This article first appeared in The Edge Malaysia Weekly on March 2, 2026 - March 8, 2026

A sharp surge in the opening of nominee accounts over the years, driven by digital brokerage platforms, has prompted Bursa Malaysia to overhaul how it classifies investor trading activity. The move is aimed at sharpening data accuracy and strengthening market credibility.

“We observed that nominee structures are now widely used, especially through digital brokerage channels.  At the same time, technology and broker reporting have advanced to the point where it is possible to reliably capture deeper details on the trade levels. 

“We analysed investor segmentation at the trade level and looked at ways to provide market statistics that would reflect actual trading participation and capital flows,” Bursa tells The Edge in an email reply.

A nominee trading account structure on Bursa Malaysia is a type of Central Depository System (CDS) account in which shares purchased are registered under the name of a nominee company,  typically owned by a broker, rather than the investor’s personal name.

Under this arrangement, the investor remains the beneficial owner of the shares and is entitled to dividends, capital gains and voting rights. The broker, through its nominee company, acts as the legal holder and custodian of the securities, handling administrative and settlement matters on the investor’s behalf.

“The growing use of nominee structures has made it increasingly difficult for the market, particularly fund managers and analysts, to gauge the true participation of each investor segment.

“The initiative is therefore expected to provide a clearer reflection of the actual contribution of institutional and retail investors in terms of transaction volume and value, offering a more precise picture of trading dynamics,” a market observer says.

The exchange points out that new nominee account openings jumped to 336,159 in 2024 and 397,468 in 2025, nearly five times the annual average of about 80,963 recorded between 2021 and 2023. It adds that these digital brokerage platforms have contributed to over 80% of the new nominee accounts opened since 2024. 

“The sharp and sustained growth in 2024 and 2025 indicates a structural increase in the adoption of nominee structure, reinforcing the need for initiatives aimed at improving insights [and] classification clarity of nominee-based trading activities,” it says.

Last week, Bursa Malaysia announced that it will introduce a new breakdown of investor types in its market data, starting April 6.

Under the new approach, nominee accounts will be split into institutional and retail categories based on end-beneficiary information. This aims at providing a clearer representation of each investor segment’s trading participation.

In addition, investment flows of foreign-owned institutions incorporated in Malaysia will be classified based on the source of the investment fund, guided by the place of incorporation rather than the ownership location of the institution, to better reflect domestic investment activity.

“This initiative is in response to the growing use of nominee structures and reflects the exchange’s ongoing commitment to ensuring that information remains relevant, transparent and reflective of current trading behaviours and market dynamics,” Bursa says.

On the reclassification of nominee accounts, Bursa says the enhancement was in response to requests from brokers seeking greater clarity in identifying retail trading activities, particularly for investors who open accounts and trade through nominee structures.

Brokers will also provide information on the end beneficiaries of these nominee accounts to enhance insights.

In addition, Bursa also engaged foreign-owned, locally incorporated institutions to deepen its understanding of their operational flows and execution mandates, including the source of investment funds. “These discussions provided valuable insights into their sources of investment funds as well as their execution mandates, which helped shape and inform the initiative.

“This initiative demonstrates Bursa Malaysia’s commitment to strengthening the quality of data and insights to drive market vibrancy. By enhancing visibility on investor participation, the exchange aims to facilitate better investment decision-making, deepen investor engagement and reinforce confidence in the Malaysian market.”

Bursa points out that the reported levels of foreign ownership will remain unchanged under the new classification approach. Reported foreign ownership statistics are determined under the Securities Industry (Central Depositories) (Foreign Ownership) Regulations 1996.

“The enhancements that will be introduced by the exchange are related specifically to the classification of trade data and do not alter the way ownership is recorded or reported. As these two processes are independent, the reclassification exercise has no impact on the published foreign ownership statistics.”

When asked if the move comes after MSCI raised concerns about trading practices in Indonesia’s equity market, Bursa says it is not related.

“This is Bursa Malaysia’s initiative to enhance transparency within our ecosystem following our industry engagements and our observations of structural changes in the marketplace, specifically the growth in nominee-based structures driven by digital brokerage channels, and the need for clearer investor participation data. It is not related to the regional developments mentioned.”

Recall in late January, Indonesian equities were hit by a sharp selloff after index compiler MSCI Inc flagged fundamental investability issues linked to free float — the number of shares available for trading. This led it to immediately pause some index changes, including additions, until regulators address concerns over the tightly held ownership of listed firms.

Key concerns cited include opaque ownership, with confusion over companies’ free float of shares.

It should be noted that Malaysia was once removed from MSCI’s global indices at the height of the Asian financial crisis in 1998, following the imposition of capital controls.

The removal triggered automatic selling by index-tracking funds that had caused a massive foreign outflow of capital. It took a very long time for the capital market to recover. After an easing of capital controls, MSCI reinstated Malaysia into its Emerging Markets Indexes around 2000.

From a competitive standpoint, BIMB Securities director of research Mohd Redza Abdul Rahman says Bursa’s move brings Malaysia closer to more transparent regional peers.

Markets such as Thailand and Taiwan already provide detailed daily net buy and sell data across multiple investor categories. Japan publishes highly granular weekly investor participation statistics.

By contrast, many developed markets, including the US and parts of Europe, do not provide official daily retail versus institutional net flow splits at the exchange level.

“Bursa is essentially catching up to the regional gold standard by unmasking nominee accounts,” Redza says.

For investors, the immediate benefit is improved data precision.

Redza believes improved transparency may also enhance Malaysia’s positioning among global funds, especially long-only institutional investors that prioritise governance and data reliability.

“Investors will no longer have to guess if a massive institutional trade was actually a collection of retail orders hidden behind a nominee bank account,” he says, adding that this perception of better transparency may result in a lower “trust discount” and encourage long-only global funds to allocate investments into Malaysia.

MBSB Research head Imran Yassin Md Yusof characterises the initiative primarily as a transparency enhancement rather than merely a technical adjustment.

He notes that analysts and investors have been seeking clearer investor segmentation data for some time.

“We believe this has been requested or enquired about by the analyst community and investors for quite some time. There might have been some confusion in terms of classification, and this should clear the matter.”

While he does not draw direct comparisons with other regional exchanges, Imran says the initiative would provide better understanding of trading activities in the market.

“It means there is better clarity in understanding trading activities and the dynamics of the market.  As such, better analysis can be performed and investors can receive a clearer picture of current trading dynamics.” 

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