What really is the Singapore-Malaysia Trading Link?

Earlier this year Monetary Auhtority of Singapore (MAS) and Securities Commission Malaysia (SC) announced that they will be establishing a bilateral trading link to connect their respective stock exchanges by the end of the year. This will make trading and settlement on Bursa Malaysia and Singapore SGX more convenient and cost effective. Investors will enjoy a “seamless access” to a combined market of 1,600 listed companies, worth more than USD $1.2 trillion. This link will cover not only trading but also post-trade arrangements for which MAS and SC will set up cross-border supervisory and enforcement arrangements.

So what does this mean for investors? According to Malaysian Prime Minister Najib: “This exciting initiative will widen investment options for investors and contribute towards greater activity and vibrancy in both markets.”

Meaning the investors will not need seperate brokers in BM and SGX to manage their trades leading to reduced costs and transaction time. Investors in Singapore and Malaysia will be able to settle transactions in their local currency if trading in domestic market. However, trading volume will need to be of a certain level before switching away from their existing stockbroking arrangements will be worth the trouble.

For this trading link to fulfil its objective of improving the vibrancy of both the stock exchanges and increase their trading activity, efforts needs to be made towards cross-border research and analysis, investor education and engagement campaigns to familiarize investors with the unique laws and business operations of each country.

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