KUALA LUMPUR (April 16): Investors can once again engage in short selling of stocks on Bursa Malaysia starting today, said Bursa Malaysia Bhd.
The short selling of shares was banned following the 1997 Asian financial crisis.
In a statement today, Bursa said the intraday short selling (IDSS) can be carried out on a selected list of eligible securities, which currently comprises 280 securities. It will be reviewed every six months.
On Feb 6, Prime Minister Datuk Seri Najib Razak had announced the move as part of measures to enhance vibrancy and stimulate greater trading activity in the stock market at the World Capital Market Symposium.
The exchange has implemented a clear framework to facilitate IDSS trades for all investors, which under the framework, investors will be able to sell securities first and buy the securities later within the trading day itself.
“Introducing IDSS to a wider group of investors is timely considering the growing sophistication of market participants. This measure is part of the Exchange’s strategy to boost market liquidity and further improves flexibility for market participants to refine their trading and risk management strategies,” said Bursa chief executive officer Datuk Seri Tajuddin Atan.
“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 added.
Bursa noted that a robust compliance requirement and safeguards have also been put in place to allow for IDSS trades to take place, which 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, the exchange added.
Former prime minister Tun Dr Mahathir Mohamad had introduced a ban on short-selling of shares during the 1998 Asian financial crisis to help curb outflow of capital. In 2006 Malaysia had partly lifted its ban on short-selling of shares, but the IDSS was only permitted for licensed proprietary traders on Bursa.