Bursa Malaysia Seeks Feedback on Proposed Enhancements to ETF Framework

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Bursa Malaysia Bhd has issued a consultation paper to seek public feedback on the proposed review of the Main Market Listing Requirements and Rules and Directives of Bursa Malaysia Securities Bhd in relation to exchange-traded funds (ETFs). The public consultation period will run from 9 July 2018 to 23 July 2018.

The proposed ETF amendments are made consequential to the release of a set of key recommendations in 2017 by a task force on ETFs comprising the Securities Commission Malaysia (SC), Bursa Malaysia and other market participants. Various recommendations, aimed at attracting greater investor participation in ETFs and incentivising issuances by ETF managers in the Malaysian market, were made by the task force. The recommendations included promoting the issuance of innovative and new ETFs such as futures-based ETFs (including the leveraged ETFs and inverse ETFs), physically-backed commodity ETFs and synthetic ETFs.

The key proposals under the proposed ETF amendments include enhancements to the Main Market Listing Requirements to reflect the following:

  • liberalising the interim reporting frequency from a quarterly to semi-annual basis
  • enhancing the contents of ETF interim and annual reports arising from various new ETF products and their specific requirements, and
  • enhancing immediate announcement requirements to promote greater transparency in relation to the index or benchmark tracked by the ETF.

Consequential to this as well, the Rules and Directives of Bursa Malaysia Securities Bhd will be amended to introduce the qualifying criteria for investors of leveraged and inverse ETFs, and to expand the Permitted Short Selling (PSS) framework to allow Market Makers to short sell all types of ETF units. Presently, the PSS framework allows for Market Makers to short sell equity-based ETFs only.

The consultation paper is available here.

The industry and the public are invited to submit their comments and feedback to Bursa Malaysia before the closing date of 23 July 2018.

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