This will be the first of four stages of KLSE's implementation plan for the trading of securities in standard board lot of 100 units. The exercise to standardise board lots at 100 units will be done in four stages to ensure the maintenance of an orderly market. The standardisation exercise involving all four stages is expected to be completed by June 2003. Currently, securities are traded on the KLSE in board lots of 100, 200 and 1,000 units.
Deputy President, Strategy & Development of the KLSE, Abdul Hamid Sheikh Mohamed said that the first stage will involve the conversion of all securities listed on the Second Board into standard board lots to be traded at 100 units per lot.
"All counters on the Second Board including counters under the PN4 Condition on the Second Board, will be traded in board lots of 100 units from 7 April 2003. As at 27 March 2003, there are 351 counters listed on the Second Board. The list of all 351 counters is attached.
"It is also important to note, that from 7 April 2003 all Initial Public Offers (IPOs), whether on the Second Board or Main Board, will also be traded in board lot of 100 units per lot," Abdul Hamid said. To date, about 5 IPOs are scheduled for listing until the end of April 2003.
With reference to odd lots, stocks held in less than 1,000 units will be more marketable once their conversion to 100 units takes effect. Any odd lots arising from the conversion will continue to be traded on the odd lot board.
Abdul Hamid said the move to standardise board lots on the KLSE came after careful consultation with industry participants. System integration tests and mock run sessions with the brokers to confirm market readiness have been successfully conducted.
"The industry is ready and the market is ready.
"In fact, we are satisfied with the system integration tests so far and we are confident that the first stage will see the smooth conversion and trading of all Second Board counters in board lots of 100 units beginning 7 April 2003," he said.
For more information on the standard board lot, investors and other market participants are advised to read the frequently asked questions (FAQs) related to standard board lot, available on the KLSE website www.klse.com.my. The FAQs are available in both English and Bahasa Melayu. Investor's guide brochures on "Standard Board Lot of 100 Units" in English, Bahasa Melayu and Mandarin will also be distributed through the network of KLSE member companies nationwide, Balai Maklumat BSKL and Authorised Direct Members (ADM) by 1 April 2003.
The standard board lot will make investment in securities more accessible and affordable for all investors. The standard board lot will enhance investor participation in high priced securities. Enhanced investor interest and participation will result in a more efficient price discovery and sustained market liquidity. The smaller board lot will help reduce holdings of odd lots. With the standard board lot of 100 units, many of these previous odd lot shares will be more marketable. Given the emphasis on shareholder distribution, the standard board lot will also enhance the shareholding spread of securities.
KLSE will announce and update the market regularly on the various stages involved in the standardisation of the board lots to allow sufficient time for investors, dealers and other market participants to make the necessary preparations.
