The first stage of the exercise was successfully completed on 7 April 2003 with the conversion of all 350 counters on the Second Board to board lot of 100 units. The second stage implementation on 28 April saw the successful conversion of 108 counters from the Trading/Services sector of the Main Board. Securities on the MESDAQ Market are already being traded in board lot of 100 units.
The exercise to standardise board lot was scheduled to be implemented in four stages. However, this will now be accelerated into three stages, with the third and fourth stages combined and implemented concurrently on 26 May 2003.
Deputy President, Strategy & Development of the KLSE, Abdul Hamid Sheikh Mohamed said that the decision to combine the implementation of stages 3 and 4 was following the successful implementation process from the first two stages.
"Our continued monitoring of the implementation of the first two stages has seen successful conversion of the counters involved whilst at the same time maintaining an orderly market. We believe the remaining 653 counters from the 14 sectors on the Main Board are ready for a combined roll-out, with effect from 26 May 2003.
"Moreover, we have received positive feedback on the trading of securities in 100 units from all market participants, including investors. Accelerating the implementation process for the remaining counters will allow investors to have access to all securities trading in standard board lot of 100 units sooner, rather than later," Abdul Hamid said.
On the impact of trading in board lot of 100 units to date, Abdul Hamid said that it was still too early to fully evaluate the impact.
"Initial indications however, has been positive and encouraging. Average daily volume on the Second Board (excluding Direct Business Transactions) increased to 32.29 million units from 22.24 million units in the five weeks after conversion compared to the same period prior to the conversion. This marks an increase of 45.19 % in volume traded on the Second Board. Whilst total trading volume of the market decreased by 12.4% during the same period, trading activity on the Second Board as a percentage of total trading activity has increased over the same period, from 13.42 % before conversion to 22.25 % after conversion.
"Cumulative trading value for the Second Board counters rose to RM 773.17 million in the five weeks after the conversion to standard board lot of 100 units, compared to RM 605.95 million in the five weeks prior to trading in 100 units, recording an increase of over 27.60 %," Abdul Hamid said.
Trading activity in the Trading/Services sector of the Main Board has also shown positive results.
"Average trading volume for the Trading/Services sector of the Main Board in the two weeks after the conversion increased to 31.04 million units, compared to 27.45 million units in the corresponding period before the conversion to 100 units. This is an increase of 13.10 %.
"Cumulative trading value for the Trading/Services sector of the Main Board rose to RM1,039.34 million in the two weeks after the conversion compared to RM931.56 million in the corresponding period before the conversion on 28 April, recording an increase of 11.57 %.
Effective 7 April, all Initial Public Offers (IPOs) on the KLSE are traded in board lots of 100 units. The securities of SCOMI Group Berhad, which will be listed on Tuesday, 13 May 2003 on the Second Board under the Industrial Products Sector, will be traded in board lot of 100 units effective the same day.
Abdul Hamid urged investors to contact their remisiers to understand the benefits of trading in standard board lot of 100 units. "The standard board lot has made investment in securities more accessible and affordable for all investors. It allows for enhanced investor participation especially 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 also 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 continue to work with industry participants, namely the brokers, in ensuring the successful completion of the conversion of securities into standard board lot of 100 units on 26 May 2003 and will continue to monitor and regulate an orderly market.
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 have also been distributed through the network of KLSE member companies nationwide, Authorised Direct Members (ADMs) and Balai Maklumat BSKL.
