Bursa Malaysia revises short selling, securities borrowing rules

Bursa Malaysia HQ

KUALA LUMPUR: Bursa Malaysia Bhd has revised the tick rule for regulated short-selling (RSS), allowing orders to be executed at the best current asking price or higher instead of just at a price higher than the last done price of the approved securities.

The stock exchange also now allows investors to borrow securities for the settlement of potential failed trades rather than be subjected to the buying-in process.

Bursa Malaysia chief executive officer Datuk Seri Tajuddin Atan said in a statement that the revisions in the RSS and the securities borrowing and lending - negotiated transactions (SBL-NT) failed trade proposal frameworks were done to create a more efficient marketplace for price discovery and trading.

These were also aimed at introducing market practices that were in line with more developed markets and jurisdictions, he said.

“With our market fundamentals intact to preserve a fair and orderly market, this is an opportune time for Bursa Malaysia to further enhance the characteristics of the two facilities, which is expected to improve market liquidity, provide improved flexibility to market participants in mitigating the risk of settlement failure and reduce transaction costs of trading on Bursa Malaysia,” Tajudin said.

“As Malaysia looks towards becoming a leading market in Asean, RSS and SBL-NT are some of the important market mechanisms that we look to continually improve and enhance on.”

The revised tick rule will provide greater price flexibility to market participants in conducting RSS and enhance the price discovery process and market liquidity, Bursa Malaysia said.

Investors using the SBL-NT facility, meanwhile, can now mitigate the costs of genuine trade errors in the market.

“There is clear indication of market interest in Bursa’s RSS and SBL,” Tajuddin said, noting that the total SBL size stood at RM4.9bil at the end of January of this year.

“We anticipate that participation will continue to grow as the exchange further enhances Bursa’s RSS and SBL facilities to be in line with developed markets.”

The rule amendments have been approved by the Securities Commission.

For more details, visit the Bursa Malaysia website under Regulated Short Selling.