KUALA LUMPUR (March 23): As equities continue to be hammered while investors rush to liquidate their portfolio in a virus-driven panic, Securities Commission Malaysia (SC) and Bursa Malaysia have decided to temporarily suspend short-selling of equities to mitigate further volatility in the market.

The suspension will take immediate effect and will be in place until April 30, 2020, the capital market regulators said in a joint statement today, as part of their proactive measures to mitigate potential risks arising from heightened volatility and global uncertainties.

The suspension will involve intraday short-selling (IDSS) and restricted short-selling (RSS), as well as intraday short-selling by proprietary day traders. The suspension does not apply to permitted short-selling (PSS), they said.

Nevertheless, the SC and Bursa Malaysia reiterated the need for markets to remain open during the movement control order (MCO) period, to ensure continued and reliable access to the Malaysian capital market, which is vital for immediate and long-term market confidence.

"We continue to observe trading activities in this exceptionally volatile global and market environment. We will assess the situation and consider the necessary additional precautionary measures, as appropriate, to support an orderly market," SC chairman Datuk Syed Zaid Albar said in the statement.

"This remains a short-term measure to provide stability and confidence. We remain committed to ensuring a conducive trading environment in our marketplace," added Bursa Malaysia chief executive officer Datuk Muhamad Umar Swift.

Last week, the SC announced that Malaysia’s capital markets including Bursa Malaysia, will operate as usual during the 14-day partial lockdown that will last until March 31.

It also said the wider market will continue trading to enable investors to manage their risks and opportunities during this period.

In a separate statement, Bursa Malaysia said it has the necessary infrastructure, rules and processes to safeguard and maintain a fair and orderly marketplace.

At the time, Bursa Malaysia said the tick rule was to be extended to intraday short-selling and permitted short-selling activities of investment accounts and market makers. The tick rule was also to be applied for short-selling activities of proprietary day traders.

Short selling occurs when an investor borrows a security to sell it on the open market, with the plan to buy it later at a cheaper price. Simply put, short-sellers bet on and profit from a drop in the security’s price.

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