What is the Kuala Lumpur Stock Exchange (KLS)
The Kuala Lumpur Stock Exchange (KLSE) was the precursor exchange to the Bursa Malaysia Exchange. Its main index is the Kuala Lumpur Composite Index (KLCI), composed of the top 30 companies on the Bursa Malaysia Exchange.
The KLSE began as the Singapore Stockbrokers' Association in 1930. Creation of the exchange was to deal in Malayan securities.
BREAKING DOWN Kuala Lumpur Stock Exchange (KLS)
The Kuala Lumpur Stock Exchange (KLSE) went through several name changes over the years. These names include the Malayan Stock Exchange, which began trading securities to the public in 1960, and the Stock Exchange of Malaysia, which would rename as the Stock Exchange of Malaysia and Singapore.
In 1973, the Stock Exchange of Malaysia and Singapore separated into the Kuala Lumpur Stock Exchange Bhd (KLSEB) and the Stock Exchange of Singapore. The need for this separation was due to Singapore gaining independence and the ending of the interchangeability of currencies. The name of the KLSEB changed to the Kuala Lumpur Stock Exchange in 1994.
In a move to become more customer focused, the exchange demutualized in 2004. With demutualization, a business which has member ownership converts into one which has shareholders. Also, with this change in ownership structure, the name changed to Bursa Malaysia. The exchange entered into a partnership with the Chicago Mercantile Exchange (CME) to offer derivatives and launched the Islamic banking, the Shari'ah-compliant trading platform in 2009.
Today, the exchange continues to work with others around the globe to promote performance and transparency in global capital markets.
Move to Open ETF Trading on the KLSE
Currently, traders can only short-sell equity-based exchange-traded funds (ETFs), but that may change in the future. In July 2018, Bursa Malaysia released a consultation paper which sought public comment on a proposed amendment related to ETFs. This call comes after a task force on ETFs, which included the Securities Commission Malaysia (SC), Bursa Malaysia and other market participants, made recommendations aimed at expanding investor interest in ETFs. Recommendations from the task force urged including ETFs such as:
- Futures-based ETFs
- Leveraged ETFs
- Inverse ETFs
- Physically backed commodity ETFs
- Synthetic ETFs.
In service to these goals, the rule changes would loosen regulations on the short selling framework to allow various short-selling types of ETF units.
Size of the Kuala Lumpur Exchange
The Kuala Lumpur Stock Exchange, now the Bursa Malaysia Exchange, is one of the more significant and most active exchanges in Asia with nearly 1,000 companies listed. Stocks, bonds, derivatives, and ETFs trade each day on the exchange. It has a fully automated trading system which launched in late 2008.
To show that a listed business is a public limited company (PLC), “Berhad,” “BHD,” or “Bhd” will appear after the company's name. In contrast, the use of the Sendirian Berhad or "SDN BHD" denotes that the business is a private limited company. In 2018, the top five companies on the Bursa Malaysia Exchange were:
- AMMB Holdings Bhd
- Astro Malaysia Holdings Bhd
- Axiata Group Bhd
- CIMB Group Holdings Bhd
Kuala Lumpur is the capital of Malaysia and its cultural, economic, governmental, and financial center. This capital city has the largest GDP by capita of all the Malaysia states. Also, Malaysia’s economy is the fourth largest in Asia.