Singapore and Malaysia to set up stock market trading link by end-2018

THE Singapore and Malaysia stock markets are set to be connected by a trading link by the end of this year which will allow investors to trade and settle shares in both markets in a more convenient and cost-efficient way.

The Monetary Authority of Singapore (MAS) and the Securities Commission Malaysia (SC Malaysia) will work together with the two exchanges to establish such a link, both said in a joint release on Tuesday.

The bilateral link between the Singapore Exchange (SGX) and Bursa Malaysia (BM) will extend beyond trading to cover post-trade arrangements such as the clearing and settlement of traded stocks, they added.

The MAS and the SC Malaysia will set up cross-border supervisory and enforcement arrangements ahead of the trading link.

Malaysia Prime Minister Najib Razak said at the World Capital Markets Symposium on Tuesday that the link will provide investors on both sides of the Causeway with easier and seamless access to each other's markets, with a combined market capitalisation of over US$1.2 trillion and 1,600 listed companies.

"This exciting initiative will indeed widen investment options for investors and contribute towards greater activity and vibrancy in both markets," he said at the event hosted by SC Malaysia.

MAS assistant managing director Lee Boon Ngiap said it will help lower trading costs for investors and encourage greater cross-border investments in the stocks listed on each other's exchanges.

"This will improve the liquidity of both our stock markets," he said in a statement. "I hope this initiative will in time expand to include the rest of the stock exchanges in Asean."

Malaysian bank CIMB is excited by the capital market initiatives, including the stock market trading link, announced on Tuesday.

"The Malaysia-Singapore Connect share trading initiative will not only attract more new players to participate in the wealth creation of a total of 1,600 listed companies across both markets, but also encourage financial product creation and diversification," said its group chief executive Zafrul Aziz.

The initiative follows the ongoing efforts of the Asean Capital Markets Forum (ACMF) to deepen financial connectivity across the region's capital markets.

Said SC Malaysia chairman Seri Ranjit Ajit Singh, who is also chairman of ACMF: "The establishment of this trading link is an important step towards encouraging Asean investors to invest in Asean. The ease of accessibility for investors will contribute towards greater vibrancy in our markets.

"Once operationalised, this pilot initiative can form the basis for future connectivity among Asean markets."