Yusli Mohamed Yusoff, the chief executive officer of Bursa Malaysia, which manages the Malaysian stock exchange, seems a tad uncomfortable talking about his successes. Rather, the 45-year-old chartered accountant - who began as an accountant with Peat Marwick Mitchell & Co in London and then went on to be chief executive director for CIMB Securities - insists on looking ahead to what needs to be done.

Yusli oversaw the listing of Bursa Malaysia in mid-March, a debut that garnered a premium to larger regional peers such as the Australian, Hong Kong and Singapore exchanges due to optimism that it would return cash to shareholders. Bursa Malaysia expects to return M$416 million ($110 million) in surplus capital to shareholders by the end of 2005, according to Yusli. After the capital repayment, Bursa Malaysia will be left with nearly M$500 ($133 million) million in cash - enough to operate the exchange.

He's been at the forefront of organizing roadshows to and from Malaysia to promote local listed companies. At the same time, he has overseen moves to facilitate a more orderly and informed market. For example, he has improved the quality of the unusual market activity (UMA) query, which requires companies to now state impending developments taking place at a company. He has also seen the abolition in July of a requirement for investors to open multiple central depository system accounts, which makes for a more cost-effective way to deal in securities as there are now fewer CDS accounts to operate - it also is a move designed to attract foreign investors who didn't want to open accounts under their own names.

We talked to him about the future of the Malaysian exchange:

What are your plans for the Exchange?

We have quite a number of things we want to do but basically it all revolves around trying to improve the quality of the market and the quality of our listed companies. When it comes to technology, we are upgrading our operational facilities, which is in line with what the country is trying to do in terms of improving the delivery system. If we compare ourselves to more advanced markets around the world, or even in the region, such as Singapore and Hong Kong, there is still room for improvement.

In terms of attracting international investors, what is the current status and what is your outlook?

The level of ownership of shares in our market by foreign investors is not as high as it was before the crisis - but the level has been steadily picking up over the past few years. Percentage-wise, it was in the high twenties; now it's between 15% and the low twenties and gradually increasing.

We are doing more and more promotion to foreign investors. The exchange itself organizes one or two trips a year to Europe and the US and we are regularly doing road shows in the region to Hong Kong and Singapore. The government has been very supportive, as well. A lot of the feedback in how we can make our market more attractive has been taken onboard.

For example?

The most recent example has to do with liberalizing our depository structure. Previously if you wanted to invest in our market you had to open a separate depository account in your own name. So, for example, you would have to have an account under Lara Wozniak if you wanted to invest in a company - unless you traded through an exempt fund manager, for example Fidelity, then you could go under Fidelity's nominee account. But that was limited.

We had this rule since the Asian Financial Crisis but we've now decided we want to do away with it (starting from the middle of October) and so if you want to invest in Malaysia you can do so through an account opened in your name or through a nominee's account. So people will have the choice, which is what they do in other markets and what we did in our market before the 1997 crisis as well.

After the crisis the government wanted to identify who was investing in our market but it became rather cumbersome for people to invest in Malaysia - especially for private banking clients, people who want to remain anonymous. They wouldn't invest in our market because they didn't want the attention. So we hope that with this recent change they will start to come back to our market.

You've been involved with Invest Malaysia along with CSFB and CIMB, is that helping to draw more investments to Malaysia?

Yes, that was in March and it was part of our market promotion activities and we want to do that more often. That was the first of what we refer to as a "reverse road show" because instead of sending our companies outside to meet investors offshore we brought the investors to Malaysia. As a result, we got more coverage because the investors who came here for the three-day conference got to see roughly 60 of our listed companies, so it's very intense.

The feedback was very positive; investors said they loved the fact that they could meet so many of our companies. And also they got to meet some of our senior leaders. The Prime Minister, for example, gave a keynote speech and we arranged for breakfast meetings with the likes of the Deputy Prime Minister and the Governor of Bank Negara. It was good for the investors to hear from the policymakers themselves.

Will you do it again?

We will do it again next year. We may work with different brokers but the format will be similar.

What are some other changes that you think may attract more investment?

The government is initiating a lot of policies to try to improve the quality of companies that come under its control. The government's been taking measures to force change amongst the GLCs (government-linked companies), even in terms of basic things such as the procurement processes and the effectiveness of their boards. These things have been put in place and we know the foreign investors are happy with those efforts but now they are waiting to see the results. But that's going to be a function of how effective the implementation is of those processes by the companies themselves.

One issue that keeps cropping up is, is Malaysia going to bring back short-selling? This is something that the government is thinking about but hasn't made a decision on as of yet.

Overall, we want to make sure that we are on par with all the other regional markets.

Has the depegging of the ringgit had any effect on the equities market?

We saw a few days of very high activity. Shortly after that, though, it just pulled back. I think there was a lot of pent-up demand just waiting for the event to happen, so when it happened that demand was released. And then following that I think they just wanted to see if the ringgit was something they could arbitrage. When it didn't appear it was going to strengthen, they started to withdraw.

But that's okay because we want to attract investors who want to invest in Malaysia because they think it's a good market, not people who want to make money on foreign exchange.

So that brings us back to the issue of improving the fundamentals of the market. We think there is no shortcut to the process. In my view we are going in the right direction. It's just a question of how quickly we can do it in terms of GLC reforms and improving the way the exchange does business. All these things will happen eventually - but the sooner it happens the better because then investors will have a stronger reason to come here.

The feedback we get from investors is that they are pleased with the improvements we have made and the fundamentals of the country. The only issue is that we are perhaps not as exciting as we used to be, because now investors are looking to China and India as emerging markets. So Malaysia is seen to be a fairly steady market but we need to inject some more excitement in order to lure more investors. I'm okay with this, so long as companies do it properly.

And in terms of modernizing the exchange, how do you plan to do this?

Well at the moment our systems are all electronic - but we are upgrading the system to the most modern type. In terms of internet investment, it is available in Malaysia today. But because the broadband penetration in this country is, for example, not as high as Korea, we don't have a high percentage of our trades going through the internet today - I think it's still below 5% in terms of overall equity investment. So it's a long way off from where we want to be but I think this will grow as the broadband penetration in Malaysia grows.

Are you considering permitting those foreign brokers operating in Malaysia to offer direct market access trading to their institutional clients?

Direct market access is something we are exploring. Currently, most markets in the region already have this feature and it has been shown to increase liquidity in markets where it is available. So naturally, we are considering it, both to remain on par with our peers in terms of facilities offered to investors, and also in view of the potential it offers in attracting more international institutional players to our market.