Bursa revises short selling, securities borrowing rules

PETALING JAYA: Bursa Malaysia Bhd has revised the tick rule for regulated short-selling (RSS), allowing orders to be executed at the best current asking price or higher instead of just at a price higher than the last done price of the approved securities.

The stock exchange also now allows investors to borrow securities for the settlement of potential failed trades rather than be subjected to the buying-in process.

Bursa chief executive officer Datuk Seri Tajuddin Atan (pic) said in a statement that the revisions in the RSS and the securities borrowing and lending – negotiated transactions (SBL-NT) failed trade proposal frameworks were done to create a more efficient marketplace for price discovery and trading.

These are also aimed at introducing market practices that are in line with more developed markets and jurisdictions, he said.

“With our market fundamentals intact to preserve a fair and orderly market, this is an opportune time for Bursa 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,” Tajuddin said.

“As Malaysia looks towards becoming a leading market in Asean, RSS and SBL-NT are some of the important market mechanisms that we look to continually improve and enhance on.”

The revised tick rule will provide greater price flexibility to market participants in conducting RSS and enhance the price discovery process and market liquidity, Bursa said.

Investors using the SBL-NT facility, meanwhile, can now mitigate the costs of genuine trade errors in the market.