Malaysia not ready to liberalize broking industry: Exchange chief
Malaysia not ready to liberalize broking industry: Exchange chief
KUALA LUMPUR (AFP): Malaysia was not ready to license foreign
brokerages to trade locally although they would still be allowed
to do so through tie-ups with local houses, its stock exchange
chief said yesterday.
"The time will come, but personally I feel it is still not
right yet at this stage to liberalize to that extent," Nik Din
Nik Yusoff, the executive chairman of the Kuala Lumpur Stock
Exchange (KLSE), said in an interview.
The government has not restricted foreign brokerages from
participating in Malaysia's securities industry through taking up
equity stakes of up to 49 percent in any of the 60 local broking
houses, he said.
In fact, Nik Din said there was still room for new local
stockbroking houses in the more remote towns of the country
although certain capital cities had reached saturation point.
Eleven foreign broking houses, six of which are from Singapore
and the rest from Hong Kong and Britain, have so far taken up
equity stakes of 30 percent each in local stockbrokerages.
"We have not closed our doors to foreign broking houses to
participate in trading locally. They can still come in to look
for local partners," Nik Din said.
"But the 'big boys' should not yet be allowed to come in and
compete directly with the local boys. We must first nurture and
develop our own broking industry, as the market is just picking
up," he added.
Under the General Agreement on Tariffs and Trade (GATT) pact
on trade and services, ratified last year by more than 140
governments, including Malaysia, the financial and services
sectors must ultimately be liberalized.
Nik Din said once the local broking concerns were big enough
to venture overseas -- a few of which had already done so -- and
compete international, "then maybe the time is right to
liberalize to a certain degree," he said.
The local broking industry still had a lot of room to expand
in Malaysia's growing market, particularly in the more remote
areas where potential investors were being deprived of access to
broking services, Nik Din said.
Nik Din said the minimum capital base of 20 million ringgit
(US$8 million) for stockbrokerages in the country was adequate to
cope with the present volume of business.
Concern was raised over whether local broking could cover
rising volumes at the height of the 1993 boom when daily
transactions exceeded one billion units valued at over two
billion ringgit ($800 million).
Volume has since middle of last year dwindled to a daily
average of 100 million units worth less than 200 million ringgit
($80 million).