Following the launch of the “Ekonomi MADANI” by the Prime Minister and Finance Minister Dato’ Seri Anwar Ibrahim on 27 July 2023, the Securities Commission Malaysia (SC) last week held its annual industry dialogue to discuss and deliberate on key areas to further develop and grow the capital market.
The Annual SC Industry Dialogue 2023 (SCID 2023) saw 60 capital market industry leaders and senior representatives sharing ideas and proposals as well as highlighting issues and challenges over a range of topics under the three broad areas of investment opportunities, funding inclusivity and market reforms in the capital market.
These include strengthening our capital market promotional efforts to, among others, build a stronger domestic issuer pipeline, create greater market vibrancy, widen the pool of investors, as well as intensifying efforts relating to leverage on the Sustainability agenda and Malaysia’s leadership in Islamic Capital Market.
Industry participants also expressed their appreciation on the slew of capital market measures announced by the Prime Minister recently, as well as those announced in February and June this year. It was also acknowledged that several measures have since been implemented namely the reduction of stamp duty for share trading and secondary trading in the private market.
Further, the industry also looks forward to the implementation of other initiatives, including widening the definition of sophisticated investors, which the SC expects will take effect before the end of 2023.
Discussion at the SCID 2023 also focused on the three recent capital market measures announced by the Prime Minister last week namely the following:
1. Reducing the current board lot size for trading on Bursa Malaysia from 100 units to a more affordable level;
2. Enabling fractional share trading by investors through stockbrokers; and
3. Enabling automatic transfer for companies listed on the ACE Market to the Main Market of Bursa Malaysia, subject to meeting certain criteria.
A fractional share is a portion of stock that is less than one standard board lot. Investors can purchase fractional shares based on a specific amount of money or units of shares.
SC Chairman, Dato’ Seri Dr. Awang Adek Hussin said: “By continuing to collaborate with various stakeholders, the SC can leverage on their expertise to drive the required reforms and improvements towards strengthening the Malaysian capital market’s vibrancy, inclusivity and competitiveness.”
The reduction of board lot size and introduction of fractional trading1 of shares traded on Bursa Malaysia will provide greater accessibility to a wider group of investors, especially retail and younger investors, to invest in the stock market and build a balanced portfolio. This will also increase trading and liquidity that would benefit both companies and investors, and create a more active and dynamic market environment.
He said Bursa Malaysia is looking at reducing the board lot from 100 shares to an appropriate level, taking into account the need for the most effective implementation approach with brokers agreeing to review the current minimum commission to allow for the lowering of board lot size.
Further, the SC has also agreed to provide securities brokers the flexibility to offer fractional trading to enhance retail investors’ access to the stock market. Brokers offering fractional trading of shares listed on Bursa Malaysia will need to adhere to a set of broad principles, such as price transparency.
In relation to the automatic transfer of companies listed on the ACE Market to the Main Market of Bursa Malaysia, some of the broader issues and principles discussed at the SCID 2023 include having meaningful criteria to ensure the sustainability of the promoted companies to continuously meet with requirements to remain in the Main Market.
Awang Adek said the transfer process will benefit qualified ACE Market companies by providing them with greater visibility and access to a larger pool of investors.
Additionally, the increased number of listed companies with large market capitalisation on the Main Market will offer more investors, particularly large as well as foreign investors, a diverse range of investment opportunities in the Malaysian capital market.
He said the criteria and process are currently being reviewed and discussed together with Bursa Malaysia, and further announcements will be made when the framework is finalised.
He added, “We target for the eligibility criteria for the automatic transfer to be ready by end 2023, while the broad principles for the fractional trading will be released by end of Q3 this year.”
This week’s SCID 2023 with industry stakeholders was timely in facilitating the implementation of these capital market measures. It has also provided useful insights and yielded fresh ideas to further develop the capital market.
