunity to navigate today’s challenging landscape and shape the future of capital markets.

Scholarships are awarded to bright and deserving students to become regulators for tomorrow. In 2015, we decided on 13 scholarships following a selection process that incorporated higher standards of criteria given the field of candidates.

Our pipeline was also augmented by 13 young people under the rebranded Graduate Management Executive Programme (GMEP) known since October 2015 as the Model Regulator Programme or MORE@SC which has been designed to be more structured with mandatory modules including practical training and a corporate social responsiblity (CSR) component. All SC graduating scholars are required to serve with us under the MORE@SC initiative.

To tap on a more diverse pool of talent, efforts to attract young people extended beyond conventional recruitment channels of active participation in career fairs and exhibitions across the country, to leveraging social media, alumni networks and referral programmes.

These efforts, together with recruitment initiatives targeted at experienced hires, resulted in 57 people joining the SC in 2015.

Making the right recruitment choice is critical to ensure that we have the people we need to deliver our mandate and commitment to our stakeholders. The recruitment process was refreshed with the use of a new assessment tool which provides development profiles for the purposes of identifying and designing development interventions for each candidate. This not only allows us to profile candidates who have a good cultural fit with our organisation but also profile existing talents in progressing their careers in accordance with best job-fit.

Optimising our workforce

Continuous process improvements and periodic reviews of work roles across the SC were undertaken to ensure the resourcing structure is in place to deliver our strategic priorities. Departments’ organisational structures were reviewed and job functions refined to accurately reflect the changing roles, jobs, accountabilities and responsibilities. Job profiling exercises provide pathways for upward mobility through role expansions. Thus, more growth opportunities were made available for our people, as shown in the promotion of 107 qualified and primed candidates in 2015.

Developing regulatory capabilities for the future

We also commenced an extensive internal review of our capabilities and capacities to meet demands arising from changes in market structure, financial innovation and investor behaviour.

Long-term developmental and regulatory strategies were mapped out to determine the SC’s future deliverables and capacity requirements to fulfill our mandate.




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Developmental initiatives will be reviewed to determine whether a gradual shift in focus towards creating an enabling environment would be a more sustainable approach for market development. As a start, we have streamlined the strategic focus of our core regulatory functions to deliver more effective regulation through credible deterrence.

Given the growth of FinTech and the increasing delivery of capital market services through technology, we have also embarked on initiatives to enhance our data analytics capabilities to provide insights into policymaking, supervisory interventions and enforcement actions. Resourcing, learning and development programmes will be calibrated to align with the need to deliver on our immediate and future core functions.

Leadership development

As we move forward, identifying and developing strong leaders in the SC is pertinent to sustaining our performance, values and culture. As a multi-faceted knowledge-based organisation, advancing strong leadership capabilities and specialist skills is essential. Our emphasis on having a healthy talent pipeline with the required leadership bench strength is demonstrated through the Leadership Development Programme (LDP).

The LDP aims to foster thought leaders and develop desired leadership attributes. In 2015, the SC collaborated with IMD to introduce the IMD’s Global Leadership in The Cloud (GLC) Programme. This is a flexible learning and global exchange platform for senior level professionals to develop and elevate leaders’ global leadership skills. In addition, three of our people participated in a regional leadership programme for securities regulators, jointly run by the Monetary Authority of Singapore Academy and Toronto Leadership Centre in Singapore.

In prioritising sustainable talent development and strengthening efforts in succession management, we incorporated a more rigorous and systematic leadership development programme to accelerate personal growth and readiness of our talents to assume critical roles. We continued to evaluate the potential and capabilities of our people and succeeded in adding seven individuals to our leadership bench strength. At senior levels, leadership assessments together with job profiling initiatives have facilitated placements of talent in roles that optimise their performance potential and contribution in delivering quality regulatory services.

Continuous learning and development

Effective regulation demands proactive efforts to identify and address risks, systemic or otherwise, in order to prevent or mitigate harmful outcomes. It requires people to master new skills, including understanding and using technology for a range of supervisory activities, deeper appreciation of behavioural economics in order to better respond to new challenges brought about by investors or leveraging quantitative analyses to obtain deeper insights into market and corporate performance. To achieve our objectives, we continued to invest in learning and development programmes, including targeted learning solutions designed to address specific developmental needs of individuals and bridge capability gaps.

Our people had the opportunity to take part in regional and international programmes for exposure to best practices through collaborative relationships with other financial institutions and regulatory agencies. This included our collaboration with the Toronto Leadership Centre in organising sharing sessions on specialist risk areas such as cyber security, financial behavioural analysis in complex financial crimes and crisis preparedness programmes. To stay abreast with evolving supervisory responsibilities and strengthen risk






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management processes, relevant personnel were exposed to methodologies and standards on risk and crisis management learning events held variously by the Asia-Pacific Economic Financial Regulators Training Initiative, the International Monetary Fund – Singapore Regional Training Institute, US Securities and Exchange Commission, the Australian Securities and Investments Commission, the OECD, the Financial Supervisory Commission, Republic of China and IOSCO. Throughout 2015, 644 staff underwent various forms of training, ranging from seminars and conferences to intensive classroom sessions.

Staff members who want to develop professional and specialised skills continue to take advantage of our Financial Scheme for Continuous Professional Development (PROFOUND) which enables qualified personnel to pursue post-graduate qualifications and grow their skills, knowledge and understanding in focussed areas related to the SC’s functions. In 2015, five staff completed their qualifications under the PROFOUND scheme while nine are in the midst of completing their studies.

To further grow their skill-sets in conducting effective audits and examinations, 15 staff completed the Institute of Chartered Accountants in England and Wales International Standards on Auditing (ICAEW ISA) certification programme. Another eight participated in the Certificate of Islamic Finance (CIF) programme.

Broadening work experiences through secondments and attachments

As capital markets become more global, regulators have become more interdependent and with that the realisation of the importance of co-operation, including in the area of building workforce capacity. This opportunity comes at a time when classroom training has become increasingly expensive or found to be not adequate in order to implement agreed standards

and principles or for sharing of best practices, especially at the middle management and senior levels. One avenue that is increasing in popularity and efficacy is the exchange of resources by way of secondments and attachments programmes. These provide practical learning opportunities and exposure to relevant work experiences. In 2015, the SC hosted two regulators from the Capital Market Authority, Arab Saudi, an officer from the Financial Services Agency of Japan (JFSA), two attachés from the Capital Markets Board of Turkey and one attaché from the Financial Supervisory Service, South Korea. At the same time, a staff member of the SC was seconded for two years to the Islamic Financial Services Board (IFSB).

Our Internship Programme with local universities entered its eigth year in 2015, with 16 interns being hosted by various departments in the SC. In support of Malaysia’s chairmanship of ASEAN, we took part in a new platform for internship brought together by a collaboration between the Ministry of International Trade and Industry and TalentCorp Malaysia, known as the myASEAN Internship programme. Through this programme, SC commits to provide work experience to ASEAN nationals studying in Malaysian universities The first candidate to commence an internship with the SC is from Vietnam.

SCHOLARSHIPSAWARDED13 BUILDING

AUTOMATIONSYSTEM

Leadership Development ProgrammeFLEXIBLE LEARNING AND

GLOBAL EXCHANGE PLATFORM FOR SENIOR LEVEL PROFESSIONALS TO DEVELOP AND ELEVATE LEADERS’ GLOBAL LEADERSHIP SKILLS

FINANCIAL REPORT ELECTRONIC SUBMISSIONHUB




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DIGITISATION AND ENHANCING ANALYTICS

Enhancing efficiency and analytics capabilities through digitisation and technology

With digitisation and technological innovation becoming more pervasive, we continue to leverage technology to increase organisational efficiency and capabilities, including–

1. LOLA Online Submission System to streamline industry submissions under the LOLA framework. Time-to-market of unlisted capital market products is now shortened and operational overheads reduced.

2. The Financial Report Electronic Submission Hub (FRESH) which is an online platform for PLCs to submit their annual audited accounts and periodic financial reports following the amendments to section 319 of CMSA. FRESH also aids our pre-emptive surveillance processes, facilitates information sharing as well as communication with PLCs.

3. i-Cube, an in-house business intelligence platform developed to process information from a centralised Enterprise Data Warehouse (EDW), thereby strengthening data analytics capabilities and providing intelligence; and

4. The XBRL pilot project for PRS filing to further improve the efficiency and quality of data collection, ease information exchange and promote greater market transparency. This pilot project marks the first successful XBRL submission in Malaysia.

Protection against cyber threats

Concomitant with our expanding technological infrastructure and increasing cybersecurity threats globally, we have taken several measures to address potential breaches of our infrastructure and data. These included undertaking periodic vulnerability assessments consistent with the National Cyber Crisis Management Policy drawn up to combat cyber threats to the nation’s Critical National Information Infrastructure. These efforts were validated by SIRIM when certifying the SC on the revised Information Security System and Management (ISMS) ISMS/ISO 27001:2013, assuring the system’s continued compliance with international security standards. The revised standard focussed on the organisational context of information security and risk assessments.

WIDENING KNOWLEDGE SHARING

Retaining and sharing knowledge

One of the key challenges in managing organisational knowledge is retaining and sharing tacit knowledge possessed by an individual with others in the organisation. Retaining and sustaining such knowledge requires us to take a different approach which is in contrast to documents and other tangible forms of retaining knowledge.

Continuing the three year knowledge management roadmap established in 2014 to manage the wealth of institutional knowledge within the SC, various organisational development initiatives were carried out to augment organisational productivity. In 2015, ‘Hard Talk Sessions’ were organised with SC’s past and present senior leaders as a way to capture, share and thereby retain and sustain such domain knowledge. As well, a series of conversations between SC senior staff with industry experts and business leaders under the programme, ‘Conversations@SC’ was undertaken






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throughout the year under review. The compilation of this series made available to our people as well as members of the public through our corporate portal have been assessed to be useful in terms of providing perspectives and insights on economic and business outlook, emerging trends impacting financial markets as well as strategic concerns relating to the workforce of the future. Through these initiatives, our people are provided with exposure to various perspectives which may have direct relevance to their roles or projects in which they are involved.

We received the Knowledge Ready Organisation (KRO) Award by the Information & Knowledge Management Society (iKMS), at a ceremony held in Singapore. This regional award recognises our unstinting efforts in nurturing a knowledge enriched environment while promoting collective knowledge leadership in pursuit of organisational goals.

SUSTAINABILITY AT THE SC

Sustainability is embedded across our organisational functions and activities. This is evidenced by workforce diversity, concerted efforts to reduce carbon footprint by reducing paper and electricity usage, and leveraging the `smart’ features of the SC building to reduce energy cost, environmental impact and operational inefficiencies.

People and diversity

Diversity is a critical attribute of a well-functioning board and an essential measure of good governance. The SC continues to uphold this principle as demonstrated by our Board composition (Chart 1). In addition, a truly diverse, inclusive and engaged workforce is vital in

Chart 1

Gender breakdown based on board and management level

Source: SC

58.7%Executives

30.3%Non-executives

33.3%Board members

52.9%Top management

54.9%Senior and middle management

WOMEN MEN

41.3%Executives

69.7%Non-executives

66.7%Board members

47.1%Top management

45.1%Senior and middle

management




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sustaining a well-functioning organisation. Diversity in terms of gender (Chart 1), age (Chart 2) and ethnicity (Chart 3) permeate throughout the workforce from top management to the executive level.

Given that a high percentage of our women staff either have young children or are at a child-bearing age (43% of staff population), we continue to provide support for women at work. Our in-house crèche facility provides good quality and reliable child care at an affordable price. Having the crèche within the building allows our young working mothers to be able to concentrate and be productive at work, knowing that their child is safe and happy at a centre that is well managed by a certified provider with proven early childhood development methods.

Chart 2

Age group breakdown based on management level

50

60

70

40

30

20

10

020–29 years

30–39 years

40–49 years

Top management Senior & middle management

Non executive

Perc

enta

ge (%

)

Executive

50–59 years

60 years and above

Source: SC Source: SC

60

80

100

40

20

0

Bumiputera

Chinese Others

Perc

enta

ge (%

)

Indian

Topmanagement

Senior & middlemanagement

Executive Non-executive

Chart 3

Ethnicity breakdown based on management level

In addition, our flexible working hours arrangement provides our people with the option to start work early or a little later, so as to achieve a better work-life balance.

Safety and health

Our commitment to our people’s health and well-being is exemplified in the work of the Health & Safety Committee that is responsible for all aspects of health and safety at the workplace focussing particularly on steps to reduce risks in this regard. The committee conducted ergonomic assessments, introduced healthier menus at the cafeteria, held a blood donation drive, organised several talks on safety and arranged for free health screenings for our people during the 2015






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Health and Safety Week event. Health alerts were issued when there was an outbreak of a disease or deteriorating air quality levels.

We continue to adhere to the national Occupational Safety and Health laws. Our Auxiliary Police and floor representatives have been trained in first aid and their skills are regularly updated as required by law. In addition, Health and Safety audits are carried out to ensure compliance with relevant laws and regulations of the country.

Environmental impact

We continually strive to minimise the impact of our operations on the environment and actively monitor our operational carbon footprint, promote recycling and responsible use of resources. We educate our people about climate change and the importance of environmental protection. The use of smart energy monitoring software in our Building Automation System helps to reduce electricity demands during peak hours, thus lessening energy wastage. This year, our energy saving initiatives included the replacement of lightings with energy efficient bulbs and LED lightings, rescheduling air-conditioning chiller operations to lesser operating hours and optimal operating temperature.

We significantly reduced our paper usage in the last four years from 2012 to 2015 by 20% which represents a 26% cost saving over the same period. These positive results are borne out of disciplined efforts to reduce the printing of hard copy documents as well as replacement of old printers with models that have a scanning function.

Our energy consumption (Chart 4) and paper usage (Chart 5) are continually tracked and monitored to ensure a greener workplace.

KWh/

RM m

illio

n

Chart 4

Electricity consumption in KWh and RM

Source: SC

5,000,000

6,000,000

7,000,000

8,000,000

4,000,000

3,000,000

2,000,000

1,000,000

0

6.92mil

6.86mil

6.82mil

2012

2013

2014

20156.76mil

2.73mil

2.70mil

3.16mil

3.13mil

Usage (kWh) Cost (RM)

Chart 5

Paper use in reams

Source: SC

Ream

s/RM

80,000

50,000

60,000

70,000

40,000

30,000

20,000

10,000

0Usage (Reams) Cost (RM)

2012

2013

2014

2015

7,500 7,500 7,000 6,000

71,25068,500

63,000

52,825




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COMING TOGETHER FOR THE COMMUNITY

Our people participated actively in various corporate social responsibility activities and collaborated with other agencies. This encouraged volunteerism, strengthened relationships, engagements and created greater goodwill in the community.

In response to the floods that affected major parts of the East Coast in the early part of the year, the SC joined the Ministry of Finance (MoF) and its associated agencies to extend support for various communities in Kelantan.

Our people rallied together for a flash donation drive where over RM30,000 was raised and another RM20,000 was added from the SC’s corporate social responsibility budget, bringing it to RM50,000.

In Kuala Krai and Tanah Merah, 54 of our people assisted in major post-flood cleanup over two days.

The combined efforts of the SC, MoF and other agencies helped to prepare two schools namely Sekolah Kebangsaan Sultan Yahya Petra and Sekolah Kebangsaan Ladang Kerilla for the new academic year. Our people also travelled to villages further inland to distribute critically needed necessities such as school uniforms, clothing, household items, gas stoves and canisters to families in need of assistance.

The Treasure Trove, SC’s charity shop organised a `Pop-up Bazaar’ with 35 stalls. Proceeds of RM3,675 from the sales was channeled to the National Cancer Council Malaysia (MAKNA). Since its inception in November 2011, a total of RM52,220 has been raised and given to various charities.

In its third year, with a turnout of 400 people, the SC Charity Jogathon, themed ‘Run with Me, Run for Funds’ was held on 14 November bringing together our people, their families, friends, and the increasing network of SC Alumni. Almost RM60,000 was raised and these funds will be disbursed in 2016.

SC joined MoF and its associated agencies in the Kelantan flood relief

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PART 4 PREPARING OUR PEOPLE FOR THE FUTURE of non-compliance. ... US Securities and Exchange Commission, ... Commission, the OECD, the Financial Supervisory