Bursa Malaysia Bhd has implemented the intraday short selling (IDSS) effective yesterday for all investors, as the country’s stock market operator sought to boost maket liquidity and attract greater participation in the equity market.
The stock market operator said it has also introduced a clear framework to facilitate IDSS trades for all investors.
Under the framework, investors will be able to sell securities first and buy the securities later within the trading day itself.
Bursa Malaysia said the IDSS can be carried out on a selected list of eligible approved securities currently comprising 280 securities and the participating equities will be reviewed every six months.
The IDSS implementation follows Prime Minister Datuk Seri Mohd Najib Razak’s announcement on Feb 6 this year to enhance vibrancy and stimulate greater trading activity in the stock market.
“Introducing IDSS to a wider group of investors is timely, considering the growing sophistication of market participants,” said Bursa Malaysia CEO Datuk Seri Tajuddin Atan.
He said the measure is part of Bursa Malaysia’s strategy to boost market liquidity and further improve flexibility for market participants to refine their trading and risk management strategies.
“The exchange will continue to undertake initiatives to provide a more efficient and facilitative market framework and the introduction of IDSS is set to further advance the exchange’s efforts to build a dynamic and vibrant capital market,” he said in a statement. Bursa Malaysia said a robust compliance requirement and safeguards have also been put in place to allow for IDSS trades.
This includes market controls for IDSS suspensions if a stock price falls by more than 15% from the previous day closing price, or if the gross short-selling volume exceeds the daily maximum limit of 3% of outstanding shares per security.
The framework also specifies compliance obligation requirements for investors before IDSS activities can commence.
To allow investors to carry out IDSS, the exchange has amended the Rules of Bursa Securities, Directives and the Participating Organisations’ Trading Manual. The rule amendments have been approved by the Securities Commission Malaysia.
Besides the short selling, the exchange has waived stamp-duty charges for small- and mid-cap stocks trading effective early March this year.
The waivers are meant to enhance trading activities and demand for the small- to mid- cap stocks.
The waivers cover the trading of 361 counters on Bursa Malaysia, or about a third of the total listed companies on the local bourse. The waiver is for a period of three years.
The authorities hope such moves will encourage greater participation especially from retail investors which have shied away from the local equity market.
After the Asian financial crisis 1997/98, many retail investors took a beating for their exposure after the market crashed and many suffered losses.
The authorities are also looking at a six-month waiver on trading and clearing fees for new investors, and the liberalisation of margin financing rules. — TMR