Bursa M’sia enhances its ETF framework

Datuk Seri Tajuddin Atan

KUALA LUMPUR: Bursa Malaysia Bhd has made several enhancements to the exchange-traded fund (ETF) framework under the Main Market listing requirements and Bursa Malaysia Securities Bhd Rules and Directives to spur further growth of the ETF industry in Malaysia.

The initiative as well as the revised guidelines on ETF issued by the Securities Commission Malaysia (SC) on Nov 26, 2018 form part of efforts by the exchange and the SC to grow the potential of the Malaysian ETF market.

“With the revised guidelines, a wider variety of ETFs such as futures-based ETFs, synthetic ETFs, physical commodity ETFs and smart beta ETFs, can now be issued.

“Through the ETF amendments, Bursa has enhanced the post listing and trading framework of ETFs with the aim of promoting greater business efficacy and reducing the cost of compliance by ETFs, facilitating further growth of the ETF industry, enhancing investor protection and transparency, while facilitating market making activities for all ETFs through the enhanced Permitted Short Selling (PSS) framework,” it said in a statement yesterday.

In this regard, the key ETF amendments include liberalising the interim reporting frequency from quarterly to semi-annual basis, enhancing the contents of ETF interim and annual reports arising from the new types of ETF products and their specific requirements to promote meaningful and value-add information to unit holders.

Another amendment was to enhance the immediate announcement requirements to promote greater transparency on specific key matters such as information pertaining to the index or benchmark tracked by the ETF and significant matters or changes affecting the ETFs, to introduce qualifying criteria for investors trading in leveraged and inverse ETFs and to expand the PSS framework allowing the short sell of new types of ETFs.

Currently, under the PSS framework, short-selling is only applicable to equity-based ETFs.

Meanwhile, Bursa Malaysia chief executive officer Datuk Seri Tajuddin Atan said the introduction of innovative ETF products was a welcome development for the ETF market, and should lead to a more vibrant ETF ecosystem.

“The resulting enhancements to the framework complements our ongoing market development initiatives to provide an efficient and effective ecosystem for ETFs as well as diversified product range for investors.

“We have successfully reached out to over 15,700 investors through 165 ETF workshops and seminars especially over these last two years,” he added.

The ETF amendments are effective Jan 2, 2019 onwards. — Bernama

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