Holiday trading a possibility


“We are writing to seek your feedback on the proposed amendments to the business rules for Bursa Malaysia Securities Bhd, Bursa Malaysia Derivatives Bhd, Bursa Malaysia Bonds Sdn Bhd, Bursa Malaysia Securities Clearing Sdn Bhd, Bursa Malaysia Depository Sdn Bhd and Bursa Malaysia Directives Clearing Bhd to facilitate operations on public holidays,” said the stock exchange in an email.

PETALING JAYA: Bursa Malaysia is mulling the idea of allowing trading in securities on the local bourse on any day that is declared a public holiday as part of its ongoing update of its rules and listing requirements.

In its email to industry players seen by StarBiz, the stock exchange is seeking feedback from industry participants on proposed amendments in its business rules to operate on a public holiday for its subsidiaries.

“We are writing to seek your feedback on the proposed amendments to the business rules for Bursa Malaysia Securities Bhd, Bursa Malaysia Derivatives Bhd, Bursa Malaysia Bonds Sdn Bhd, Bursa Malaysia Securities Clearing Sdn Bhd, Bursa Malaysia Depository Sdn Bhd and Bursa Malaysia Directives Clearing Bhd to facilitate operations on public holidays,” said the stock exchange in an email.

The stock exchange has also suggested amendments to the Main Market, ACE Market and Leap Market listing requirements to facilitate operations on public holidays.

Bursa Malaysia said the proposed amendments were able to fulfil the objective on operating on a public holiday declared by a minister in accordance to the Holidays Act 1951.

It added that the objective of the amendments was to express that “all persons with obligations under the business rules and listing requirements must comply and give effect to our rules and directives if we operate on a declared public holiday”.

When contacted by StarBiz, a Bursa Malaysia official said the stock exchange was doing a “survey” to get feedback from industry players.

Minority Shareholders Watchdog Group (MSWG) chief executive officer Devanesan Evanson said fixed deliveries and settlements provide certainty to the capital markets and views the impact on the industry of this proposal to be positive.Minority Shareholders Watchdog Group (MSWG) chief executive officer Devanesan Evanson said fixed deliveries and settlements provide certainty to the capital markets and views the impact on the industry of this proposal to be positive.

“It is an industry consultation that we are doing,” added the official, without elaborating.

Although there was no clear explanation in the email about the rationale behind these proposed amendments, most industry experts believe the proposal to operate on a public holiday is for sudden public holidays announced by the government rather than the usual public holidays.

However, most industry players contacted viewed the proposal negatively due to concerns about trading liquidity and the cost involved in getting staff to work on public holidays would be higher.

A brokerage said bringing back brokers on a public holiday to continue trading could cost as much as three times more due to public holiday wages.

“The idea of improving market access is welcomed, but the cost of operating on a public holiday will be higher for broking companies. We also have to consider if there will be enough trading liquidity to make it worth the effort,” it added.

A trader with the local derivative brokerage told StarBiz that contract volumes traded fall off significantly on Bursa Malaysia Derivative or BMD after the market closes at 6pm.

The crude palm oil futures or FCPO contract which is now allowed to trade again at 9pm to 11.30pm attracts little interest with volumes traded quite low and the ask/bid spread also being higher in the night session.

He added the futures broker also had a growing list of clients trading online overnight on derivative contracts offered on the CME Globex trading platform.

“The higher costs will outweigh the revenue for related parties including brokers and Bursa Malaysia. If banks are closed, then it is no point to open trading for securities unless Bank Negara says banks must be open as well. Trading volume on public holidays would not be significant. Thus, it wont be a game-changer,” said the brokering firm.

Another broker sees this development as “a sign of desperation” to boost market participation in the country.

“Our trading volumes have dropped lately. But the most important thing the stock exchange needs to explore is why investors are not trading on the local bourse as high as in other countries.

“We need to look at our own fundamentals and fix the issues and in turn, the volumes will come back. Perhaps, we need to ask ourselves, whether the cost of trading in Malaysia is higher than other countries.

“Is it because Bursa-listed companies are not competitive compared to the other regions,” asked the broker.

Citing an example of the Hong Kong Stock Exchange, the broker said the exchange has short trading hours but the trading volume is huge.

“Hence, if the country’s market is good, investors will be back,” quipped the broker.

Meanwhile, a fund manager said allowing the stock exchange to operate on public holidays would lead to lower productivity as the work-life balance may have negative impact on work performance.

“Longer work days and less holidays are not good for creativity and inspiration,” the fund manager added.

The fund manager noted members of listed companies may also face problems on operations including aggressive timeline for submissions when other government agencies or banks in the country are not open.

“The problem would arise for those filing to Bursa Malaysia when government offices are closed, which are needed for stamp duty. With shorter holidays and longer business days, some cases where there are deadlines to be met, company auditors, investment advisors or bankers may need to rush on submission on results, announcements, or even corporate actions like rights issue.

“Related businesses that operate on holidays will also incur higher building costs, added the fund manager.

On the flip side, the fund manager explained that the move may also be beneficial for investors to not lose out on “business opportunities” should other markets be open.

Echoeing similar views, Minority Shareholders Watchdog Group (MSWG) chief executive officer Devanesan Evanson said fixed deliveries and settlements provide certainty to the capital markets and views the impact on the industry of this proposal to be positive.

“The capital markets operate on the certainty and timeliness of these rules. It provides certainty that deliveries and settlements will take place. This, in turn, ensures ‘business as usual’ in the capital market,” he added.

In December last year, Bursa announced the after-hours (T+1) trading session, which is an extended trading session available for all Bursa Malaysia Derivatives commodity and equity index futures and options contracts.

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