KUALA LUMPUR: Bursa Malaysia Securities Bhd announced that equity brokers are now allowed to offer non-cash rewards and incentives to their clients.

Based on a guidance on rebates on commission issued by the regulator, such non-cash rewards or incentives may take the forms of educational training and research materials, where a participating organisation and its dealer’s representatives may offer its clients free investment seminars or talks, or a free subscription to financial journals or magazines.

Others include the accumulation and redemption of points or free gifts like electronic products, such as computers or telephones, based on the accumulation and redemption of points, free gifts or lucky draws — where a participating organisation and its dealer’s representatives may invite its clients to participate in a lucky draw based on reward points accumulated by clients.

Bursa Malaysia Securities in a statement yesterday said the move is part of an initiative undertaken by the exchange to facilitate business and encourage market development, and at the same time introduce practices which are in line with other markets and jurisdictions.

“The introduction of the guidance will not only encourage fair market conduct by equity brokers in rewarding and retaining clients, but will also promote active retail participation,” it added. Bursa said that the guidance is also intended to inculcate best practices in equity brokers in the structuring of the types of non-cash rewards and incentives that can be offered by equity brokers to clients.

Bursa Malaysia Securities also said that this would further enhance Bursa Malaysia’s regulatory framework and promote the best business conduct among equity brokers.

Remisiers Association of Malaysia president Sam Ng, when contacted by the digitaledge DAILY, said although the impact would not be substantial enough to reverse the differing brokerage rates in the industry that have resulted in low trading volume and liquidity, he was bittersweet about the move by the regulator, which may excite trading in the market place.

“It will make the market more transparent and allow these brokerage firms to be as aggressive as commercial banks by conducting seminars and printing brochures to openly and actively lure clients,” he added.

This article first appeared in digitaledge Daily, on September 10, 2015.