TEHRAN, Young Journalists Club (YJC) -Singapore and Malaysia will set up a trading link between their stock markets by the end of the year that will help lower trading costs and encourage cross-border investments, regulators from the neighboring countries said on Tuesday.
The link between Bursa Malaysia (BMYS.KL) and the Singapore Exchange (SGXL.SI) would allow investors to trade and settle shares listed on each other’s stock market in a more convenient and cost efficient manner, benefiting retail investors, both regulators said in a joint statement.
Malaysia’s Prime Minister Najib Razak announced the move first to investors gathered at the World Capital Markets Symposium in Kuala Lumpur on Tuesday.
“A regulatory arrangement will be worked on by the countries’ relevant regulatory authorities, to pave the way for the establishment of this trading link,” Najib said in his speech.
He said this ‘Malaysia-Singapore Connect’ will provide investors in both countries easier and seamless access to each other’s markets with a combined market capitalization of more than $1.2 trillion and 1,600 public listed companies.
This bilateral link between the bourses will cover post-trade arrangements such as clearing and settlement of the stocks traded.
The Monetary Authority of Singapore (MAS) and the Securities Commission Malaysia (SC) will set up cross-border supervisory and enforcement arrangements.
“The trading link will help lower trading costs for investors and encourage greater cross-border investments in the stocks listed on each other’s exchanges,” said Lee Boon Ngiap, Assistant Managing Director at MAS.
“This will improve the liquidity of both our stock markets,” he added.
Countries in Southeast Asia have been trying to improve their financial connectivity by linking their capital markets for years, but progress has been slow.
Jingyi Pan, a Singapore-based market strategist at trading and investments provider IG, said the move was expected to facilitate more cross border flows between the two countries and could be the first step to seeing more of such links in the ASEAN region.
Singapore was part of Malaysia after the end of British colonial rule but they separated acrimoniously in 1965, clouding diplomatic and economic dealings for decades.
Ties between the countries, however, have improved under the leadership of Najib and Singapore Prime Minister Lee Hsien Loong.
Malaysia and Singapore are finalizing a project to build an estimated $17 billion high-speed rail linking both countries.