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CHAPTER 3:
SECURITIES MARKET, • launched by bursa Malaysia and…
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• launched by bursa Malaysia and securities commission after merged between main board and second board
• In June 2017, Bursa Malaysia launched the Leading Entrepreneur Accelerator Platform (LEAP).
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• Only qualified investors, as defined in Part I of Schedule 6 or 7 of the Capital Markets and Services Act 2007, can trade on the LEAP market.
• Access, Certainty, Efficiency (ACE)
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• In 1992, Bursa Malaysia introduced the fully computerized System on Computerized Order Routing and Execution (SCORE) for share transactions.
• In 1994, WinScore was implemented for stockbrokers and investment banks to execute share transactions.
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• For buy orders, brokers expect the lowest price; for sell orders, they expect the highest price.
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• For buy orders, brokers execute only if the price is ≤ limit; for sell orders, execution occurs only if the price is ≥ limit
- Investors open a trading account and CDS account
- Investors place buy or sell orders through CMSR to execute trades on their behalf.
- All order details are entered into WinSCORE for share trading, and a transaction confirmation is received
- Transactions are matched in SCORE at Bursa Malaysia based on share supply and demand
- The matched price in SCORE is sent back to the investment bank via WinSCORE, and a trade confirmation is printed
- The trading clerk informs the client of the trade confirmation
- A contract note is then sent to the client
- Bursa Malaysia
- Securities Commission
- Intermediary in trading the equity
- It is company carrying in dealing with the securities
- Investors appoint broker from SBC to transact the stock
- Recently, most of stock broking company merged with merchant bank and
discount house to be investment bank.
Securities market is a market
place to trade the securities.
Example of securities market are stock market and derivatives
market.
Securities is an instrument traded in market either debt
instrument or equity instrument.
Example of securities are stocks,shares,notes,debentures and
bonds.
- Initial public offering (IPO) is first time issue of the securities to the public.
- Capital raiser will appoint investment bankers.
- Must get approval from securities commission before issuing securities
- Investment bank are responsible to buy shares if there are not sold.
- Sell new share to their employees (Employee Share Option Scheme, ESOS).
- Offer to their employee to have company’s equity.
- Those who bought this kind of share are not allowed to sell at specified time
period.
- Company will find the institutional as their investors which will sell directly to investors.
- Investor is not allowed to sell shares within a specific time period.
- New share offered to existing shareholders. (Pre-Emptive right)
- Usually, Company will offer lower that market price.
- Uses provisional Allotment Letter (PAL).
- Bonus issue
- Company gives reward to existing shareholders.
- New share with no cost involved.
- Seasonal offering
- Equity which is already in the market for a while after Initial
Public Offering (IPO).
- Help securities to be stable in terms of price movement in the market.
- Buying and selling recorded in CDS account.
Clearing and settlement
- Transaction is implemented at T + 3
- Selling client must have tradeable balance of share in CDS account on T + 2 before 12.30 PM. If the seller fail to have sufficient amount of share in CDS,
Bursa Malaysia will institute buying in against the seller the next day.
- For buying broker, the share scrip must be credited to buying client by 12.30
PM on the third day after the date of contract.
- If the buyers fail to pay by
12.30 PM on T + 3, SBC will sell out the shares to cover his/her outlay on T + 4.
- The liability incurred will be charged to the buyer.