Regulated Short Selling (RSS) On Bursa Malaysia

Basically, short selling means that investors sell a share without first having it. Short selling is a technique used by investors to profit from the falling price of an overpriced market.

In Bursa Malaysia, short selling is regulated under Regulated Short Selling (RSS) and Securities Borrowing and Lending (SBL) guidelines, which introduced to the market on 3rd January 2007. Prior to 2006, short selling was banned for about 8 years.

RSS means that investors sell a share without first having it, but they have to borrow it from the Central Lending Agency (CLA). CLA is an agency managed by Bursa Clearing where all lending and borrowing are taking place. Investors don’t deal directly with the CLA, but they have to go through the approved Participating Organisation (PO) or investment bank.

For those who have excess shares, you may lend it to the CLA and earn some fees.

1. How to participate in RSS?

Investor who wishes to participate in RSS must open a designated RSS trading account with a PO. All short selling transactions are to be executed through a RSS Account.

Prior to executing RSS, investors must first borrow the stocks from the CLA through the approved PO. Investors have to pay a fee and placing sufficient collaterals for borrowing.

Upon successfully borrowed the required stock, RSS will be executed by dealers at PO after receiving instruction from the investors. The order price must be higher than the last traded price of the relevant stocks. This is known as the ‘up-tick rule‘.

2. Which stocks are approved for RSS

Currently, there are 100 stocks are approved by Bursa Malaysia for RSS. Please refer to table 1 below.

The stocks were approved based on the following criteria,

• average daily market capitalisation must exceed RM500 million for the preceding 3 months
• at least 50 million shares in public float
• average monthly traded volume must exceed 1 million units for the preceding 12 calendar months

List of approved stocks for RSS is updated every 6 months.

3. Suspension of RSS

Total short position of an approved stocks is limited to 10% of the total number of the shares. When the limit reach, RSS activities on that stocks will be suspended for 4 market days.

4. More informations

For further information kindly refer to Regulated Short Selling (RSS) Guidelines by

• Bursa Malaysia
• Bank Negara Malaysia

Table 1 : Approved Regulated Short Selling (RSS) Stock as of 1st August 2011.