About Us
CEO's Message
(extracted from Annual Report 2007)
At the start of 2007, Bursa Malaysia announced three Key Performance Indicators (KPIs):
- an ROE of 16.8%;
- a velocity of 40%; and
- a growth in derivatives contracts of 40%.
- an ROE of 30.3%;
- a velocity of 53%; and
- a growth in derivatives contracts of 49%.
It would be easy to focus only on the records we achieved at Bursa Malaysia in 2007 and, indeed, it was an exceptional year.
The KLCI broke new ground, rising to levels which exceeded those attained before the Asian economic crisis. Average daily volume in our equities market was the highest ever recorded. On the derivatives side, we experienced considerable activity growth in both commodities and financial futures. Records were set for daily volume and open interests in the Crude Palm Oil Futures (FCPO) and Kuala Lumpur Composite Index Futures (FKLI). The market saw renewed interest in warrants, with a sharp increase in the number of issues, and we saw warrant issues for offshore companies for the first time.All this is very positive and speaks well of the confidence investors have in our markets. It is underpinned also by a resilient economy, supported by strong fundamentals and domestic initiatives. However, we must continue our proactive efforts to build variety, depth and quality in our markets.
We compete not only with other exchanges for the attention of investors, we compete against other products for the attention of issuers. During 2007 we saw some companies chose the alternatives of private equity and debt financing. It signals the need to constantly add variety and flexibility to the instruments available through our markets, so that we can respond to the needs of issuers. To thrive, our markets must address the requirements of both the investors and the issuers. Recognising this, we established a dedicated unit in 2007 to focus more tightly on issuer development through a process of direct engagement.
Much work was done on improving our trading platform, Bursa Trade. The derivatives module was launched in late 2006, and will be enhanced with the equities module later in 2008. This important aspect of our trading infrastructure is designed to improve market efficiency and, despite one or two glitches, has generally worked well. It certainly contributed to our growth in the derivatives market during the year.
The health of the markets also involves broadening the base of investors. The retail development programme gathered pace throughout 2007. This is a concerted effort to encourage younger investors in the 23 to 45 age group to focus on direct involvement in the market. We believe the industry tends to pay insufficient attention to this important demographic sector, ignoring the fact that direct investment can be a rewarding alternative to collective investment schemes like unit trusts.
The comfort of having a sound economic platform on which to grow our markets and their products and services is vital.
Looking Ahead
An enhancement to our trading platform is due to be launched during 2008. BT Securities employs the latest technologies and offers new functionalities. The result will be higher capacity and better response time for market participants. DMA Equities will be introduced in the second half of 2008 to complement the implementation of the improved trading platform, putting Bursa Malaysia on par with developed markets.We will focus on new initiatives that include further enhancement on CMF which will allow for the matching of trade and settlement details for institutional trades prior to the creation of settlement instructions. We will enhance the CLA model and develop the negotiated transaction (OTC) facility for SBL to ensure that it meets market requirements, and we also plan to utilise BNM's Real-Time Electronic Transfer of Funds and Securities Systems (RENTAS) payment system for Bursa's securities financial settlements, with the aim of eliminating settlement bank risk.
In our effort to further improve the market infrastructure, we will be introducing other initiatives such as market making and block trading facilities to strengthen liquidity.
To complement DMA Derivatives, in 2008 we will launch Malaysia's first foreigncurrency commodity derivatives product - the USD Crude Palm Oil Futures contract (FUPO). Once Bursa Malaysia's DMA infrastructure is completed, FUPO is expected to attract new funds into Malaysia by providing the benefit of extended market access to global players. Another exciting development will be the introduction of a new financial derivatives product, allowing investors to take future contracts out on the FBM 30 Index. We also plan on implementing the ECOS Gateway to help Trading Participants' clients to trade derivatives via the internet.
Other initiatives include implementation of a common broker-front-end trading system to enable the 10,000 equity dealer workstations to trade on the derivatives markets.
A further step forward in the coming year will be the implementation of FMTP for the fixed income market. We have responded to a Government call for the transparent trading of the numerous fixed income instruments in issue. Progress has been smooth so far, and this voluntary market should be operational in the first half of the year.
Last but not least, we will continue to promote the development of the market for Islamic products. This is part of the national objective of making Malaysia a leading international Islamic financial centre.
Dato' Yusli Mohamed Yusoff
Chief Executive Officer, Bursa Malaysia Berhad
ceo@bursamalaysia.com