MAS Response to Malaysian Finance Minister's Statement on CLOB Shares
28 Dec 1999... AFP, Reuters and other news agencies today quoted Malaysian Minister of Finance Tun Daim Zainuddin as saying that if Clob is not settled by this week, the Clob shares will be transferred to the Malaysian Ministry of Finance, and "you can claim later from the Ministry of Finance". However, he also said that nothing would happen to the shares on December 31 itself, which will be a non-trading day.
2 As DPM Lee Hsien Loong told Parliament on 23 Nov 99, the Central Depository (CDP) has been advised by its legal advisers, including Queen's Counsel, that there is no basis in law for a transfer of the Clob securities to the Malaysian Ministry of Finance. Under Malaysian laws, the Malaysian Central Depository (MCD) has a statutory duty to transfer the Clob securities into the beneficial owners' individual securities accounts.
3 The Kuala Lumpur Stock Exchange (KLSE) and the Stock Exchange of Singapore (SES, now the Singa-pore Exchange or SGX) signed an agreement in Sep 1998, which set out precise arrangements for Clob securities to be transferred into individual accounts with the Malaysian Central Depository for trading on the KLSE. This agreement is legally binding and is specifically enforceable in Malaysian courts.
4 The SES also submitted a proposal to the KLSE in July this year, proposing a staggered release of Clob securities over 12 months so as to meet Malaysian concerns that the release of the securities would not disrupt the KL market. The proposal was without prejudice to SES' rights under the Agreement with the KLSE. Subsequently at KLSE's request, SES provided KLSE with data showing that the release would not be disruptive. SES last wrote to KLSE on 7 Dec 1999 to remind KLSE of its proposal and seek its response. SES has received no reply from KLSE.
5 Tun Daim Zainuddin said that the Malaysian Government would leave the matter to the KLSE; the Clob issue had to be resolved between the KLSE and the Singapore Exchange, and the Malaysian government would only intervene if it is requested to do so. The Singapore Government therefore hopes that the Malaysian Government will allow the KLSE to fulfil its obligations under the law and according to the agreement reached between the two exchanges.