The standard board lot of 100 units for all listed securities is expected to be implemented in stages in the second quarter of 2003. Currently, securities are traded on the KLSE in board lots of 100, 200 and 1000 shares - the most common being 1000 units of securities per lot for securities on the Main and Second Boards. Sixteen counters on these boards are being traded in 200 units of securities per lot since 31 July 1995 as part of the move to make these securities more affordable to a larger sector of the investing public, hence improving the liquidity of the securities. Securities listed and traded on the MESDAQ Market are already in board lot size of 100 units.
Executive Chairman of the KLSE, Dato' Mohd Azlan Hashim said that the main objectives for the introduction of the standard board lot of 100 units are to eliminate multiple board lots by requiring trades in standard lot of 100 units. Additionally, this would reduce investor holdings of odd lots.
Presently, these odd lots are quoted on a separate screen for trading. Due to the varying number of units, trading in odd lots is highly illiquid. With the standard board lot of 100 units, many of these previous odd lot shares will be more marketable. Standard board lot size for all securities listed on the Main Board, Second Board and MESDAQ Market also helps avoid confusion among investors and brokers, and facilitates computation of stock prices and comparison of portfolio investment.
"The proposal for standard board lot including the phased implementation approach is made after consultation with industry participants.
"The standard board lot has the advantage of making securities investment more accessible and affordable for all investors. For high value securities, the standard board lot will enhance investor participation in these securities.
"In this way, there will be greater investor participation and interest in investment which will result in more efficient price discovery and sustained market liquidity," he said.
Given the emphasis on shareholder distribution, the standard board lot will also enhance the shareholding spread of securities.
The KLSE has obtained approval from the Securities Commission (SC) for changes to the Rules of the KLSE to implement the standard board lot. KLSE will conduct system, integration and readiness tests with the stockbroking companies before implementation.
"The standard board lot of 100 units will be implemented in stages to ensure that the roll-out will be accomplished in a smooth and orderly manner and to facilitate easier understanding by investors and other market participants," Mohd Azlan said.
KLSE will announce the details of the implementation plan in due course.
