Bursa non-committal on adopting new governance structure

KUALA LUMPUR: Bursa Malaysia Bhd remains non-committal on whether it will adopt a new governance structure similar to the Singapore Exchange (SGX), which recently announced the transfer of its regulatory unit into a new subsidiary, to keep it at an arm's length from the exchange.
"What the exchange has looked at with the Securities Commission Malaysia (SC) is that these are the areas that we need to discuss. What I'm trying to say here is for Bursa, we are always looking at how to improve our governance and our governance model and framework in this aspect," its CEO Datuk Seri Tajuddin Atan (pix) told reporters at a results briefing yesterday.
He said for Bursa, the current governance model works at this point in time but the exchange will continue to improve the model and constantly monitor how things are moving in the area of governance, adding that different exchanges have different approaches.
On the outlook for the second half of 2016 (2H16), Tajuddin said it will still be challenging as the issues that affected the market in 1H16 will continue to impact market performance.
"If you look at the first quarter of 2016 (1Q16), we were the darling. There was a lot of fund chasing after our stocks, as there was some good dividends that continued to be paid … some of our companies, especially the top 30 or even top 70 are paying decent dividends. That's one of the reasons why," he said.
However, in 2Q16, several events including the announcement of a new central bank governor, Brexit, MSCI rebalancing and palm oil prices affected market performance. For 1H16, total net foreign outflow stood at RM100 million.
"We acknowledge the prevailing market condition that is the reality, it is challenging, but with these challenges, there are pockets of opportunity for the exchange," he said, adding that discerning long-term players would seek opportunities to invest on a longer period of time.
In terms of listings, five companies were listed on Bursa in 1H16, the same number as a year ago. However, funds raised from new listings were much smaller at RM400 million in 1H16 compared with RM2.9 billion a year ago. Funds raised from secondary market were also lower at RM7.1 billion compared with RM8.1 billion a year ago.
"At this point in time, we have five. We had one in July recently and one more confirmed on Aug 10. That would make it seven. On average, we normally have it in the teens," said Tajuddin.
In 2Q16, Bursa's profit after tax and minority interest (patami) remained unchanged at RM49.5 million while operating revenue rose 1.3% to RM122.2 million from RM120.7 million a year ago.
Operating expenses rose 4.8% to RM60.3 million from RM57.5 million a year ago while cost-to-income rose one percentage point to 46% from 45% a year ago.
For 1H16, patami rose 3% to RM99.4 million from RM96.5 million a year ago while operating revenue rose 3.3% to RM248.4 million from RM240.4 million a year ago.
Operating expenses rose 5% to RM123.6 million from RM117.8 million a year ago while cost-to-income rose one percentage point to 47% from 46% a year ago.
"Despite challenging market conditions, our patami for 1H16 is the best first half results since 2008. while trading revenue in the securities market decreased marginally due to lower trading activities, the derivatives market trading revenue increased, as did the Islamic Capital Market's Bursa Suq Al-Sila trading revenue following the adoption of the Murabaha concept and higher usage of tenor-based pricing," said Tajuddin.