Short selling in Malaysia more regulated than US, Bursa, SC

 

The Securities Commission (SC) and Bursa Malaysia Bhd advise Malaysian investors to be cautious of social media chatrooms that try to influence investors to buy or sell certain stocks based on speculation or rumours.

The regulators said they are closely monitoring the local stock market in light of the current price surge of selected stocks in the United States (US) markets, fuelled by social media chatrooms against short-sellers.

“Investors should also be wary of discussions in these social media chatrooms that may trigger securities breaches such as the provision of investment advice or stock recommendations without a licence,” they said in a joint statement today.

Any person found guilty may be liable to a fine not exceeding RM10 million or imprisonment not exceeding 10 years or both.

According to the regulators, the market dynamics between the US and Malaysia differ.

“In Malaysia, regulated short selling (RSS) is only applicable to approved securities in the RSS list, which currently comprises 218 securities. Limits are also imposed to prevent excessive short-selling activities,” it said.

In addition, RSS trades require investors to either borrow the approved securities to be short-sold or have confirmation of borrowing of the approved securities.

RSS must be undertaken in a designated account where sell orders must be placed at the best offer price or higher.

The SC and Bursa Malaysia said they also conduct real-time monitoring of all trading activities to detect, analyse and escalate trading concerns promptly.

“Robust frameworks are in place to ensure an efficient, fair and orderly market.

“Where warranted, the SC and Bursa Malaysia will take the necessary measures to curb disruptive trading practices and market abuse,” they said.

Earlier today, the Minority Shareholders Watch Group cautioned minority shareholders to exercise diligence and be aware of the risks involved when taking on institutional investors who short certain shares.

It said that in ‘bursabets’ - a new subreddit on social news aggregator site Reddit - Malaysian retail investors discussed buying up stocks of glove makers, noting that the share prices had dipped in recent months despite these firms reporting increasing profits.

According to MSWG, some small investors in Malaysia have been inspired by retail investors’ recent action to fuel the GameStop stock rally.

- Bernama