Temporary suspension of short selling extension to provide market stability

07 Jul 2020 / 18:22 H.

KUALA LUMPUR: The temporary suspension of short-selling that is being extended to Dec 31, 2020 by the Securities Commission Malaysia (SC) and Bursa Malaysia Bhd is aimed at providing market stability and confidence, SC chairman Datuk Syed Zaid Albar said today.

He said the decision was backed by the fact that the growing sign of recovery was at an early stage, both in the domestic and the global economic situation, while taking the cue from the International Monetary Fund (IMF) which describes the period of the COVID-19 pandemic as a profound uncertainty.

“We have also accounted for market conditions remaining volatile, the continued weakness in the overall economic environment, and the re-escalation of geopolitical tensions,” he said in a live virtual session of Invest Malaysia 2020 on the topic of ‘Malaysia’s Capital Market -- What Lies Ahead’ via BursaMKTPLC’s Facebook page.

Syed Zaid said the SC and Bursa Malaysia will continue to monitor developments affecting the capital market, assess the adequacy of existing measures to support an orderly market and mitigate any potential risks.

On June 26, the SC and Bursa Malaysia announced the temporary suspension of short-selling extension, saying there would not be any change to the scope of the suspension as it applies to Intraday Short Selling (IDSS) and Regulated Short Selling (RSS), as well as intraday short selling by Proprietary Day Traders.

Permitted Short Selling (PSS) is not affected by the temporary suspension of short selling, as PSS is necessary for market makers to market make the relevant securities such as exchange-traded funds efficiently.

The temporary suspension, which began on March 24, was extended on April 28 and was scheduled to expire on June 30 this year.

On the impact of COVID-19 on the capital market’s digitalisation efforts, Syed Zaid said it has somewhat forced companies and SC intermediaries to ramp up their digital strategies as well as consider technological solutions to ensure compliance with their legal and regulatory obligations.

“Since March this year in terms of digitalisation, we see there have been greater efforts to resolve, and collaboration from all stakeholders to find a workable solution.

“The SC will continue to facilitate digital offerings and solutions for the capital market,” he said.

Syed Zaid added that the SC would continue to press for regulatory reforms that would facilitate business processes and regulatory reporting, including for submissions, advertising, and serving of notices by the SC.

“The pandemic is a moment of opportunity to reflect on the current landscape and consider rebuilding a better tomorrow and the next generation. We must look at creating and developing a new future that is more resilient, sustainable and inclusive,” said Syed Zaid. -Bernama

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