Malaysia lifts short selling ban
31 December 2020 Malaysia
Image: rudi1976/stock.adobe.com
The Malaysian Securities Commission and the country's stock exchange will imminently lift the temporary suspension of short selling that has been in place since March and came in response to COVID-inspired market disruption.
Malaysia’s blanket ban on short selling began on 24 March and was originally set to expire in April, but was extended until 30 June and then again until 31 December.
The renewal of short selling is expected to revive the country's modest securities lending industry.
The Pan Asia Securities Lending Association (PASLA) welcomed the decision, arguing that 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," the regional trade body adds. "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.”
Meanwhile, Malaysia's regulator and bourse are also reviewing the other market management measures that were introduced earlier this year following heightened market volatility arising from the broader impact of COVID-19.
The temporary suspension on intraday short selling by proprietary day traders (PDT short sales) due to expire on 31 December 2020 will be extended to 28 February 2021.
Consequential to the extension of PDT short sales, temporary waivers in relation to PDTs 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, are being pushed back from 18 January 2021 and are now scheduled to end 30 May 2021.
Malaysia’s blanket ban on short selling began on 24 March and was originally set to expire in April, but was extended until 30 June and then again until 31 December.
The renewal of short selling is expected to revive the country's modest securities lending industry.
The Pan Asia Securities Lending Association (PASLA) welcomed the decision, arguing that 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," the regional trade body adds. "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.”
Meanwhile, Malaysia's regulator and bourse are also reviewing the other market management measures that were introduced earlier this year following heightened market volatility arising from the broader impact of COVID-19.
The temporary suspension on intraday short selling by proprietary day traders (PDT short sales) due to expire on 31 December 2020 will be extended to 28 February 2021.
Consequential to the extension of PDT short sales, temporary waivers in relation to PDTs 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, are being pushed back from 18 January 2021 and are now scheduled to end 30 May 2021.
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