Labuan International Financial Exchange

LFX is an international financial exchange to be based in Labuan. It is one of the vehicles to promote Labuan as an international financial centre. Its goal is to facilitate the influx of funds through the listing and trading of financial instruments.

To attain this goal, LFX will strive:

• To be recognised as investor-friendly
• To be market driven and transparent
• To utilise international networking systems

LFX is a full fledge exchange with listing and trading facilities. Listing of financial instruments will be the initial focus.

LFX, being an international financial exchange will facilitate the listing of a multitude of financial instruments such as:

• equities
• investment funds
• debt instruments
• insurance related instruments
• other types of financial instruments (depending on requirement and demand of issuers and investors)

These financial instruments can be based on both conventional and Islamic principles.

There are no restrictions on the type of financial instruments and there is no predetermined minimum quantity for listing. The decision for listing lies with the Listing Committee of LFX.The financial instruments will be denominated in foreign currencies or non-Malaysian Ringgit.

At present, the Bursa Malaysia Berhad (Bursa) is the sole owner of LFX.

The authorised and paid-up capitals are US$10 million and US$5.5 millions respectively.

The Memorandum & Articles of Association (M&A) and Rules of Labuan International Financial Exchange are governed by the Labuan Companies Act (1990) and the Labuan Financial Services And Securities Act (2010) respectively.

Labuan Financial Services Authority (LFSA) is the statutory regulator for LFX.

Labuan Financial Services Authority (LFSA) is the statutory regulator for LFX.

• A General Manager will be responsible for managing the day to day operations of LFX.
• LFX is managed by an Exchange Committee comprising representatives of the shareholder and market participants. The Committee will address and handle all operational aspects of LFX.
• Discretionary matters pertaining to Licensing, Listing and Disciplinary will come under the purview of the respective specific Committees.

The organisational structure of LFX is divided into three major units i.e. Market Development, Operations and Support Services. Market Development will handle matters pertaining to the customers of the Exchange including developing and marketing of the exchange business. Operations is responsible of the operational activities, that includes licensing, listing, trading, settlement, clearing, depository, business continuity plan of the exchange and other operational related activities and also perform the supervising and monitoring of market players to ensure compliance with the Exchange's Rules and Regulations. Support Services will provide support functions such as IT Support, finance and administration to LFX.

It is an international financial exchange that seeks to meet the requirements of international clientele. Unlike Bursa and other exchanges, LFX is governed by the LFSSA 2010. As it is based in an international jurisdiction, participants will benefit from various tax incentives and exemptions.

LFX facilitates the listing and trading of a multitude of multicurrency financial instruments and securities.

Being an international financial exchange in Asia, the geographical location of Labuan augurs well as a central location for all major cities in the region.

The Rules of LFX is such that it is not restrictive in terms of financial instruments to be listed, catering for the needs of the region and participants worldwide.

LFX does not require participants to have physical presence in Labuan as access can be made through international communications network via a web browser to the @LFX system.

LFX is an international financial exchange with both Listing and Trading activities. Therefore, participation can be as follows:

1. Issuers of Financial Instruments to be Listed.
• Each Issuer has to appoint a Listing Sponsor for each listing on LFX.
• Listing advisory, consultation and underwriting expenses will be levied by Listing Sponsors at their discretion.
• LFX adopts a disclosure-based policy whereby Issuers will be required to disclose all relevant and material information.
2. Listing Sponsors
   • Listing Sponsors are responsible for :
     • Ensuring financial instruments to be listed meet the qualitative and quantitative criteria set by LFX.
     • Ensuring proper disclosures are made by Issuers, as part of their post-listing obligations.
     • Acquisition of equipment and other resources required to perform their function.
   • A Listing Sponsor can undertake multiple listing exercises.
   • Listing Sponsors are licensed by LFX.
   • Listing Sponsors with the capability and financial capacity may underwrite the listing of the financial instruments. Issuers and Sponsors may be in different geographical locations and time zones and need not have physical presence in Labuan.
   • Fees between Issuers and Listing Sponsors are negotiable between the two parties as LFX does not regulate back office dealings between its participants.
   • Listing Sponsors may also be Trading Agents and vice-versa if they meet LFX's set criteria.
3. Trading Agents
• Trading Agents are responsible for :
  • Execution of trades on behalf of Investors.
  • Acquiring equipment and other resources for trading purposes.
  • Reporting all trades done to LFX for trade confirmation.
  • Ensuring all trades done are settled according to the rules of LFX.
  • Providing investment advice to investors.
• Trading Agents will be licensed by LFX.
• Trading Agents may undertake proprietary trading.
4. Investors
   • Investor participation in LFX is through licensed Trading Agents. All trades and settlement of trades done will be done through Trading Agents.
   • Charges for trading services rendered to investors by Trading Agents will be at their discretion.
   • Investors need to evaluate the risks and merits of their investments based on disclosures made by Issuers. Trading Agents and Investors may be in different geographical locations and time zones and need not have physical presence in Labuan.

It does not affect LFX as dealings will be in any currency except the Ringgit.

LFX is 100% owned by Bursa Malaysia Berhad. Bursa is represented in the board of directors of LFX by its present Chief Executive Officer Dato’ Tajuddin Bin Atan and Bursa’s Chief Financial Officer Nadzirah Abd Rashid. Its scope of work will include policy matters and budgetary controls.

The operations of LFX is managed by the Exchange Committee of LFX. The committee is divided into three committees namely, Licensing, Listing and Disciplinary Committees and each committee will work according to its stated scope of work.