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Malaysia modifies SBL rules amid rising volumes
27 February 2017
Malaysia is the seventh largest market in Asia Pacific in terms of equity lending revenues
Malaysia’s stock exchange has revised rules
around short selling and securities lending in an attempt to
boost price flexibility and market liquidity.
A modified tick rule will allow short sales to be executed
at the best current asking price or higher, officials at Bursa
Malaysia said on Monday.
In addition, investors will be able to borrow securities for
the settlement of potential failed trades rather than be
subject to a buying-in process.
"Using this facility, investors can now mitigate the costs
of genuine trade errors in the market," a statement read.
The rule amendments have been approved by the Securities
Malaysia is the seventh largest market in Asia Pacific in
terms of equity lending revenues, according to IHS Markit data.
Revenues jumped 40% over in 2016.
Although the total remains low by regional standards at $32m
it is over 10 times that generated five years ago.
Bursa Malaysia offers two securities borrowing and lending
(SBL) models: central lending agency (SBLCLA) and negotiated
The SBL-CLA model sees the bourse act as the central lending
agency for all SBL transactions between authorised lenders and
SBL-NT provides an on-shore route to agree transactions an
over-the-counter basis and report to its representatives.
Datuk Seri Tajuddin Atan, Bursa Malaysia’s
chief executive, said this week that there is a "clear
indication" of growing market interest in the exchange's
regulated short selling (RSS) and SBL mechanisms.
"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," he added.
"As Malaysia looks towards becoming a leading market in The
Association of Southeast Asian Nations (ASEAN), RSS and SBL-NT
are some of the important market mechanisms that we look to
continually improve and enhance on."