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Bursa Malaysia Enhances ETF Framework To Spur Further Growth And Innovation In The Market

Date 07/12/2018

Bursa Malaysia Berhad (“Bursa Malaysia” or “the Exchange”) has made several enhancements to the exchange-traded fund (“ETF”) framework under the Main Market Listing Requirements and Bursa Malaysia Securities Berhad Rules and Directives (collectively “the ETF Amendments”) that will help spur further growth of the ETF industry in Malaysia.

This initiative as well as the revised Guidelines on Exchange-Traded Funds issued by the Securities Commission of Malaysia (“SC”) on 26 November 2018 form part of the efforts by the Exchange and the SC in growing the potential of the Malaysian ETF market.  With the revised Guidelines on Exchange-Traded Funds, a wider variety of ETFs such as futures-based ETFs, synthetic ETFs, physical commodity ETFs and smart beta ETFs, could now be issued.

Through the ETF Amendments, the Exchange has enhanced the post listing and trading framework of ETFs with the aim of achieving the following objectives:

  • Promoting greater business efficacy and reducing the cost of compliance by ETFs;
  • Facilitating further growth of the ETF industry whilst enhancing investor protection and transparency; and
  • Facilitating market making activities for all ETFs through the enhanced Permitted Short Selling (“PSS”) framework.                 

In this regard, the key ETF Amendments include the following:

  • 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;
  • Enhancing 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;
  • Introducing qualifying criteria for investors trading in leveraged and inverse ETFs; and
  • Expanding 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.

Bursa Malaysia Chief Executive Officer, Datuk Seri Tajuddin Atan said, “The introduction of innovative ETF products is a welcome development for our 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 our investors.”

“In tandem with this, we are also focusing on investor awareness and education as we believe that this is important for the ETF industry to take off. In this regard, we have been actively educating investors on ETF for the past few years. We have successfully reached out to over 15,700 investors through 165 ETF workshops and seminars especially over these last two years. To further build on the growing demand from investors for passive investing instruments, we will intensify our nationwide roadshows and education programmes that seek to give them the ability to build a diversified portfolio that can place them in the best position for long-term financial success” Datuk Seri Tajuddin concluded.

The ETF Amendments will take effect from 2 January 2019 onwards.

For more information on the ETF Amendments, please visit Bursa Malaysia’s website at:

[http://www.bursamalaysia.com/market/regulation/rules/listing-requirements/main-market/amendments-to-listing-requirements/]