Volume, volatility expose weakness in Bursa trading

Maybe, it’s time for an overhaul of the whole system — the platform, data feed services and broker trading platforms

Bhupinder Singh


THE breakdown in trading activity on Bursa Malaysia yesterday should be a clear wake-up call for the exchange to improve its trading platform service urgently.

What happened? The exchange stated that it was experiencing a “technical issue” and the matter was being investigated. Or was it another ransomware attack for “bitcoins”, similar to what happened in the recent past.

While the Bursa platform was down, the Bursa Malaysia Derivatives Bhd’s platform continued trading as it uses the CME Globex trading platform.

The problem with the Bursa trading platform seems to occur once too often. Maybe, it’s time for an overhaul of the whole system — the platform, the data feed services and broker trading platforms.

With trading volumes surging to an average eight billion units traded daily these days, traders are complaining of malfunctions once too often when seeking to undertake trades.

At the end of last year, proprietary day traders struggled to cover their positions as the stock exchange was halted in the last 15 minutes of trade.

The trading system then stopped abruptly as it did yesterday. Trading came to an abrupt halt at 3.30pm yesterday just when traders were waiting patiently for the resumption of trade in Top Glove Corp Bhd shares, anticipating a heavy sell-down of the glovemaker on the negative news out of the US.

The company’s shares had been suspended after the morning session as news broke that the US Customs and Border Protection agency had placed a detention order on disposable gloves manufactured by two of its subsidiaries, namely Top Glove Sdn Bhd and TG Medical Sdn Bhd on July 15.

Top Glove, in its filing to the exchange, stated yesterday that the consignments were probably detained due to labour-related issues and it would seek to resolve the matter within the next two weeks.

The US is a major export market for Top Glove, accounting for about a quarter of all its exports in 2019, according to its annual report. The trading of its shares was suspended at 2.30pm on Bursa yesterday and was set to resume trading at 3.30pm.

This never came to be due to the trading disruption, but as Top Glove is dual-listed in Singapore, the traders there took the opportunity to sell-off the counter, which closed almost 11% or 81 cents lower at S$6.49 (RM19.90) a share yesterday.

Using that as a benchmark, it’s logical to anticipate traders here will likely do the same with Top Glove shares on Bursa Malaysia today when trading resumes as Bursa stated yesterday.

The selling will likely be contagious across the whole glovemaker complex, assuming the trading platform does not face any technical issues again with the volatility and heavy trading volumes.

Oddly, while this episode is another meant to highlight the increasing scrutiny on the cheap labour model of many Malaysian rubber glovemakers and plantation companies, it has also helped highlight the flaw in the securities market.

Bhupinder Singh is the corporate desk editor of The Malaysian Reserve.