KUALA LUMPUR (March 23): As equities continue to be hammered as investors rush to liquidate their portfolio in the coronavirus-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.

“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,” said SC chairman Datuk Syed Zaid Albar in the same statement.

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

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.

Notwithstanding the short-selling suspension, both the SC and Bursa Malaysia reiterated their stance that markets need to remain open during the movement control order (MCO) period to ensure continued and reliable access to the Malaysian capital market, which they said is vital for immediate and long-term market confidence.

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

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