Investors in the Malaysian exchange’s securities lending market are now allowed to borrow securities for the settlement of potential failed trades rather than be subjected to the buying-in process.
The revision aims to offer a way to mitigate the costs of genuine trade errors in the market.
In the short selling market, changes to the tick rule will allow short selling orders to be executed at the best current asking price or higher.
The change will provide greater price flexibility to market participants and aid price discovery and market liquidity, according to the exchange.
The reforms come under the exchange’s Regulated Short Selling (RSS) and the Securities Borrowing and Lending-Negotiated Transactions (SBL-NT) Failed Trade Proposal frameworks.
The exchange recently valued the total size of its securities lending market at MYR 4.9 billion (USD 1.1 billion).
Bursa Malaysia CEO Datuk Seri Tajuddin Atan said: “The revised tick rule on RSS and SBL-NT Failed Trade Proposal frameworks are part of Bursa Malaysia’s ongoing initiatives to create a more efficient marketplace for price discovery and trading, and to introduce market practices which are in line with more developed markets and jurisdictions.”
“With our market fundamentals intact to preserve a fair and orderly market, this is an opportune time for Bursa Malaysia to further enhance the characteristics of the two facilities which is expected to improve market liquidity, provide improved flexibility to market participants in mitigating the risk of settlement failure and reduce transaction costs of trading on Bursa Malaysia.”
“As Malaysia looks towards becoming a leading market in the Association of South Eastern Nations, RSS and SBL-NT are some of the important market mechanisms that we look to continually improve and enhance on.”