Short-selling here different from the US, Securities Commission says as BursaBets picks up steam

Zurairi Ar
·3-min read
The Securities Commission and Bursa Malaysia had conducted real-time monitoring of all trading activities to detect, analyse and escalate trading concerns promptly. — Bernama pic
The Securities Commission and Bursa Malaysia had conducted real-time monitoring of all trading activities to detect, analyse and escalate trading concerns promptly. — Bernama pic

KUALA LUMPUR, Jan 29 ― The Securities Commission (SC) has advised Malaysian investors to be wary of content in social media platforms, as the movement called “bursabets” that aims to inflate certain stock prices picks up steam.

It also reminded investors that the market dynamics in the country is different from the United States, as bursabets members try to emulate the controversial success of the “wallstreetbets” campaign that shocked the titular Wall Streets there,

“The market dynamics between the US and Malaysia differ. In Malaysia, Regulated Short Selling (RSS) is only applicable to Approved Securities in the RSS list, which currently comprises 218 securities.

“Limits are also imposed to prevent excessive short-selling activities,” it said in a statement.

It explained that RSS trades require investors to either borrow the Approved Securities to be short-sold or have confirmation of borrowing of the Approved Securities.

It added that RSS must be undertaken in a designated account where sell orders must be placed at the best offer price or higher.

Furthermore, the SC said it and Bursa Malaysia had conducted real-time monitoring of all trading activities to detect, analyse and escalate trading concerns promptly.

“Robust frameworks are in place to ensure an efficient, fair and orderly market. Where warranted, the SC and Bursa Malaysia will take the necessary measures to curb disruptive trading practices and market abuse,” it said.

Yesterday, on social aggregator Reddit, a subreddit was created by the Malaysian collective of presumably stock and option traders who are now calling for a rally against “institutions” and “big money” who, its founder alleged, are rigging the market to suppress share prices of local glove makers.

Earlier today, some glove counters appeared to be riding on the bursabet rally, with Top Glove Bhd opening this morning at RM7.05 per unit, a rise of over 13 per cent from yesterday.

The SC said today Malaysian investors should be cautious of social media chat rooms that try to influence investors to buy or sell certain stocks based on speculation or rumours.

“Investors should also be wary of discussions in these social media chat rooms that may trigger securities breaches such as the provision of investment advice or stock recommendations without a licence.

“Any person found guilty, may be liable to a fine not exceeding RM10 million or imprisonment not exceeding ten years or both,” it said.

The subreddit now has nearly 8,000 members just over 24 hours after it was started.

Over the past few months but reaching its peak media coverage the last few days, a large group of regular US retail traders who banded under the subreddit wallstreetbets had set their sights against shortlisters who punted on GameStop share prices to fall.

Instead the US-based gaming retailer’s rose as high as around US$500 (RM2,022.91) each yesterday, thanks to these regular traders who bought into all available GameStop shares after learning that they were being shorted.

The SC and Bursa Malaysia said they are closely monitoring the local stock market in light of the current price surge of selected stocks in the US markets, fuelled by these developments.

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