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CBS-1 Securities Broking & Trade Execution
Introduction
Securities Broking and Trade Execution are among the most critical market-facing services provided by Kenanga Investment Bank, forming the backbone of its role as an intermediary between clients and the capital markets.
This service directly supports orderly market functioning, client confidence, and regulatory trust, while also being highly time-sensitive and technology-dependent.
Any disruption to this service—whether arising from system failures, third-party outages, cyber incidents, or operational errors—has the potential to cause market impact, client detriment, and regulatory concern.
In line with the Bank Negara Malaysia (BNM) 2025 Discussion Paper on Operational Resilience, financial institutions are expected to move beyond traditional risk and recovery thinking and adopt a service-centric view of resilience.
This requires identifying Critical Business Services (CBS), understanding how they are delivered end-to-end, and mapping the underlying processes that enable their continued operation within defined tolerance levels.
For Kenanga Investment Bank, CBS-1: Securities Broking & Trade Execution represents a high-impact service that must remain available and reliable even during severe but plausible disruptions.
Purpose of the Chapter
The purpose of this chapter is to decompose the high-level Critical Business Service (CBS-1: Securities Broking & Trade Execution) into its detailed business processes (Sub-CBS) to provide a clear, structured understanding of how this service is delivered end-to-end.
By articulating these Sub-CBS processes, the chapter enables readers to appreciate the operational dependencies, process handoffs, and control points that collectively support trade execution, post-trade processing, and settlement.
This chapter prepares the reader to apply operational resilience concepts in practice, particularly in the context of BNM’s expectations regarding service mapping, impact tolerance setting, and disruption analysis.
Upon completing this chapter, the reader should be able to
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Recognise the critical process components underpinning securities broking and trade execution,
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Understand how failures at the Sub-CBS level could affect the overall critical service, and
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Use this breakdown as a foundation for resilience testing, scenario analysis, and recovery planning in subsequent chapters.
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Table P1: Detailed Processes for CBS-1
|
Sub-CBS Code |
Name of Sub-CBS |
Description of Sub-CBS |
|
1.1 |
Client Onboarding & Order Intake |
Capture and verify client trading account details, performed via online trading platforms (e.g., KenTrade, Kenanga Digital Investing) and front-office channels. Includes KYC checks, account activation, trading permissions, and intake of client buy/sell orders. Ensures that validated orders are entered accurately into the broking system. |
|
1.2 |
Order Validation & Pre-Trade Checks |
Validate order parameters (e.g., stock code, order type, size, price limits) against market rules and client limits. Perform risk and compliance filters to prevent erroneous or unauthorised trading instructions before execution. |
|
1.3 |
Order Routing & Trade Execution |
Route validated client orders to the appropriate trading venue (e.g., Bursa Malaysia or international exchanges where applicable) through the order management system (OMS). Monitor execution status and capture execution details once trade matches occur. |
|
1.4 |
Trade Capture & Enrichment |
Record executed trade data into internal systems. Enrich with necessary information such as commission calculations, fees, taxes, settlement instructions, clearing member codes, and client linking data for downstream processing. |
|
1.5 |
Trade Validation & Verification |
Middle-office checks to ensure trade data integrity. This includes reconciling executed trade details against orders, checking compliance with internal and regulatory requirements, and confirming trading limits and counterparty details. |
|
1.6 |
Trade Confirmation & Affirmation |
Confirm executed trades with clients (e.g., via electronic confirmation messages) and obtain any required affirmation or corrections. This step is essential to confirm mutual agreement on trade terms and reduce settlement risks. |
|
1.7 |
Trade Settlement Instruction & Clearing |
Generate and send settlement instructions to clearing and settlement systems (e.g., central depository, custodians). Coordinate transfer of securities and funds according to settlement cycles (e.g., T+2) and manage settlement obligations. |
|
1.8 |
Post-Trade Reconciliation & Exception Handling |
Reconcile trade records between internal ledgers, custodial records, and exchange/clearing data. Identify mismatches or exceptions and resolve them through investigative workflows to ensure books and records are accurate. |
|
1.9 |
Trade Reporting & Regulatory Compliance |
Report trade execution and settlement data to relevant regulators (e.g., Bursa Malaysia / Securities Commission Malaysia) and internal governance teams. Ensure compliance with reporting standards, surveillance obligations, and audit trails. |
|
1.10 |
Client Settlement & Confirmation Delivery |
Coordinate final settlement placement for clients and issue settlement reports, trade confirmations, and statements. Handle client queries on executed trades and settlement outcomes. |
Notes on Operational Resilience Context
- Operational resilience principles emphasise ensuring that critical business services continue to operate during disruptions and aligning governance, technology, risk, and third-party dependencies to do so.
- The 2025 BNM Discussion Paper on Operational Resilience highlights the need to safeguard critical functions, including market infrastructure and client services, against operational failures and digital risks.
- Within securities broking & trade execution, each Sub-CBS above is a point at which resilience capabilities are applied—such as system redundancies for order routing, failover mechanisms for trade capture, and reconciliation controls to prevent data discrepancies.
- These align with BNM’s emphasis on response, recovery, and adaptation of critical services during disruptions.
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The identification and documentation of detailed Sub-CBS processes for CBS-1: Securities Broking & Trade Execution provide a critical foundation for strengthening Kenanga Investment Bank’s operational resilience posture.
By breaking down this critical business service into its constituent processes, the bank gains visibility into where operational vulnerabilities may exist and how disruptions could propagate across the service lifecycle—from client order initiation to trade settlement and reporting.
This process-level clarity directly supports BNM’s service-centric resilience framework, enabling Kenanga Investment Bank to establish meaningful impact tolerances, prioritise investment in resilience capabilities, and design proportionate response and recovery strategies.
Ultimately, understanding these Sub-CBS processes ensures that Securities Broking & Trade Execution can continue to meet client expectations, regulatory obligations, and market integrity requirements, even under significant operational stress or disruption.
Gain Competency: For organisations looking to accelerate their journey, BCM Institute’s training and certification programs, including the OR-5000 Operational Resilience Expert Implementer course, provide in-depth insights and practical toolkits for effectively embedding this model.
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