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The establishment of the Capital Market Development Fund ("CMDF” or "the Fund”) was approved by the Minister of Finance on 21 November 2002, as part of the policy proposal for the demutualisation of the (then) Kuala Lumpur Stock Exchange.

In recognition of their contribution towards the development of the stock exchange, the shares of the Exchange were allocated as follows:
  • 40% was allocated to the broking industry, in recognition of their direct contribution and business risks undertaken to develop the exchange, of which 30% was allocated to the stockbroking companies and 10% to the remisiers
  • 30% was allocated to MOF Inc, in recognition of the role of the government in their effort to develop and promote the Malaysian capital market; and
  • 30% was allocated to the setting up of the CMDF, in recognition of the direct and indirect contributions of the non-broker community and other stakeholders to the growth and development of the exchange.

The CMDF was legally established as an independent statutory fund on 5 January 2004, pursuant to Part IX, Section 332 of the Capital Markets & Services Act* (CMSA) 2007. Part IX of the CMSA sets out the scope and broad terms of reference for the CMDF.

*The CMDF was originally established pursuant to the Securities Industry Act 1983, which has since been subsumed into the new CMSA.