Sunday, August 21, 2011

Bursa Malaysia Needs To Be Privatised

On Star Bizweek: When the smoke signals are right

  • ...Bursa Malaysia, has an obligation to ensure orderly and fair trading but its officials have said in the past that healthy speculation is good for the market.

    In fact, since Bursa Malaysia is a listed company with a profit imperative, one may be forgiven for thinking that it may be a little reluctant to curb activities that increase trading turnover to which its profits are directly correlated
Healthy speculation is good for the market? Bah!

And yeah... 'Bursa Malaysia is a listed company with profit imperative'..

This issue has been mentioned many times before.

Bursa Malayaisa is a listed entity, a business and sadly for the stock market, this business is there to make money.

And so I ask again, how could Bursa perform as a regulator when its company objective is to make money?

Now Star Biz, Managing editor P Gunasegaram, is questioning this very same issue.

And fellow blogger, M.A. Wind is also addressing this very same issue,
  • Although I admit that investigating these kind of suspicious trading patterns is not that simple, Bursa Malaysia (BM) has a huge pool of employees and a database full with information regarding account holders and trades done. It always stunned me why there was never any enforcement whatsoever on the issue of insider trading. Recently I did notice some rare activity on this area, but the alleged perpetrators only had to pay back their ill gotten gains. A one in a thousand chance to get caught and then only having to pay back the gains? I don't see the rationale for these kind of low punishments at all.
Seriously, the root of the problem lies in the whole structure of Bursa Malaysia.

It should, never been allowed to be a listed entity. It's ludicrous. How could the investing public expect Bursa Malaysia to perform adequately as a regulator when the company focus is to make money?

How could it?

Star Biz, Managing editor P Gunasegaram, questions the issue of insider trading.

Yeah, have we heard Bursa swinging the rotan on insider trading? Have we? Me? I am not aware of any.

Yes, zero. Zilo.


That's what I said too. No insider trading here? Seriously?

Take the recent issue on Ranhill where a Ranhill's director bought shares of the company a week BEFORE Ranhill announced that there is a takeover bid of the company. And what do we call such an activity?

My suggestion?

The very first thing that needs to be done is to privatise Bursa Malaysia!

Yes. That's my recommendation.

Bursa Malaysia needs to be privatised.

Take it private!

It has to be removed as a listed entity. It has to be removed as a business.

If that does not happen, there's no chance to see Bursa Malaysia perform as a regulator!!!!


Avatar said...

If they ever "public-size", the first person they should consult would be you :)

Seriously though, with the current worship/idolatry of speculators... hey man, they're rich and the heroes of the day - I doubt the regulatory authorities are in the position nor have the willpower to do anything. Plus, most of them have a cushy relationships...

Moolah said...

I ask myself this many times...

How can they (Bursa) regulate when one of the primary focus of the company is to make money??

Mun Wai said...


Good piece! :)

Conflict of interest! BM is not fit at all to act as a regulator being a business entity simultaneously, a listed entity.

Okay, it is just "playing" (literally speaking) the role, not carrying out the fiduciary duties it owes to the investing public, hardly any reasonaly acceptable degree.

BM is entrusted as a regulator, but they have not been addressing adequately some real serious issues concerning the integrity of listed issuers and their directors.

BTW, the judiaciary punishments on law-breaking directors are nothing but jokes!

kine said...

What about all the auditing firms
which the minority shareholders will
depend on them to provide a true fair
view & accurate accounts to make their reliable informed decision making when their priority focus & interest also to make more money instead to safeguard & carrying their fiduciary duties to all the shareholders ? Any conflict of interest ?

Moolah said...

Kine: That's true in some ways and if we put in such perspective, then surely ratings agencies is very much questionable too.

However, Bursa Malaysia is the main regulator and BM needs to get its house in order first!

M.A. Wind said...

Kine: I agree 100%, that is why they also should be checked and if found breaking the rules they should be named, shamed and pubished. It happens much too rarely in Malaysia.

Moolah: thanks for linking to my site, I wrote a PS to my article

Moolah said...

M: Remember all the infamous '' articles?

Last one was And According To Sources, DRB Might Be Privatised

I always wonder... who are these sources passing out all these juicy info the local media?

Than I wonder... if these sources could pass on such info... what if someone decides to 'profit' from these info....

Not possible?

And what does on define such trades?

Oh wait.... maybe ... they will use the excuse.... that these are all healthy speculations.


Moolah said...

ps: Thanks for the ps.


random said...

Maybe they need a thirdparty watchdog to regulate

Moolah said...

How could a 3rd party work when the main regulator is BM itself???

Would BM allow a 3rd party to govern them????

There's no way it will work unless BM is removed as a profit seeking entity.

You look at the state of the IPOs. What's the clear objective of BM? Itsn't its goals to seek as many new listings as possible? And the end result? Look at some of the ACE stocks. First quarter after listing... they announce losses!

William Wang said...

Privatization may not be the solution. The golden rule is, understand the environment of your investment, be it the exchange or the companies. Just like many of our companies who are very successful locally but failed miserably in middle east, Pakistan, India or China.

Moolah said...

William: May I know what suggestion you have?

With Bursa Malaysia as a listed entity, it's a company whose main objective to its shareholders and employees is to make money.


And if this the case, how can we expect Bursa Malaysia to perform as a regulator?

Being a regulator would simply conflict its need to make money.

Hence, my recommendation is that the very first thing that needs to be done is to make Bursa Malaysia truly independent and to remove it as a profit making entity.

Mun Wai said...

Tell me if it makes sense for a regulator to be an independent body rather a business entity which derives income from all other listed issuers under its supervision.

No independence. No segregation of duties. Conflict of interest at its max la, Moo.

It is just not fit to function as a stock market regulatory body. For display only?

William Wang said...

Moolah, Private or public, we get the same watchdogs with the equal kind of attitudes. I sense that the personnel in Bursa work hands in gloves with these insiders. Can we trust our MACC? Usual response, no report from Bursa, public does not count. Not to discredit on your opinion, in fact I would like to see more than half the staff in Bursa be thrown in jail.

Moolah said...

Ah Wai: Yes, there's simply too much conflict of interest.

Moolah said...

William: I will err by being naive and believe that 'good' can prevail.

Take the DRB-Hicom recent call warrant fiasco.

How could Bursa allow the banker list a call warrant whose settlement price could be severely impacted by just one trading day error?

Way I see it.. as long as Bursa is geared to make profits, call warrants is naturally a good thing for the business. More call warrants means more revenue and more revenue means more profit.

So would Bursa acts against such listing of call warrants? Me? I am simply sceptical.

random said...

We need a 3rd party watchdog that is neutral and doesn't derive any profit from the market to make public findings of any fishy activities. This in turn will pressure BM to act accordingly.

Moolah said...

We need a 3rd party watchdog that is neutral and doesn't derive any profit from the market to make public findings of any fishy activities. This in turn will pressure BM to act accordingly.


I guess , MSWG isn't neutral enough for you. ( I do agree)

But what about SC?

Here in Malaysia, we already have SC and MSWG. But why isn't it working?

What's stopping it from working?

Ever wonder about that?

Ok.. we create another 3rd party watchgroup... but what's the focus?

To watch over BM?

Errr... sorry... but isn't this beating around the bush? The 3rd party can recommend all it wants to recommend but as long as BM is a company with a profit imperative, would BM sacrifice profit for the sake of good corporate governance????

I don't see this happening.

And let me repeat what P.Gunasegaram said "...Bursa Malaysia, has an obligation to ensure orderly and fair trading but its officials have said in the past that healthy speculation is good for the market. "


BM stance has always been healthy speculation is good for the market.

That's its stance.

Which means... revenue is always important to the company.

Is this going to change?

No way babe.

No way this will change as long as BM remains a listed entity.

Moolah said...

random: I ask you of the same question I asked earlier on 'according to sources'.

How many articles have you read based on such 'according to sources'?

How many articles have you read where these sources tend to have super duper incredible news?

And here's the stupid question... do you think these are 'healthy speculation' or do you think these are 'insider info'?

And if these are insider info... how come no one is trading on them? ( Why i say no one? Well... have you read about anyone being questioned for insider trading? )

And err.... what's BM doing?

Wait.. no wrong doing... it's all just healthy speculation.

random said...

yes not enough is done to protect investors.. although what you are doing here is one step towards protection of small investors.. Education

Keep it up mate :)

as always i will be reading silently

Moolah said...

Don't just read la.

This no story book la..



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Or if you prefer to send in writing, mail it to:

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50490 Kuala Lumpur, Malaysia

random said...

wait let me read the blue print first

Moolah said...

Don't you randomly take 5 years to read.