The recent launch of “Ekonomi MADANI” by Prime Minister and Finance Minister Dato’ Seri Anwar Ibrahim on July 27, 2023, spurred the Securities Commission Malaysia (SC) to convene its annual industry dialogue, focusing on pivotal areas for capital market advancement and growth.
The Annual SC Industry Dialogue 2023 (SCID 2023) brought together 60 influential figures from the capital market sector, including industry leaders and senior representatives. The discussions encompassed a wide spectrum of subjects falling under three major categories: investment opportunities, funding inclusivity, and market reforms within the capital market.
Key topics of deliberation included fortifying promotional efforts for the capital market, fostering a robust domestic issuer pipeline, enhancing market vitality, broadening the investor base, and harnessing the potential of sustainability and Malaysia’s leadership in the Islamic Capital Market.
Participants in the industry also conveyed their appreciation for the recent slew of capital market measures unveiled by the Prime Minister, alongside those announced in February and June of the same year. Notably, some measures have already been implemented, such as the reduction in stamp duty for share trading and secondary trading in the private market.
Anticipation was palpable within the industry for the forthcoming initiatives. Among them, the expansion of the definition of sophisticated investors was highlighted. The Securities Commission Malaysia (SC) foresees this initiative taking effect before the close of 2023.
A focal point of the SCID 2023 discussions revolved around three significant capital market measures recently introduced by the Prime Minister:
- Reducing Board Lot Size: Plans to lower the current board lot size for trading on Bursa Malaysia from 100 units to a more accessible level.
- Fractional Share Trading: Enabling investors to engage in fractional share trading through stockbrokers.
- Automatic Transfer for ACE Market Companies: Allowing qualifying companies listed on the ACE Market to transition automatically to the Main Market of Bursa Malaysia, contingent on specific criteria.
Dato’ Seri Dr. Awang Adek Hussin, the SC Chairman, underscored the importance of sustained collaboration with stakeholders. He emphasized that this collaboration will be instrumental in driving essential reforms and enhancements aimed at fortifying the vibrancy, inclusivity, and competitiveness of the Malaysian capital market.
The planned reduction of board lot size and introduction of fractional share trading on Bursa Malaysia is expected to broaden accessibility for a diverse array of investors, particularly retail and younger investors, facilitating their entry into the stock market and enabling the creation of well-balanced portfolios. This is also predicted to boost trading activity, liquidity, and engender an environment of greater dynamism in the market.
Efforts are being made to ensure that the reduction of the board lot size is carefully implemented, involving a collaborative approach with brokers to potentially revise the current minimum commission structure to accommodate the lowered board lot size.
Moreover, the SC is collaborating with securities brokers to introduce flexible fractional trading options, ultimately expanding retail investors’ engagement in the stock market. This move will be governed by a set of comprehensive principles that prioritize price transparency and equity.
Concerning the automatic transfer of ACE Market companies to the Main Market, discussions at the SCID 2023 centered on establishing meaningful criteria to ensure the sustainable performance of promoted companies and their alignment with ongoing Main Market requirements.
Dato’ Seri Dr. Awang highlighted that this transfer process is expected to offer increased visibility and access to a broader investor base for qualifying ACE Market companies. Additionally, a greater number of Main Market-listed companies with substantial market capitalization will present diversified investment prospects, particularly appealing to larger and foreign investors, thus enriching the Malaysian capital market.
To expedite these initiatives, the SC is diligently reviewing and discussing criteria and processes in collaboration with Bursa Malaysia, with forthcoming announcements projected as the framework is solidified. The objective is for the eligibility criteria for automatic transfers to be in place by the conclusion of 2023. Furthermore, the fundamental principles guiding fractional trading are anticipated to be disclosed by the close of Q3 this year.
The recent SCID 2023 event played a timely and pivotal role in facilitating the execution of these critical capital market measures. The dialogue not only offered a platform for implementation but also generated valuable insights and innovative ideas to further propel the development of the capital market.
