This article first appeared in Capital, The Edge Malaysia Weekly on May 4, 2026 - May 10, 2026

LOCAL retail participation on Bursa Malaysia peaked at 37% in 2021, but that could have been nearly half of total trading participation that year, going by trends indicated by Bursa Malaysia Bhd’s (KL:BURSA) recent reclassification of trading data aimed at improving clarity following the rise of digital trading via platforms like Rakuten Trade, Moomoo and Webull.

“While the reclassification does not change the underlying market activity, it materially alters the perceived composition of [market] participation. For instance, retail participation [for 2024 to March 2026] rises from around 18% to 21% historically to around 26% to 33% post-reclassification, highlighting the previously understated role of retail investors,” says Nomura Malaysia head of research Tushar Mohata, telling clients that the improved transparency provides a more accurate view of liquidity, behavioural trends and market depth.

The reclassification is important because previous investor trading participation segmentation data had “increasingly become outdated given the rapid rise in digitally intermediated retail participation”, he writes in an April 6 note, noting that over 80% of nominee account openings were driven by digital brokerage platforms.

“We are positive on the changes, as the revised framework better reflects the true source of fund flows and enables investors to better analyse the behaviour of different investor groups,” says CIMB Securities head of research Ivy Ng, noting that the update is the first since 2008 and that local institutional investors “remain the largest segment, accounting for 39.18% to 42.68% of trading activity between 2024 and end-March 2026”.

Nominee account openings surged to 336,159 in 2024 and 397,468 in 2025 — nearly five times the annual average between 2021 and 2023 — accounting for over 80% of new nominee accounts since 2024 and reshaping how retail participation is intermediated, Ng observes.

In particular, nominee accounts that were largely classified as institutional trade previously are now reclassified — since April 6 — based on end-beneficiary ownership information provided by participation organisations. Domestic versus foreign capital flows should also be better reflected with reclassified data on foreign-owned institutions based on source of investment funds rather than just domicile or place of incorporation.

“Going forward, investors that are subsidiaries of foreign institutions but incorporated in Malaysia will be correctly classified as local institutions (versus foreign previously), which is a much-requested disclosure improvement. Note, however, that the level of foreign ownership in Malaysian stocks remains unchanged at 18.9% currently,” Mohata adds.

The retail segment, which includes both foreign and local retailers under the new framework, is the second largest investor segment in 2024 at 33.19% under the reclassified data, edging past foreign institutions’ 27.63%. Local retail participation alone was 31.93% in 2024 while foreign retail participation was 1.27%, according to Bloomberg data.

For 2025 and 1Q2026, however, foreign institution trade participation was above that of retail, Bursa Malaysia data shows.

“Foreign institutional trading value and participation declined by approximately 10 percentage points in 2025 (to 31.05% from 40.75%), as trades by foreign-owned, locally incorporated entities are now reclassified as local institutions. Despite this, overall fund flow trends remain broadly unchanged, with foreign institutions continuing to be net sellers of RM2.76 billion in 2024 and RM22.47 billion in 2025 respectively, post-reclassification,” Ng says.

“Another notable revision is the shift in local institutional flows for 1Q2026. Under the previous methodology, local institutions recorded a net inflow of RM0.78 billion; however, under the revised framework, this is restated as a net outflow of RM1.69 billion. Correspondingly, foreign institutional net buying has been revised upwards to RM2.73 billion from RM1.17 billion, while retail net selling has moderated to RM1.04 billion from RM1.94 billion for 1Q2026,” she adds.

For comparability, Bursa Malaysia provided reclassified data for 2024, 2025 and 1Q2026 based on the new framework. However, there is no reclassified data before 2024, which means there is a data gap for a material period of between 2020 and 2023, when the prevalence of digital trading platforms was already significant.

“Historical data prior to 2024, especially from 2020 after trading activity via digital brokers began to increase more significantly, is a question for Bursa to address in order to better understand the actual market situation and limitation involved,” Ng says, noting that the change “is still welcomed as it provides a more accurate reflection of fund flows”.

“The rise of digital brokers happened from 2020 onwards. Historically, I would allocate around the same incremental percentage of 10 to 12 percentage points for retail due over historical percentage, based on restated numbers in 2024 to 2025. But pre-2020, there were not that many digital brokers, so data [pre-2020] may be comparable [to restated data 2024 onwards],” she adds. “Retail participation during the glove rally [2020-2021] may potentially have been higher than the range cited for 2024 to 2025 but we do not have sufficient statistics to validate this.”

It is noteworthy that Rakuten Trade was officially launched as Malaysia’s first digital equity broker nine years ago on May 19, 2017.

Adding 10 to 12 percentage points would bring the peak retail participation data of 37% in 2011 to as high as 49%, a back-of-the-envelope calculation shows. There is, however, no way for third parties to tell for certain.

“While [restated 2020 to 2023] is important, I am also concerned about the integrity of the data and whether Bursa has the capability to accurately restate client classifications dating back to 2020,” an observer says.

A key question that arises is whether the local retail participation rate in Malaysia is correctly perceived. The jump in nominee accounts points to the presence of interest. Digital trading platforms, for instance, allow retailers to also trade global stocks in the US and Hong Kong, not just Malaysia, at fractional fees relative to local brokers, with at least two dangling sweeteners for new users like fractional shares in Nvidia Corp — the world’s most valuable company by market capitalisation, driven up by its dominance in AI data centre chips.

The Capital Market Masterplan 2026-2030 (CMP4), unveiled by the Securities Commission of Malaysia (SC) on March 9, for example, described local retail participation in Malaysia as “low” and noted that “many Malaysians lack confidence to invest and are not financially savvy, resulting in many households holding wealth in low-yielding assets”. Among key action plans are innovation in investment products, trading instruments and structures to make retail participation more affordable and accessible.

Yet, even under the old data classification, local retail participation was extremely strong during the Covid-19 pandemic.

In 2020, local retail investors were not only net cumulative buyers but the local retail participation rate was also above that of local institutions for the following year. Local retail interest was shored up by those seeking short-term gains from glove and technology-related counters that surged during the pandemic.

At the same time, new net funds coming into the local market from local institutions fell from a combination of lower statutory contributions rate of 9% compared with the usual 11% (April 2020 to June 2022) as well as special Covid-19-related withdrawals from the Employees Provident Fund (EPF) totalling RM14.5 billion in 2020, RM86.2 billion in 2021 and RM145 billion in 2022.

The local retail investor participation rate rose to an average of 32.4% in terms of value traded in 2020, significantly above 20.8% in 2019 and the then five-year average of 21.4%, data from the SC shows, prior to the recent data reclassification by Bursa that does not provide reclassified data before 2024.

In 2021, local retail participation hit an all-time high of 34.6% in terms of value traded, with local retail investors being net buyers totalling RM12.2 billion (RM14.3 billion in 2020) even as local institutions turned net sellers of -RM9.1 billion (versus RM10.3 billion net buying in 2020) and net selling by foreigners at -RM3.1 billion (down from -RM24.6 billion in 2020).

The local stock exchange operator and front-line regulator explained its limitations when asked for guidance to interpret pre-2024 data based on its refreshed trading classification framework.

“2024 is the earliest period where the inputs required for the reclassification were consistently and reliably available. That consistency was not available at the same level of granularity in the earlier years, when broker models, market practices and nominee usage were different. To enable a like-for-like comparison based on the previous methodology, Bursa makes available daily trade data in both legacy and enhanced classification formats,” says Stephanie Tan Kar Mun, director of group commercial and market coverage at Bursa Malaysia Bhd.

“The numbers prior to 2024 are not comparable following the reclassification of nominee accounts. Under the earlier classification, all nominee trades were classified as institutional. Over time, this did not reflect the underlying retail activity as the use of nominee accounts expanded — particularly via digital brokerage platforms, which rose nearly fivefold between 2023 and 2025. With the enhanced classification, which distinguishes retail and institutional investors at the endbeneficiary level, retail participation is now better reflected,” Tan adds, noting that the “refined data points to a more balanced participation across retail, local institutional and foreign institutional investors”.

On why Bursa groups foreign retail with local retail in the reclassification, Tan says foreign retail participation “remains relatively modest”, noting that many tend to access the Malaysian market “through more convenient channels such as funds and unit trusts, as well as via omnibus account structures by foreign brokers, which are typically classified under institutional flows and offer a simpler, more diversified entry point”.

Data reclassification is based on information submitted by stockbrokers who are also authorised depository agents (ADAs) responsible for collecting, validating and maintaining accountholder and beneficial ownership information during trading and Central Depository System (CDS) account opening conducted using supportive identification and constitutive documents, in accordance with applicable rules.

“To ensure the reliability and integrity of nominee-related information, Bursa enforces mandatory disclosure obligations and conducts ongoing supervisory reviews to assess compliance with regulatory requirements,” Tan says.

She sees “room for growth” for retail participation but is “encouraged by the progress” seen over the past two years, pointing to double-digit growth in CDS accounts in 2024 and 2025, particularly among investors below the age of 35.

“This signals a positive shift — more young Malaysians are becoming open to investing and are gradually taking steps into the capital market. While the momentum is building, we also recognise that sustaining their participation and broadening it beyond just one demographic group is important. At the same time, we are mindful that accessibility and relatability continue to be key considerations. Financial content can sometimes feel too technical or not tailored for the general public, which may create barriers for wider participation. Thus, we aim to make it more accessible and inclusive for all Malaysians, regardless of background or experience level,” Tan says.

If the strength of retail participation during the Covid-19 pandemic is any indication, policymakers should perhaps ask if enough is being done to captivate retailers to remain invested in Malaysia.

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