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).