Taking steps towards a developed marketplace
Bursa Malaysia Bhd is taking deliberate steps towards becoming a developed marketplace by encouraging the issuance and trading of exchangetraded fund (ETF) and the use of securities borrowing and lending (SBL).
ETF is a stock market-listed investment fund that tracks indexes such as the Kuala Lumpur Composite Index and Morgan Stanley Capital International Index.
SBL is a tool that allows stockholders to enhance their returns by lending their stocks to other investors.
Chief executive officer Datuk Tajuddin Atan said ETF and SBL would enhance the equity market’s ecosystem and provide investors a diverse range of efficient and cost-effective products and instruments.
“The growth in these areas has always been in the developed markets due to the high volatility and volume.
“We are moving towards that,” he told reporters after launching the inaugural ETF and SBL Conference 2014 here yesterday.
The one-day conference, themed “Enhancing Portfolio Returns Using ETF and SBL”, aims to increase awareness of ETFs as a portfolioenhancing tool among investors as well as highlight the importance of SBL in developing the marketplace in the country.
Tajuddin said ETF provided lowcost, dynamic and flexible trading tool and contributed up to 30 per cent of trading volume in developed markets.
He said the global annual growth rate of ETF was expected to be between 15 per cent and 30 per cent for the next five years.
In Malaysia, he said, ETF was still in the development phase and few things needed to be done to nurture it, among them building the ecosystem and educate investors on benefits of the trading instrument.
To date, there are six ETFs in Malaysia, including CIMB FTSE China 25 ETF, CIMB FTSE/Asean
The growth in these areas has always been in the developed markets due to the high volatility and volume.
Datuk Tajuddin Atan, Bursa Malaysia CEO
40 Malaysia ETF and FTSE Bursa Malaysia KLCI ETF.
Meanwhile, Tajuddin said, SBL was a powerful tool for individuals or institutions to enhance their returns by lending their stocks and thus allowing for a higher level of activity of the capital market.
“For a market to move towards a developed market status, all these features are something that we need to do and Bursa Malaysia is trying to enhance the market offering,” he said.
As of Dec 31 last year, approximately US$1.45 trillion of securities were loaned out globally of which Asian equities comprised US$64 billion.
In Malaysia, SBL registered on Bursa Malaysia surged to US$720 million as of Sept 8 this year from US$1.15 million in January 2012.
The pool of securities eligible for SBL has widened to 227 listed securities as at Aug 14 this year. — Bernama