Introduction
The Kuala Lumpur Stock Exchange (KLSE), now known as Bursa Malaysia, stands as a testament to Malaysia’s economic development and growing influence in Southeast Asia. Established in 1930 in the bustling capital city of Kuala Lumpur, it has been the epicenter for the trading of various financial securities in Malaysia. Over the decades, the exchange has undergone several transformations, adopting new names and expanding its services to accommodate an evolving financial landscape.
Key Highlights
A Pillar in ASEAN’s Financial Market
The KLSE, now referred to as Bursa Malaysia, is one of the largest stock exchanges within the Association of Southeast Asian Nations (ASEAN). Fully automated, this exchange facilitates the trading of equities, exchange-traded funds (ETFs), offshore Islamic assets, and numerous other securities. Its primary index, the FTSE Bursa Malaysia KLCI, consists of the top 30 companies physically listed on the exchange, showcasing the country’s economic powerhouses.
Modern Integrated Services
Bursa Malaysia offers a comprehensive suite of financial services, including clearing, trading, listing, depository, and settlement functions. This fully integrated exchange adopts sophisticated technology to ensure seamless and reliable transactions. Home to around 900 firms, Bursa Malaysia provides avenues for these enterprises to raise capital efficiently, further driving Malaysia’s economic growth.
Areas of Trading
Symbolizing the dynamic nature of Malaysia’s market, Bursa Malaysia provides a platform for a variety of financial securities:
- Equities
- Bonds
- Derivatives
- Exchange-Traded Products (ETPs)
- Real Estate Investment Trusts (REITs)
Notably, it also fosters an Islamic market framework to support Shariah-compliant capital markets. This initiative caters to Malaysia’s predominant Muslim population by offering domestic and offshore Islamic financial products, supported by an Islamic banking platform operational since 2009.
Pathways for Companies
The exchange invites companies to list on one of three specific markets tailored to their size and growth potential:
- Main Market for large, established corporations.
- ACE Market targets innovative companies with growth potentials.
- LEAP Market caters to small- and mid-sized enterprises poised for upcoming ventures.
Working alongside global partners like the Chicago Mercantile Exchange (CME), Bursa Malaysia ensures its operations are aligned with international standards of performance and transparency.
Looking Forward
The Bursa Malaysia is continually evolving, highlighted by the 2018 consultation paper aimed at expanding investor interest in ETFs. Proposals included measures for:
- Futures-based ETFs
- Leveraged ETFs
- Inverse ETFs
- Physically-backed Commodity ETFs
- Synthetic ETFs
The primary focus is to liberalize the current short-selling framework, promoting a more dynamic and profitable trading environment.
Historical Evolution
The journey of KLSE started in 1930 as the Singapore Stockbrokers’ Association, the earliest securities market development in Southeast Asia. Later it transformed into the Malayan Stock Exchange and then the Stock Exchange of Malaysia, before adopting its current visage as Bursa Malaysia. The exchange public trading began in 1960 and underwent demutualization in 2004, adding shareholders to its ownership structure and aligning itself more closely with global standards.
Conclusion
Bursa Malaysia, formerly known as the Kuala Lumpur Stock Exchange (KLSE), represents a robust, ever-evolving hub within the global financial ecosystem. For investors looking to delve into Malaysia’s dynamic market, it offers a wealth of opportunities through diversified instruments, a commitment to transparency, and a progressive approach to regulation.
Related Terms: ASEAN, securities, FTSE Bursa Malaysia KLCI, Islamic banking, derivatives, ETFs
References
- Bursa Malaysia. “Corporate History”.
- Bursa Malaysia. “Who We Are”.
- Bursa Malaysia. “About Us”.
- Bursa Malaysia. “FTSE Bursa Malaysia KLCI”.
- Bursa Malaysia. “Islamic Market”.
- Bursa Malaysia. “Listing on Bursa Malaysia”.
- Bursa Malaysia. “BURSA MALAYSIA EXTENDS AGREEMENT TO HOST ITS DERIVATIVES PRODUCTS ON CME GLOBEX, AND PLANS TO ACQUIRE THE REMAINING 25% EQUITY INTEREST IN BURSA MALAYSIA DERIVATIVES”.
- Bursa Malaysia. “Consultation Paper No. 2/18”, Page 4.
