Bursa Malaysia

Bursa Malaysia Berhad
Publicly traded government-linked company
Traded as MYX: 1818
ISIN MYL1818OO003
Industry Stock exchange
Founded 1964
Headquarters Exchange Square, Bukit Kewangan, 50200 Kuala Lumpur, Malaysia.
Key people
 Amirsham Abdul Aziz (Chairman)[1]
Tajuddin Atan (CEO)[2]
Parent Minister of Finance Incorporated
Website www.bursamalaysia.com

Bursa Malaysia Berhad (MYX: 1818) is an exchange holding company approved under Section 15 of the Capital Markets and Services Act 2007. It operates a fully integrated exchange, offering the complete range of exchange-related services including trading, clearing, settlement and depository services.

On 18 May 2015, the MYX joined the United Nations Sustainable Stock Exchanges Initiative (SSE) as part the SSE's regional dialogue in Bangkok hosted by the Stock Exchange of Thailand.[3]

History

Exchange Square, the headquarters of Bursa Malaysia

Bursa Malaysia (MYX: 1818) was known as Kuala Lumpur Stock Exchange (KLSE, Bursa Saham Kuala Lumpur in Malay) from its founding in 1930[4] when the Singapore Stockbrokers' Association was set up as a formal organisation dealing in securities in Malaya.

The first formal securities business organisation in Malaysia was the Singapore Stockbrokers' Association, established in 1930. It was re-registered as the Malayan Stockbrokers' Association in 1937. The Malayan Stock Exchange was established in 1960 and the public trading of shares commenced. The board system had trading rooms in Singapore and Kuala Lumpur, linked by direct telephone lines.

In 1964, the Stock Exchange of Malaysia was established. With the secession of Singapore from Malaysia in 1965, the Stock Exchange of Malaysia became known as the Stock Exchange of Malaysia and Singapore. In 1973, currency interchangeability between Malaysia and Singapore ceased, and the Stock Exchange of Malaysia and Singapore was divided into the Kuala Lumpur Stock Exchange Berhad and the Stock Exchange of Singapore. The Kuala Lumpur Stock Exchange which was incorporated on 14 December 1976 as a company limited by guarantee, took over the operations of the Kuala Lumpur Stock Exchange Berhad in the same year.

In 1998, as one of the attempts to weather the 1997 Asian financial crisis, it fully suspended the trading of CLOB (Central Limit Order Book) counters, indefinitely freezing approximately US$4.47 billion worth of shares and affecting 172,000 investors, most of them Singaporeans.[5][6][7]

On 14 April 2004, Kuala Lumpur Stock Exchange was renamed Bursa Malaysia Berhad, following the demutualisation exercise, the purpose of which was to enhance competitive position and to respond to global trends in the exchange sector by making themselves more customer-driven and market-oriented. It consisted of a Main Board, a Second Board and MESDAQ with total market capitalisation of MYR700 billion (US$189 billion).

Bursa Malaysia has since then focused on various initiatives aimed at improving its product and service offerings, increasing the liquidity and velocity of its markets, improving the efficiency of its businesses and achieving economies of scale in its operations. On 18 March 2005, Bursa Malaysia was listed on the Main Board of Bursa Malaysia Securities Berhad with a 17% or RM0.50 premium over its retail price of RM3.00.

Source: Bursa Malaysia's About Us Page – Data updated as at 3 February 2016 Bursa Malaysia's About Us

Corporate milestones

Year Milestones
1930
  • First formal securities business organisation established in Malaysia - the Singapore Stockbrokers' Association
1937
  • Re-registered as the Malayan Stockbrokers' Association
1960
  • The Malayan Stock Exchange was established and the public trading of shares commenced. The board system had trading rooms in Singapore and Kuala Lumpur, linked by direct telephone lines.
1964
  • The Stock Exchange of Malaysia was established.
1965
  • The Stock Exchange of Malaysia became known as the Stock Exchange of Malaysia and Singapore, with the secession of Singapore from Malaysia in 1965.
1973
  • The Stock Exchange of Malaysia and Singapore was divided into the Kuala Lumpur Stock Exchange Berhad and the Stock Exchange of Singapore with the cessation of currency interchangeability between Malaysia and Singapore.
1976
  • The Kuala Lumpur Stock Exchange was incorporated on 14 December 1976 as a company limited by guarantee and took over the operations of the Kuala Lumpur Stock Exchange Berhad (KLSEB) in the same year.
1980
  • The Kuala Lumpur Stock Exchange was incorporated on 14 December 1976 as a company limited by guarantee and took over the operations of the Kuala Lumpur Stock Exchange Berhad (KLSEB) in the same year.
1994
  • The Kuala Lumpur Stock Exchange was renamed ‘Kuala Lumpur Stock Exchange’.
1997
  • The Shariah-compliant securities list is introduced in June by the Shariah Advisory Council (SAC) of the Securities Commission of Malaysia (SC). Shariah-compliant securities are securities which are screened against a clear set of guiding principles.
1999
  • Launch of Kuala Lumpur Shariah Index (KLSI) in April to meet the demands from investors seeking Shariah-compliant investments. It acts as a benchmark for tracking the performance of Shariah-compliant securities.
2004
  • On 14 April 2004, Kuala Lumpur Stock Exchange changed its name to Bursa Malaysia Berhad, following a demutualisation exercise, the purpose of which was to enhance competitive position and to respond to global trends in the exchange sector by making the Exchange more customer-driven and market-oriented.
2005
  • On 18 March 2005, Bursa Malaysia listed on the Main Board of Bursa Malaysia Securities Berhad.
2007
  • The exchange received certifications for conformance to the ISO 9001:2000 Quality Management System and ISO 14001:2004 Environmental Management System standards on 5 October 2007.
  • Launch of FTSE Bursa Malaysia Emas Shariah Index (FBM Emas Shariah) in January. FBM Emas Shariah became the benchmark index for Malaysian Shariah-compliant investments after KLSI was deactivated on November 2007.
  • FTSE Bursa Malaysia Hijrah Shariah Index (FBM Hijrah Shariah) was launched in May. FBM Hijrah Shariah is designed to be used as a basis of Shariah-compliant investment products that meet the screening requirements of international Islamic investors.
2009
  • A new board structure comprising the Main and ACE Markets was officially implemented in 3 August 2009. Essentially the Main and Second Boards were merged to form the Main Market, while the MESDAQ Market was revamped into an alternative market known as ACE Market (ACE stands for Access, Certainty and Efficiency).
  • Bursa Malaysia Berhad entering into a strategic partnership with Chicago Mercantile Exchange (CME) with the view to improve accessibility to its derivatives offerings globally. CME holds 25% of the equity stake in Bursa Malaysia Derivatives Berhad, while the remaining 75% interest is held by Bursa Malaysia Berhad.
  • Launch of Shari’ah-based electronic commodity trading platform, called Bursa Suq Al-Sila’, the world's first end-to-end Shari’ah compliant commodity trading platform that is able to facilitate commodity-based Islamic financing and investment transactions under the Shari’ah principles of Murabahah, Tawarruq and Musawwamah.
  • Bursa's benchmark index, the KLCI, was raised to a new level with the adoption of the FTSE international index methodology. The enhanced KLCI, now known as the FBM KLCI, is based on globally accepted standards of tradability and investability of the constituents, as well as transparency of the methodology.
2010
  • Bursa's inaugural Business Sustainability Programme officiated, in line with Bursa Malaysia's call to Malaysian listed companies to integrate sustainability elements into their business strategies. The Programme consists of a guide on sustainability for directors, a knowledge portal, a project matching facility and thought leadership sessions.
2011
  • Launch of ASEAN Exchanges, a collaboration among Bursa Malaysia, Hanoi Stock Exchange, Hochiminh Stock Exchange, Indonesia Stock Exchange, The Philippine Stock Exchange Inc, Singapore Exchange and The Stock Exchange of Thailand, with a mission to establish an interlinked ASEAN capital market via greater cross-border investments, mobilisation of intra-ASEAN funds and trading of equity markets. The alliance saw the launch of ASEAN Brand Identity, ASEAN Exchanges website and ASEAN Stars with the intent to promote the growth of the ASEAN capital market and spur higher liquidity in the region.
2012
  • Launch of ASEAN Trading Link on 18 September 2012 connecting Bursa Malaysia and Singapore Exchange and later on 15 October 2012, The Stock Exchange of Thailand connects to ASEAN Trading Link. This grouping brings together 2,250 listed companies with a market capitalisation of USD1.6 trillion, representing approximately 70% of the total market capitalisation of ASEAN. Will greatly increase capital flow and enhance liquidity as well as the vibrancy of the ASEAN marketplace to the benefit of investors in this region.
  • The FTSE Group and Bursa Malaysia launched the "FTSE Bursa Malaysia Small Cap Shariah Index" to serve as a benchmark for Shari’ah-compliant investments in small-cap companies on the Malaysian stock market. The new index forms part of the "FTSE Bursa Malaysia Emas Shariah" universe and will be calculated on an end-of-day basis.
2013
  • The launch of Exchange Traded Bond and Sukuk (ETBS) with the maiden issuance by DanaInfra Nasional Berhad on the Exchange marked a historic milestone for the Malaysian capital market, effectively creating a new asset class on the Exchange to cement Malaysia as the world's leading sukuk marketplace.
2014
  • Launch of BURSAMKTPLC (spoken name: ‘Bursa Marketplace’), giving a comprehensive view with rich market information and insights of the Malaysian market - what every investor and trader needs in one place; a first-of-its-kind virtual marketplace that brings a unique user experience and engages the investors especially new investors, to access market knowledge, market insights and trading ideas as they chart their ‘Trip to Trade’ and at the same time grow their financial literacy.
  • Introduced ASEAN Post Trade Services to Participating Organisations (POs) for outbound (non-Bursa Malaysia Securities) trades executed on participating ASEAN stock exchanges that are currently on the ASEAN Trading Link.
  • Introduced Environmental, Social and Governance (ESG) Index – FTSE4GOOD Bursa Malaysia (F4GBM) which measures the performance of companies demonstrating strong ESG practices.
2015
  • Bursa Malaysia Berhad signed the Sustainable Stock Exchanges’ (SSE) voluntary commitment to promote sustainability performance and transparency in Capital Markets. The support for SSE's sustainability initiative underscores the national Exchange's commitment to remain one of the world's most competitive markets by integrating global best practices in the local marketplace.
  • Introduced the new Sustainability Reporting Framework, comprising amendments to the listing requirements requiring our Listed Issuers to issue a Sustainability Statement in their annual report. To assist Listed Issuers with their Sustainability Statement, the Sustainability Reporting Guide and 6 Toolkits was introduced. We were the first ASEAN exchange to adopt this approach.
2016
  • FTSE Russell, the global index provider, announces the launch of FTSE4Good ASEAN 5 Index, an ESG index developed in collaboration with the Association of Southeast Asian Nations (ASEAN) Exchanges. The new benchmark consists of companies listed on the five ASEAN exchanges from Developed and Emerging markets: Singapore, Indonesia, Malaysia, Philippines and Thailand. The companies included in the index have been assessed to ensure they meet the standards required for FTSE4Good inclusion.
  • Bursa Malaysia joins 34 Exchanges worldwide to Ring the Bell for gender equality. These thirty‐four exchanges join the Sustainable Stock Exchanges (SSE) Initiative, UN Global Compact, IFC, UN Women, Women in ETFs and the World Federation of Stock Exchanges to "Ring the Bell for Gender Equality," and highlight the business case for women's economic empowerment, as well as opportunities for the private sector to advance gender equality and sustainable development.
  • Introduced Bursa Malaysia-i, the world's first end-to-end Shariah investing platform to mainstream Shariah investing and provide a choice to faith-based investors.
  • Introduced the "Empowering Women Series" that focuses on programmes for women in senior management to further develop their leadership skills and to prepare them for board positions in the capital market. This programme is a follow-up from the earlier initiative, "Ring the Bell for Gender Equality" under the auspices of the Sustainable Stock Exchanges (SSE), to raise awareness on the empowerment of women for sustainable development.

Source: Bursa Malaysia's Corporate History Page – Data updated as at 8 December 2016 Bursa Malaysia's Corporate History

Structure

The wholly owned subsidiaries of Bursa Malaysia own and operate the various businesses, as set out below:-

  1. Bursa Malaysia Securities Bhd – Provide, operate and maintain securities exchange
  2. Bursa Malaysia Derivatives Bhd – Provide, operate and maintain a futures and options exchange
  3. Labuan International Financial Exchange Inc. – Provide, operate and maintain offshore financial exchange
  4. Bursa Malaysia Bonds Sdn Bhd – Provide, operate and maintain registered electronic facility for secondary bond market
  5. Bursa Malaysia Securities Clearing Sdn Bhd – Provide, operate and maintain a clearing house for the securities exchange
  6. Bursa Malaysia Derivatives Clearing Bhd – Provide, operate and maintain a clearing house for the futures and options exchange
  7. Bursa Malaysia Depository Sdn Bhd – Provide, operate and maintain a central depository
  8. Bursa Malaysia Depository Nominees Sdn Bhd – Act as a nominee for the central depository and receive securities on deposit for safe-custody or management
  9. Bursa Malaysia Information Sdn Bhd – Provide and disseminate prices and other information relating to securities quoted on exchanges within the group
  10. Bursa Malaysia Islamic Services Sdn Bhd – Operate all Islamic Markets businesses and activities initiated under Bursa Malaysia

Trading hours

Securities Market[8]

Monday – Friday (except public holidays)

  • Pre-Open – 8.30 am – 9.00 am
  • Continuous Trading – 9.00 am – 12.30 pm
  • Pre-Open – 2.00 pm – 2.30 pm
  • Continuous Trading – 2.30 pm – 4.45 pm
  • Pre-Close – 4.45 pm - 4.50 pm
  • Trading at Last - 4.50 pm – 5.00 pm
  • Close – 5.00 pm

Derivatives Market[9]

Trading Session Monday to Friday

  • Financial Derivatives: 9:00am – 5:00pm
  • Equity Derivatives: 8:45am – 5:15pm
  • Commodity Derivatives: 10:30am – 6:05pm

Offerings and products

Bursa Malaysia has a range of progressive products and services which covers equities, derivatives, offshore listings and services, bonds and Islamic offerings:

Securities Market Derivatives Market Islamic Offerings Others
Two Markets:
  • Main Market: 823 companies
  • Ace Market: 117 Companies

Market capitalisation as at 31 March 2011: MYR1.287 trillion / USD429 billion

Products:

Ten Derivatives Products:

  • Commodity futures
  • Equity futures
  • Equity options
  • Financial futures
  • Sukuk
  • Shari'ah compliant equities
  • i-Reits
  • i-ETFs
  • Bursa Suq Al-Sila'

Bond Market – Electronic trading platform for:

  • Government Bonds
  • Corporate Bonds

Offshore Market

  • Non-Ringgit Securities
  • Sukuk Listing

Closed-end funds

  • icapital.biz Berhad

Source: Bursa Malaysia Annual Report 2009 – Data updated as at 31 December 2009Bursa Malaysia's Annual Report 2009

Events

On 18 April 2005, Bursa Malaysia introduced CBRS, a scheme which allows all investors to access research reports of Bursa-listed companies free-of-charge.

In June 2006, Bursa Malaysia and FTSE Group jointly introduced FTSE Bursa Malaysia Index. On 7 November 2006, the index passed the 1,000 mark hurdle and closed at 1,003.28. It was partly boosted by the strong overnight close in the Wall Street.

On 10 March 2008, trading on the exchange was suspended for one hour due to composite index fall by more than 10 percent or 130 points to 1166.32 points. This was largely by combination of factors such as the United States subprime mortgage crisis and the political uncertainty caused by the 12th General Election. Dealers expected the move was an over-reaction to the election results and the market will correct itself.[10] The index gained 2.1% the next day on the morning session as investor reinvest in plantation stocks and blue chips.[11]

On 3 July 2008, trading on the exchange was suspended for the day when it suffered multiple hardware glitches. The glitches only affected the equities market, not the bonds and commodity market.[12] Trading resumed the next day.

Bursa Malaysia's 2009 initiatives and events

Improved accessibility

  • Launch of DMA for the securities market
  • Introduction of SBL-Negotiated trades
  • Introduction of Market Making for Structured Warrants and Exchange Traded Funds

Enhanced efficiency

  • New fund raising framework and board structure
  • Restructuring of minimum tick size
  • Shortening of trading halt

New products and services

  • Launch of FTSE Bursa Malaysia Palm Oil Plantation Index Series
  • Listing of foreign IPOs
  • Listing of sukuk and bonds

Internationalised markets

  • KLCI enhancement to FBM KLCI
  • Strategic partnership with CME
  • Launch of Bursa Su Al-Sila'

Source: Bursa Malaysia Annual Report 2009 – Data updated as at 31 December 2009Bursa Malaysia's Annual Report 2009

Palm oil futures

Bursa Malaysia is the world's biggest palm oil futures trading hub since 1980. The FCPO, the global price benchmark for the crude palm oil market, is a deliverable contract which is traded electronically on Bursa Malaysia's trading platform.[13]

Crude palm kernel futures and crude palm oil futures are primarily traded on Bursa Malaysia in Malaysian Ringgit (MYR) and US dollar denominated contracts. Their codenames are FPKO, FCPO and FUPO, respectively.

Below is a non-exhaustive list of commodities exchanges around the world where palm oil futures is traded with different contract specifications:

In August 2009, Bursa Malaysia launched Bursa Suq Al-Sila', the world's first Internet commodities trading platform with crude palm oil (CPO) as its underlying asset that is syariah-compliant.[14] Bursa Suq Al-Sila', formerly known as Commodity Murabaha House, facilitates commodity-based Islamic financing and investment transactions under the Syariah principles of Murabahah, Tawarruq and Musaw-wamah. Under the Bursa Suq Al-Sila concept, the bank buys a commodity from a supplier such as a CPO producer at a principal amount, and sells it to a customer at a profit. The customer then sells back the commodity to the spot market for cash. This initiative is spearheaded by the Malaysia International Islamic Finance Centre.

Among the plantation signatories are Boustead Estate Agency Bhd, Genting Plantations Bhd, IOI Corp Bhd and Sime Darby Bhd. The financial institutions include Gulf Cooperation Council (GCC) banks Al Rajhi Banking & Investment Corp (M) Bhd, Asian Finance Bank Bhd, Kuwait Finance House (M) Bhd and Unicorn International Islamic Bank Malaysia Bhd. Bursa Malaysia chief executive officer Datuk Yusli Mohamed Yusoff said "This venture brings two of the nation's main global players; namely the Islamic banks and palm oil producers together, to further enhance Malaysia's palm oil futures' visibility on the world stage."

Bursa Malaysia and CME Group, in 2009, announced plans for crude palm oil futures to be electronically traded on the CME Globex.[15] CME Group will develop a US dollar-denominated, cash-settled contract using Bursa Malaysia settlements as its reference, at its Globex electronic platform in Chicago.[16][17][18] CME Group will buy a 25% stake in Bursa Malaysia Derivatives for RM55.6 million to be satisfied in RM1.9 million cash and 76,427 shares of CME Group. To facilitate the proposed equity participation, Bursa will consolidate all its derivatives businesses into Bursa Malaysia Derivatives and its subsidiaries. Under the corporate exercise, Bursa Malaysia Derivatives will acquire the entire issued and paid-up share capital of Bursa Malaysia Derivatives Clearing Bhd from Bursa for a cash consideration of RM37.1 million. [19]

Operating round the clock, the CME Globex trading system is at the heart of CME. Proposed in 1987, it was introduced in 1992 as the first global electronic trading platform for futures contracts. This fully electronic trading system allows market participants to trade from booths at the exchange or while sitting in a home or office thousands of miles away. When Globex was first launched, it used Reuters' technology and network. September 1998 saw the launch of the second generation of Globex using a modified version of the NSC trading system, developed by Paris Bourse for the MATIF (now Euronext). To connect to CME Globex, traders connect via Market Data Protocol (MDP) and iLink 2.0 for order routing.

Jakarta Futures Exchange launched trading of physical crude palm oil (CPO) contracts in June 2009. Indonesia's Deputy Minister of Agriculture and Fisheries at the Coordinating Ministry for the Economy, Bayu Krisnamurthi, had emphasised that a physical market must be established before futures trading can begin.[20]

In October 2009, Indonesia plans to facilitate trading of crude palm oil and other raw materials on the Indonesia Commodity & Derivatives Exchange (ICDX).[21] In spite of being the world's largest producer, Indonesia has been unable to set a palm oil benchmark price, with trading centred in neighbouring Bursa Malaysia in Kuala Lumpur.

The Jakarta Futures Exchange, which was launched in 2000, started by offering crude palm oil and coffee futures but trading was "dormant" as operators have preferred to trade the palm oil contracts in Malaysia and coffee futures in London and New York, according to Edi Susmadi, a director of JFX. He attributed the failure to competition from Bursa Malaysia, and the low tech trading system. Max Ramajaya at Wilmar International, the world's largest processor of palm oil, said: "When you trade on MDEX [Bursa Malaysia] you have better access to information about the market and more insight.

Back in June 2007, Singapore launched the Joint Asian Derivatives Exchange's (JADE) US dollar-denominated CPO futures contract.[22] JADE was a joint venture between the Chicago Board of Trade (now CME Group) and the Singapore Exchange (SGX). The aim was to provide a fair and transparent platform for price discovery in CPO and allow traders to buy JADE CPO futures and CBOT soybean oil futures concurrently to manage their edible oils price risk.

However, the JADE CPO futures failed to sustain. CME Group, which acquired CBOT and inherited its investment in JADE, sold its 50% stake to SGX in late 2007.[23] According to reports, both the rubber and CPO futures offered by JADE have failed to attract volumes. JADE merged with the Singapore Commodity Exchange in 2008.[24]

See also

References

  1. ↑ "Tun Mohamed Dzaiddin Abdullah stepped down as Bursa Malaysia chairman in 1 March 2015". Bursa Malaysia Berhad. Retrieved 9 January 2015.
  2. ↑ "Bursa Malaysia appoints Datuk Seri Tajuddin Atan as new CEO". Bursa Malaysia Berhad. Retrieved 1 April 2011.
  3. ↑ "South East Asian Capital Market Leaders Pursue Sustainable Business Agenda". SSE Initiative. SSE Initiative. Retrieved 23 May 2015.
  4. ↑ "Bursa Malaysia history". Archived from the original on 19 April 2007.
  5. ↑ "INVESTMENT IN MALAYSIA". Asia Times. Retrieved 10 December 2012.
  6. ↑ "INTERNATIONAL BUSINESS; Malaysia Extends Deadline in Singapore Exchange Dispute". The New York Times. 1 January 2000. Retrieved 10 December 2012.
  7. ↑ "Malaysia's stockmarket; Daylight Robbery". The Economist. 10 July 1999. Retrieved 10 December 2012.
  8. ↑ "Bursa Malaysia Securities Trading Sessions".
  9. ↑ "Bursa Malaysia Derivatives Trading Sessions".
  10. ↑ "Trading on Bursa suspended". Business Times. Archived from the original on 11 April 2008.
  11. ↑ Surin Murugiah. "KLCI best performer among regional indices at midday". The Edge.
  12. ↑ Cindy Yeap (3 July 2008). "Bursa Malaysia announce "surprise and rare" trading halt". The Edge. Archived from the original on 6 July 2008. Retrieved 3 July 2008.
  13. ↑ Palm Oil Futures Trading in Malaysia Archived 20 November 2008 at the Wayback Machine.
  14. ↑ Syariah commodities trading platform to be launched Archived 7 August 2011 at the Wayback Machine. The Edge, 29 July 2009
  15. ↑ CME and Bursa Malaysia to launch palm oil contract Financial Times, 11 August 2009
  16. ↑ Bursa Malaysia, CME in palm oil futures deal Reuters, 11 August 2009
  17. ↑ CME Group to take stake in Bursa Malaysia derivatives unit Chicago Tribune 11 August 2009
  18. ↑ CME to acquire 25% stake in Bursa's derivatives business The Star, 17 September 2009
  19. ↑ CME to take 25% stake in Bursa's derivatives for RM55m Archived 23 September 2009 at the Wayback Machine. The Edge Malaysia, 17 September 2009
  20. ↑ Jakarta's CPO contract not a threat Archived 7 October 2011 at the Wayback Machine. The Edge Malaysia, 29 June 2009
  21. ↑ Jakarta plans palm oil exchange Financial Times, 6 August 2009
  22. ↑ Singapore's JADE to launch crude palm oil futures on June 6 Forbes, 3 May 2007
  23. ↑ Singapore Exchange buys CME's stake in JADE market Reuters, 9 November 2007
  24. ↑ JADE palm oil, rubber futures to shift to SGX Reuters, 7 November 2007
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