Bursa Malaysia: Regulated Short Selling And Securities Borrowing And Lending To Facilitate More Efficient Price Discovery - The Number Of Eligible RSS Counters Increased From 100 To 171 Effective 22 July 2013

Bursa Malaysia Berhad (“Bursa Malaysia” or “the Exchange”) today shared the enhancements in Regulated Short Selling (“RSS”) and Securities Borrowing & Lending (“SBL”) which is an instrument to facilitate more efficient price discovery.

Bursa Malaysia’s Acting Director of Securities Market, Ong Li Lee said, “Our marketplace has grown by more than 130% in over four years, to USD481 billion as at April 2013. Malaysia is also a multinational marketplace with more than 45% of our FBM KLCI companies generating their revenue from overseas. In addition, Malaysia has been ranked fourth in terms of corporate governance in 2012[1] and fourth again, in terms of investor protection in 2012[2].”

She added, “With the market fundamentals intact, this is an opportune time for Bursa Malaysia to widen the number of approved securities and allow for the fast entry of qualified large cap stocks under RSS. As Malaysia looks towards becoming a leading market in ASEAN, RSS / SBL are significant market mechanisms that need to be in place to enable us to progress from our current status as advanced emerging to developed market status.”

The total RSS trade value reached a monthly peak at RM293 million in June this year from a zero base in March 2012[3] indicating market readiness and interest. Trade value is anticipated to continue growing as the Exchange introduces plans to attract greater market participation in the SBL. As at 22 July 2013, the number of stocks available has increased from 100 to 171 following the Securities Commission Malaysia’s (“SC”) approval on the removal of the 100 stocks cap. SC’s approval also includes a fast entry allowance for stocks with large market capitalisation.

In closing Ong Li Lee said, “Bursa Malaysia will continue to provide investors with the necessary tools that will help them use different trading strategies that are more robust and naturally seen in the price discovery process.”

Bursa Malaysia also shared that the latest 10 day market data on RSS trades will be shared on their website and is part of their efforts to allow for greater visibility with regards to the RSS / SBL activities in the marketplace. For more details, please visit this webpage on the Bursa Malaysia website under Regulated Short Selling at:

http://www.bursamalaysia.com/market/securities/equities/market-statistics/

RSS and SBL in a nutshell

Under the Exchange’s RSS framework, a short seller can only short sell an “approved security” as determined by the Exchange. A short seller must first borrow securities or have located a borrowing before the seller can execute a short sale. The securities for RSS can be borrowed either under the Exchange’s Securities Borrowing & Lending Agency (“SBL-CLA”) or the Securities Borrowing & Lending Negotiated Transactions (“SBL-NT”) models.