SGX-Bursa link - details unknown but this time, it's different

Twenty years is a lifetime in the stock market but when the announcement was made on Tuesday that the Singapore Exchange (SGX) and Bursa Malaysia (BM) intend to establish a full-fledged trading link by the end of this year, it immediately brought to mind the painful events of 1998 that is today known as the Clob International crisis - and raised the question of whether history will repeat itself.

Although details of the current proposed link are not known yet and are expected to take many months to iron out, from what is known so far, there is every reason to believe that this time is different.

First, the trading of Malaysian shares on the Central Limit Order Book (Clob) computerised system was done over-the-counter with physical scrip, while the present link will extend throughout the entire scripless systems of both exchanges, from trading to clearing and settlement. In substance, it appears almost a return to the arrangement that existed before the Kuala Lumpur Stock Exchange (KLSE) and the SGX parted ways in January 1990 before which shares of both countries traded freely on each other's exchanges.