Affin Hwang Investment launches retail SBL


Affin Hwang Investment Bank Bhd has launched its retail securities borrowing and lending (SBL), a move to boost retail participation at the local bourse and allow securities owners to reap financial gains from their shareholdings.

In collaboration with Bursa Malaysia Bhd, the investment bank will provide the facility for individual shareholders to lend out their stock for short-selling, hedging, arbitraging and failed trade settlement.

The move also was intended to encourage retail investors’ participation in the SBL segment, presently dominated by institutional investors.

“We hope to facilitate Malaysia’s trading of regulated short selling and market-making activities, while widening and penetrating the SBL supply in the domestic market to increase local participation from retail and institutional trading activities in the market,” Affin Hwang Capital group MD Datuk Maimoonah Hussain said at the launch of the retail SBL in Kuala Lumpur yesterday.

Affin Hwang targets RM50 million in securities lending book size this year.

As at December 2018, Bursa has 1.87 million retail accounts with holdings worth RM137 billion.

Retail investors contributed 17% to the total volume traded in 2018 with an average of 20% over the past few years.

Retail investors’ participation in the equity market has not grown as fast as institutional investors.

Bursa, which is the second- best performer in the Asia- Pacific region based on benchmark indices, has designated 2019 as the “Retail Invest Year” to encourage investment in the equity market as a mean of wealth creation.

“The SBL is yet another Bursa facilitation to develop the marketplace by creating more liquidity and vibrancy,” Bursa CEO Datuk Seri Tajuddin Atan said.

Under Affin Hwang’s retail SBL, stocks owners who participate under the scheme have the right to recall stocks if they wish to sell them.

In addition, lenders’ credit and counter-party risk will be indemnified by the broker. Participants will still enjoy dividend payments, bonus or rights issues during the loan period.

Affin Hwang had internally launched the retail SBL to commissioned and salaried dealer representatives in the third quarter of last year (3Q18).

The initial run loaned out RM8.5 million of retail clients’ shares in less than two months despite a slowdown in 4Q18.

The SBL is an equivalent product to the Islamic Securities Selling and Buying Nego- tiated Transaction (ISSBNT) framework, the world’s first Shariah-compliant SBL launched by Bursa in December 2017.

In July last year, Affin Hwang became the first investment bank to be approved as a supplier and user under the ISSBNT model.

Tajuddin said the bourse plans to expand the current 239 stocks eligible for SBL and short-selling to enhance the exchange’s diversity and liquidity.

He said average value trades were close to RM2.4 billion as at end December 2018, an increase from RM2.3 billion in 2017.