MALAYSIA COUNTRY REPORT

In 2006 and 2007, Bursacontinues to strengthen its CSD infrastructure, rationalise related systems to a common platform and offer value-added services to both investors and participants.

Bursa Malaysia Securities Clearing, in July 2006,established a RM100 million Clearing Guarantee Fundto provide the Clearing House with readily available financial resources to meet its settlement obligations in the event of payment or delivery obligation default by a Trading Clearing Participant.

In August 2006, the Equities Clearing & Settlement System was successfully migrated to a common web-based infrastructure. This was subsequently followed by the migration of the Central Depository System to the same platform in January 2007. The common system platform will simplify system enhancement and integration between the various post-trade processes. It will also enable Bursa Malaysia Depository to introduce new internet-based services to its users and expand the scope of Straight-Through-Processing in CDS.

In January 2007, Bursa Malaysia Securities Clearing began to offer its services as a Central Lending Agency by borrowing eligible Bursasecurities from lenders for onward lending to borrowers. This was pursuant to the re-introduction of Regulated Short Selling (“RSS”) and Stock Borrowing and Lending (“SBL”) in the Malaysian market after the prohibition of such activities during the Asian financial crisis. Currently, there are 70 eligible securities available for SBL.

As part of its value-added services, Bursa Depository launched “SPEEDS” in an effort to reduce timeto market for securities arising from corporate actions that involve subdivision or consolidation and bonus issue exercises by allowing these securities to be traded immediately on the next market day, instead of the previous time frame of 6 to 10 market days after the booksclosuredate. SPEEDS also enables continuous trading for securities undergoing subdivision or consolidation.

Amongst the CSD initiatives in development is the Central Matching Facility which will facilitate the matching of trade and settlement details for institutional trades prior to the creation of settlement instructions. In an effort to eliminate settlement bank risk, Bursa Malaysia Securities Clearing is working closely with Bank Negara Malaysia, the Malaysian Central Bank, to interfaceBursa’s payment settlement system with the Central Bank's RENTAS payment system. The CLA model for SBL is also being enhanced to ensure that it meets with market requirements.

Amid Bursa CSD’s operational environment is the deployment of new trading platforms. By end-2007, BursaMalaysiawould be implementing a new equities trading system, which would complete the implementation of an integrated trading platform for both derivatives and equities. Phase 1 of the Bursa Trade project involving the implementation of a new derivatives trading system was completed in November 2006.Another technology related initiative is the development of an Electronic Trading Platform (“ETP”) for the Malaysian bond market, which is expected to be implemented during the first quarter of 2008.

Bursa CSD continues to rise to the challenge of offering CSD solutions as new financial products are introduced on the Malaysian Exchange and as cross-border linkages are established.