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More activities are being planned by Bursa Malaysia


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BURSA Malaysia, which expects lower trade volume as a result of higher stamp duty rates and the Cukai Makmur, will create new products to compensate for the revenue loss.


With the new proposed stamp duty fee structure, it will be more cost effective to invest in shares listed on Bursa Malaysia through an exchange-traded fund (ETF) rather than purchasing individual shares.


Given the difference in trading fees, this could make ETFs more tempting to people who prefer to buy a basket of equities.
"Over the next five years, the ETF segment may experience increased investor interest," Bursa Malaysia said.

 

According to CGS-CIMB Research, two measures in Budget 2022 are projected to have a detrimental impact on Bursa Malaysia: an increase in stamp duty on contract notes from 0.1 percent to 0.15 percent, and the elimination of the RM200 per contract note stamp duty cap.


Due to increasing trading fees for investors, this could affect Bursa Malaysia's average daily trading volume.

 

The implementation of a one-time special tax known as Cukai Makmur in 2022, at a tax rate of 33 percent, up from 24 percent currently, for pre-tax profit in excess of RM100 million, might potentially increase Bursa Malaysia's tax expenses.


ETFs are currently exempt from stamp duty; the exemption from stamp duty on ETF sale and buy transactions was announced in last year's budget and is in force until December 31, 2025.


To appeal to investors seeking reduced overall investment expenses, asset managers may explore listing additional ETFs on Bursa Malaysia.
This new tax policy may also encourage more passive investing.

 

Six ETFs now invest in Bursa Malaysia firms, with one-year returns ranging from 15.74 percent to minus 14.05 percent.
FTSE BURSA MALAYSIA KLCI ETF (9.86%), TradePlus DWA Malaysia Momentum Tracker (13.02%), MyETF Dow Jones Islamic Market Malaysia Titan 25 (minus 14.05%), MyETF MSCI MALAYSIA ISLAMIC DIVIDEND (minus 4.23%), Kenanga KLCI Daily 2x Leveraged ETF (15.74%), and Kenanga KLCI Daily (minus 1x) Inverse ETF (minus 4.23%) are (minus 9.02 percent ).


Bursa Malaysia also intends to focus on syariah and socially responsible investment solutions.

 

More than 75% of listed equities and 40% of ETFs are syariah-compliant, and Bursa Suq Al-Sila, the worldwide syariah-compliant community trading platform, is set to expand into new countries.


Bursa Malaysia is actively working on a waqf-featured fund framework with the Securities Commission (SC) in order to offer products such as waqf ETFs and waqf real estate investment trusts.


To make its offerings more relevant to traders, the exchange wants to improve global accessibility and expand its product and service offerings.
The inclusion of the East Malaysian Palm Oil Futures (FEPO) to Bursa Malaysia Derivative's palm oil complex has bolstered its offerings.

 

The FEPO contract has had a total of 893 contracts traded since its inception on October 4, 2021, with strong involvement from the palm oil industry and market participants.
"We expect the FEPO contract to see increased trading involvement from the industry and market in the coming months."


"The next stage would be to update the existing Gold Futures contract, with the goal of reviving gold trading by domestic and foreign market participants," Bursa Malaysia said.


This is especially true with the planned T+1 night trading launch, as gold is heavily traded during Asian night hours.

 

Bursa Malaysia also intends to broaden its derivatives business by adding new financial/equity derivatives and branching into other commodities such as soybean oil futures.


Physical delivery of the three-year Malaysian Government Securities (MGS) futures contract and the ten-year (MGS) futures contract is also helping to increase liquidity and accessibility in the Malaysian financial market.

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