Bursa Malaysia revises short-selling, securities borrowing frameworks to ease liquidity

KUALA LUMPUR: Bursa Malaysia Bhd has revised the Tick Rule on Regulated Short-Selling (RSS) and the Securities Borrowing and Lending-Negotiated Transactions (SBL-NT) Failed Trade Proposal frameworks in a move to provide more efficient price discovery and market liquidity.
The revised Tick Rule will allow RSS orders to be executed at the best current asking price or higher. The previous framework only allowed for entry of a price higher than the last done price of the approved securities. The change is expected to provide greater price flexibility to market participants in conducting RSS and enhance the price discovery process and market liquidity.
Under the SBL-NT Failed Trade Proposal’s new framework, investors are now allowed to borrow securities for the settlement of potential failed trades rather than be subjected to the buying-in process. Previously borrowing of securities was only allowed for under the Securities Borrowing and Lending-Central Lending Agency (SBL-CLA) framework. The facility will now help investors mitigate the costs of genuine trade errors in the market.
The frameworks were introduced in 2007.
“The revised Tick Rule on RSS and SBL-NT Failed Trade Proposal frameworks are part of Bursa Malaysia’s on-going initiatives to create a more efficient marketplace for price discovery and trading, and to introduce market practices which are in line with more developed markets and jurisdictions.
“With our market fundamentals intact to preserve a fair and orderly market, this is an opportune time for Bursa Malaysia to further enhance the characteristics of the two facilities which is expected to improve market liquidity, provide improved flexibility to market participants in mitigating the risk of settlement failure and reduce transaction costs of trading on Bursa Malaysia. As Malaysia looks towards becoming a leading market in Asean, RSS and SBL-NT are some of the important market mechanisms that we look to continually improve and enhance on,” Bursa Malaysia CEO Datuk Seri Tajuddin Atan said in a statement yesterday.
The total SBL size stood at RM4.9 billion at the end of January of this year.
“ We anticipate that participation will continue to grow as the exchange further enhances Bursa’s RSS and SBL facilities to be in line with developed markets,” Tajuddin said.
The changes have been approved by the Securities Commission Malaysia.