Bursa Malaysia

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Bursa Malaysia Berhad
بورسا مليسيا برحد
Type Public company (KLSE:[1])
Industry Stock exchange
Founded 1964
Headquarters 15th Floor, Exchange Square, Bukit Kewangan, 50200 Kuala Lumpur, Malaysia.
Key people Tajuddin Atan, CEO
Mohamed Dzaiddin Haji Abdullah, Chairman
Website www.bursamalaysia.com

Bursa Malaysia (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.

History[edit]

The offices of Bursa Malaysia

Bursa Malaysia (MYX: 1818) previously known as Kuala Lumpur Stock Exchange (KLSE, Bursa Saham Kuala Lumpur in Malay) dates back to 1930[2] 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.[3][4][5]

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 History Page – Data updated as at 9 March 2010 -->Bursa Malaysia's History

Structure[edit]

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[edit]

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

[6]

Offerings & Products[edit]

Bursa Malaysia also 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

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

Events[edit]

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, a new index series jointly developed by Bursa Malaysia and FTSE Group was introduced which is FTSE Bursa Malaysia Index. On 7 November 2006, the index finally 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.[7] The index gained 2.1% the next day on the morning session as investor reinvest in plantation stocks and blue chips.[8]

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.[9] Trading resumed the next day.

Latest Events[edit]

Summary of Bursa Malaysia's 2009 Initiatives/ Events Highlights:

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

Developed 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 2009--->Bursa Malaysia's Annual Report 2009

Largest Stocks by Market Value[edit]

Source: Information Services, Bursa Malaysia – in billions of RM, Data updated as at 6 January 2011

  1. CIMB Group Holdings Berhad (MYX: 1023) – RM66.59
  2. Malayan Banking Bhd (MYX: 1155) – RM65.97
  3. Sime Darby Berhad (MYX: 4197) – RM56.49
  4. Petronas Chemical Bhd, a subsidiary of Petronas (MYX: 5183) – RM47.36
  5. Genting Group (MYX: 3182) – RM41.96
  6. Axiata Group Berhad (MYX: 6888) – RM40.88
  7. IOI Corporation Bhd (MYX: 1961) – RM40.34
  8. Maxis Berhad (MYX: 6012) – RM40.20
  9. MISC Bhd (MYX: 3816) – RM37.59
  10. Tenaga Nasional Bhd (MYX: 5347) – RM35.98
  11. Public Bank Bhd (MYX: 1295) – RM33.28
  12. Kuala Lumpur Kepong Bhd (MYX: 2445) – RM24.15
  13. PLUS Expressways Berhad (MYX: 5052) – RM22.95
  14. Petronas Gas Bhd, a subsidiary of Petronas (MYX: 6033) – RM22.32
  15. AMMB Holdings Bhd (MYX: 1015) – RM21.19
  16. PPB Group Bhd (MYX: 4065) – RM20.89
  17. Genting Malaysia berhad (MYX: 4715) – RM20.82
  18. DIGI.COM Bhd(MYX: 6947) – RM19.44
  19. RHB Capital Bhd (MYX: 1066) – RM18.50
  20. YTL Power International Bhd (MYX: 6742) – RM17.52
  21. YTL Corporation Bhd (MYX: 4677) – RM15.97
  22. Hong Leong Bank Bhd (MYX: 5819) – RM14.77
  23. British American Tobacco Malaysia (MYX: 4162) – RM13.27
  24. Telekom Malaysia Bhd (MYX: 4863) – RM12.74
  25. Petronas Dagangan Bhd (MYX: 5681) – RM11.92
  26. UEM Land (MYX: 5148) – RM10.56
  27. Nestle (Malaysia) Berhad (MYX: 4707) – RM10.34
  28. Hong Leong Financial Group Bhd (MYX: 1082) – RM9.56
  29. Malaysian Marine Heavy Engineering Bhd, a subsidiary of Petronas (MYX: 5186) – RM9.52
  30. MMC Corporation Berhad (MYX: 2194) – RM8.89

Palm oil futures[edit]

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.[10]

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.[11] 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.[12] 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.[13][14][15] 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. [16]

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.[17]

In October 2009, Indonesia plans to facilitate trading of crude palm oil and other raw materials on the Indonesia Commodity & Derivatives Exchange (ICDX).[18] 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.[19] 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 soyabean 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.[20] 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.[21]

See also[edit]

References[edit]

  1. ^ http://www.bursamalaysia.com/website/bm/about_us/
  2. ^ "Bursa Malaysia history". 
  3. ^ "INVESTMENT IN MALAYSIA". Asia Times. Retrieved 10 December 2012. 
  4. ^ "INTERNATIONAL BUSINESS; Malaysia Extends Deadline in Singapore Exchange Dispute". New York Times. 1 January 2000. Retrieved 10 December 2012. 
  5. ^ "Malaysia's stockmarket; Daylight Robbery". The Economist. 10 July 1999. Retrieved 10 December 2012. 
  6. ^ "RHB invest". 
  7. ^ "Trading on Bursa suspended". Business Times. 
  8. ^ Surin Murugiah. "KLCI best performer among regional indices at midday". The Edge. 
  9. ^ 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. 
  10. ^ Palm Oil Futures Trading in Malaysia
  11. ^ Syariah commodities trading platform to be launched The Edge, 29 July 2009
  12. ^ CME and Bursa Malaysia to launch palm oil contract Financial Times, 11 Aug 2009
  13. ^ Bursa Malaysia, CME in palm oil futures deal Reuters, 11 Aug 2009
  14. ^ CME Group to take stake in Bursa Malaysia derivatives unit Chicago Tribune 11 Aug 2009
  15. ^ CME to acquire 25% stake in Bursa’s derivatives business The Star, 17 Sep 2009
  16. ^ CME to take 25% stake in Bursa's derivatives for RM55m The Edge Malaysia, 17 Sep 2009
  17. ^ Jakarta’s CPO contract not a threat The Edge Malaysia, 29 June 2009
  18. ^ Jakarta plans palm oil exchange Financial Times, 6 Aug 2009
  19. ^ Singapore's JADE to launch crude palm oil futures on June 6 Forbes, 3 May 2007
  20. ^ Singapore Exchange buys CME's stake in JADE market Reuters, 9 Nov 2007
  21. ^ JADE palm oil, rubber futures to shift to SGX Reuters, 7 Nov 2007

External links[edit]