Malaysian bourse ends short selling ban for New Year, with some caveats
The Securities Commission Malaysia (SC) and Bursa Malaysia Berhad (Bursa Malaysia) will uplift the temporary suspension of Regulated Short Selling (RSS) and have reviewed other market management measures that were introduced this year following heightened market volatility arising from the broader impact of COVID-19.
The Pan Asia Securities Lending Association (PASLA) said in a statement: “PASLA welcomes Bursa Malaysia’s decision to allow short-selling to resume. Regulated, transparent and covered short-selling is an important characteristic of high quality equity markets globally. By enhancing liquidity, it should reduce volatility, enable better price discovery and reduce costs for all market participants. Over the long term, we believe that markets in which participants can express different views will be more resilient, more attractive to global institutional investors and better positioned to support economic growth and prosperity.”
The suspension of RSS will expire on 1 January 2021 to facilitate investors’ risk management and revive Securities Borrowing and Lending (SBL) activities. The RSS will be re-introduced with the following enhanced control measures to ensure stability and maintain investor confidence:
- The daily gross short position limit for Approved Securities will be temporarily reduced from 3% to 2%; and
- A new cap of 4% on RSS aggregated net short position will be introduced.
Meanwhile, the temporary suspension on Intraday Short Selling (IDSS) and intraday short selling by Proprietary Day Traders (PDT Short Sale) due to expire on 31 December 2020 will be extended to 28 February 2021. Consequential to the extension of PDT Short Sale, temporary waivers in relation to PDT will be extended to 28 February 2021.
The temporary revisions to existing market management measures, namely the dynamic and static price limits as well as the circuit breaker, will be extended to 30 May 2021. These were implemented on 20 July 2020 and are due to expire on 18 January 2021.
In addition, the temporary relief measures and flexibilities relating to margin financing, which are due to expire on 31 December 2020, will be extended to 30 June 2021. The SC and Bursa Malaysia will continue to closely monitor ongoing domestic and global developments, and take a pro-active approach in implementing appropriate measures that support a fair and orderly market.
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