KUALA LUMPUR: Affin Hwang Investment Bank Bhd, which extended its securities borrowing and lending (SBL) business to retail investors yesterday, is aiming to achieve RM50 million in its securities lending book size in 2019.
The retail SBL, launched in collaboration with Bursa Malaysia Bhd, enables investors to lend assets which they already own but do not intend to sell immediately to Affin Hwang Investment Bank – as the borrower.
This allows the retail investors to earn interest income for lending their securities to the borrower for an agreed fee, ranging from 0.5% up to 12%, thus potentially gaining more returns over and above the dividends they normally receive.
At the launch ceremony yesterday, Affin Hwang Capital group managing director Datuk Maimoonah Hussain said the bank had initially rolled out the product through three branches to its commissioned and salaried dealer representatives.
In less than two months, she said the bank has loaned out RM8.5 million of retail clients’ shares in spite of the relatively slow market performance in the final quarter of 2018.
By offering this product, Maimoonah said the bank also hopes to facilitate Malaysia’s trading of regulated short selling and market making activities, while also widening and penetrating the SBL supply in the domestic market.
Hence, this will help to increase local participation from retail and institutional trading activities in the market, she added.
Maimoonah added that retail investors continue to play a significant role in the Malaysian stock exchange as evidenced by their net contribution of 17% to the volume traded in Bursa Malaysia Securities for 2018.
Meanwhile, Bursa Malaysia CEO Datuk Seri Tajuddin Atan said there are several attractive key features of the SBL facility for investors participating as lenders, including having the right to re-call the stocks, maintain economic benefits as the securities’ owner, and their credit or counterparty risk will be indemnified by the broker.
Tajuddin said the main participants in SBL activities are institutional participants, including the sovereign funds, government-linked companies, fund management companies and insurance companies.
As at December 2018, he said there were 1.87 million retail accounts in the marketplace holding a portfolio worth RM137.3 billion.
