Securities Commission To Allow Trading Of Fractional Shares

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The Securities Commission Malaysia (SC) has just recently issued the revised Guidelines on Market Conduct and Business Practices for Stockbroking Companies and Licensed Representatives (SBC Guidelines).

This newly revised guideline takes effect immediately. It outlines the requirements that would allow stockbroking companies to offer fractional share trading services for shares listed on Bursa Malaysia, the SC reported in a statement today. For those who are unfamiliar with it, fractional shares are a portion of a stock that is less than one standard board lot.

Trading of fractional shares was one of the capital market initiatives announced by the prime minister in June. It aims to make share trading on Bursa Malaysia more accessible, affordable and inclusive for the retail investors, particularly the young investors.

The revised guidelines are a reflection of the SC’s continued commitment to uplift and enhance market vibrancy and promote greater retail participation in the Malaysian stock market. The updated guideline on fractional shares can be found here.

Fractional share trading can offer wider access

The SC Chairman Dato’ Seri Dr. Awang Adek Hussin said that allowing retail investors to trade in fractional shares, individuals, especially the younger generations, will have a whole new level of accessibility and affordability with regards to investing in expensive blue-chip stocks, as they will be able to purchase them at a fraction of the standard board lot value.

“In addition, the introduction of fractional share trading would allow retail investors to diversify their portfolio, whilst creating a more inclusive capital market for all Malaysians,” he said.

“To support the orderly development of the capital market, it is important for stockbroking companies to have the necessary controls and systems to safeguard the interest of the investors,” he added.

Among the key requirements under the guidelines is the need for stockbroking companies to implement adequate systems, policies, and procedures. This is to ensure fair treatment of customers’ orders, price transparency, and proper supervision of the fractional share trading service.