Malaysia, Singapore to set up trade link for stockmarkets

Malaysia and Singapore regulators said Tuesday the two countries will establish a link to connect their stock markets by the end of the year to cut trading costs and woo cross-border investments.

The 'Malaysia-Singapore Connect' will allow investors to trade and settle shares listed on each other's stock market in a more convenient and cost efficient way, benefiting retail investors, the Monetary Authority of Singapore and the Securities Commission Malaysia said in a joint statement.

The initiative might be expanded later to include other stock markets in the region, the statement said.

It was unclear how the new system might differ from a previous attempt to link their markets. The two countries launched a regional trading link in 2012 that was later joined by Thailand, but the system was quietly shut down last year without any explanation.

Prime Minister Najib Razak told a capital market conference earlier Tuesday that the two exchanges are sophisticated and mature enough to set up a market corridor. He said the system will provide investors with easier and seamless access to the two markets with a combined market capitalization of $1.2 trillion and 1,600 public listed companies.

The regulators said the new trade link will include post-trade arrangements like the clearing and settlement of the stocks traded. Cross-border supervisory and enforcement arrangements will be set up, regulators said, working with the Singapore Exchange and Bursa Malaysia to launch the link.

"This will improve the liquidity of both our stock markets. I hope this initiative will in time expand to include the rest of the stock exchanges in ASEAN," said Lee Boon Ngiap, assistant managing director at the Monetary Authority of Singapore.