CHAPTER

3
SECURITIES
MARKET
OUTLIN
E:

1. Overview.
2. Malaysian Stock Market.
3. Stock Broking Companies
4. Terms Used in Securities Industry.
5. Trading Procedure and Process.
6. Interpretation Information From The
Newspapers.
SECURIT
IES
◻ General term applied to all stocks, shares, debentures, notes
bills, bonds,
warrants, futures & etc.

◻ Shares are classified as equity securities and debentures and

bonds
under loan securities.

◻ Documents evidence of ownership or debt.

1) Shareholding evidence of ownership.
2) Debenture or bond evidence of debt.

◻ Exchangeable and saleable in the market place.

STOCK
MARKET
◻ Consists of the trading of stocks and related
securities on all exchanges.
◻ Central market place for the raising of equity fund.
◻ Place where government and company securities
may be bought or sold.
◻ Brings together enterprise to individual or
organization:
Intend to raise money through of
the issue securities. new
Seek to invest their saving or surplus
◻ Offerfund.
investor liquidity i.e. ability to covert their
investment in short notice.
STOCK
MARKET

“Stock market “ is the place where the shares in

the company are bought and sold and the place
providing companies to access capital and
investor opportunity to own shares of the
company and enjoy potential gains from the
company.
STOCK
MARKET
Stock market is made up of two
market:

1) The primary market.

2) The secondary market.

PRIMARY
MARKET
◻ A company issue a new share for the first
timeto the market.
◻ Allows a company or government to raise initial
capital or additional fund to expand their operation
or business.
◻ Usually done by company issuing prospectus
through
underwriting stock broking company.
◻ Embraces issues of debentures, preference
share and notes as well as the equity securities of
listed companies.
PRIMARY
MARKET
◻ Several ways used by companies to issue new
shares:
1) Initial Public Offering (IPO)
2) Private Placement
3) Rights Offering
4) Sale shares to own employees
IPO
PROCESS
1) The company must obtain the approval from shareholders in AGM.
2) Auditors and lawyers also must certify that all documents for the
company
3)
are legitimate.
The company, then finds an investment bank, which willing to
underwrite the offering. This underwriter is responsible for
4)
promoting the stock and
facilitating the sale of the company’s IPO shares.
The company files a registration statement with SC which
5)
includes Prospectus, that describe the key aspects of the
issue, the issuer and its management and financial position.
After SC approved the registration statement, the price of the
6)
offered to
the public securities will be announced.
The investment bankers and company executives promote the
company’s stock offering through a road show, a series of
IPO
PROCESS
PRIVATE PLACEMENT PROCESS
PRIVATE PLACEMENT PROCESS
PRIVATE PLACEMENT PROCESS
SALE SHARES TO OWN
EMPLOYEES
SALE SHARES TO OWN
EMPLOYEES
RIGHTS OFFERING
RIGHTS OFFERING
RIGHTS OFFERING
RIGHTS OFFERING
SECONDARY
MARKET
◻ A place where people can buy and sell
securities that previously issued to the primary
market.
◻ The transaction is among investors and the
money goes to/from investors (not involve the issuer
of the share)
◻ Auctionsystem and price of the shares
determined by
supply and demand in the market.
◻ In Malaysia, the place is called Bursa Malaysia
Securities Berhad:
1) Main Market
2) Ace Market
 PRIMARY VS. SECONDARY
APR1
0
MARKET
◎ A market where new ◎ A market where
securities are bought existing securities
and sold for the first are traded among
time between issuer investors.
and investors.
◎ Once the security begins
◎ New issues of bonds, to trade among
warrants, preferred investors, it becomes
share and common part of the secondary
shares are sold here. market.
◎ The issue is backed by
an
◎ No underwriter*
underwriter*.
◎ Proceeds go between
◎ Proceeds go to the
investors.
issuer.
Raising
capital
• IPO is an easier way to raise
capital as compared to issuing
bonds or through loans. Shares
(equity) has advantages in terms
of status and the way dividends
are paid.
Confidence
• Investors tend to have more
confidence in public listed
companies since they have
passed the strict requirements of
listing on Bursa Malaysia. Once
listed, the reputation and
credibility of a company is
enhanced.
Higher profile
• Listed companies have greater
publicity that is generated by
dissemination of information by
the media. This help to stimulate
growth and attract more
business.
Additional fund
• Upon listing for the first time, it is
easy for the companies to get
additional capital which by issuing
more shares on the stock
exchange.
MALAYSIAN STOCK
MARKET
◻ Bursa Malaysia Securities Berhad.
Governs the conduct of its participants in securities dealing.
Responsible for the surveillance of the market place.
Enforcement of its listing requirements.
Formerly known as KLSE (BSKL) . Renamed to Bursa
Malaysia
Securities Berhad in April 2004.
Previously, the exchange is divided into two boards, named
as main Board and Second Board and MESDAQ.
Currently, two board , that are Main Market and ACE
Market.
MESDA
Q
• Malaysian Exchange of Securities Dealing
and Automated Quotation Berhad
(MESDAQ)
Launched in 6th October 1997.
Administer a specific segment of capital market.
Focuses on high growth and technology-related
companies.
Design as “incubator” exchange.
Shares are traded at Bursa Malaysia Securities Berhad
in ACE Market.
Participants and
Intermediaries
1. Institutional Investor.
Represented by a variety of institutions include pension
funds, unit trust, etc.

2. Retail Investor.
Include short-term and long-term investor.

3. Stock Broking Companies.

Play a critical role as the link between the client and stock
market.
STOCK BROKING
COMPANIES
▪ Referred to as participating organizations of
Bursa Malaysia Securities Berhad.
▪ It must hold a valid dealer’s license issued by the
SC.

Roles and functions of stock broking companies:

Plays an important role in the trading of common
stock due to its having the authorized accessibility
to trading and settlement systems of the stock
exchange.

Act as intermediaries between the client

and the operations of the exchanges.
 THE ROLE OF A BROKER*
APR1
0

◎ To buy or sell shares on Bursa Malaysia,

investors need to use a registered broker who
is a member of Bursa Malaysia.
◉ They cannot deal directly with Bursa Malaysia as
only brokers have direct access to the market.

◎ A broker acts as an agent.

◉ He/she earns a commission on the value of
shares traded.

◎ A broker can also be involved in the listing of a

new company by underwriting the float and
marketing the float to their group of clients.
 TERMINOLOGIES:
*TYPES OF STOCK AGENTS / DEALERS

• Is an agent who buys and sells shares on

behalf
Stock of clients and receives commission.
Broker • Normally is the owner of the stockbroking
company.
APR09
Remisi • Is an agent who buys and sells shares on
er behalf
of clients and receives commission from
• it.
Is an agent who buys and sells shares on
Paid behalf attached
• Normally of clients and receives
at a stockbroking
commission
company (Notfrom it plus ofa abasic
firm).salary.
Representati
Dealer’s employee
Paid dealers are the permanent workers
ve of a stockbroking company.
REGULATORY
BODIES….BURSA
• Development of Bursa Malaysia Securities Berhad.
The first formal securities business organization in Malaysia was the
Singapore Stockbrokers' Association, established in 1930.
It was re-registered as the Malayan Stockbrokers' Association in
1937.
The Malayan Stock Exchange was established in 1960 and
the public trading of shares commenced. The board system
had trading rooms in Singapore and Kuala Lumpur, linked by
direct telephone lines.
In 1964, the Stock Exchange of Malaysia was established.
With the secession of Singapore from Malaysia in 1965, the Stock
Exchange of Malaysia became known as the Stock Exchange of
Malaysia and Singapore.
REGULATORY
BODIES….BURSA
• Development of Bursa Malaysia Securities Berhad.
In 1973, currency interchangeability between Malaysia and
Singapore ceased, and the Stock Exchange of Malaysia and
Singapore was divided into the Kuala Lumpur Stock Exchange
Berhad and the Stock Exchange of Singapore.
The Kuala Lumpur Stock Exchange which was incorporated on
December 14, 1976 as a company limited by guarantee, took over
the operations of the Kuala Lumpur Stock Exchange Berhad in the
same year.
On April 14, 2004, it changed the name to Bursa Malaysia Securities
Berhad, following their demutualization exercise, the purpose of
exchange
which was sector
to enhanceby making them
their competitive more and toand
position market-
respond to
customer-driven
global oriented.
trends in the
Now, Bursa Malaysia is one of the largest bourses in
Asia.
REGULATORY
BODIES….BURSA
Roles and functions of Bursa Malaysia Securities Berhad.
1) To provides a market place for both retail and institutional
investors to trading listed securities. Financial products may
include shares of public listed companies, loan stocks,
debentures stocks, warrants and bonds.
2) To operate and regulate a fully integrated exchange offering
a comprehensive range of exchange-related facilities
including listing, trading, clearing, settlement and depository
services.
3) To furnish information on the financial standing of listed
companies.
4) To protect the interest of members and the investing
companies.
5) To provide investors with services and promote interest in the
 FUNCTIONS OF
OCT1
0, BURSA MALAYSIA
MAC
12
REGULATORY
BODIES….SC
Securities Commission.
Established in March1993 under Securities Commission Act
1993 to rationalize and streamline the legislation and
regulatory framework of the Malaysian capital market.

Mission ”To promote and maintain fair, efficient, secure and

transparent securities and futures market and to facilitate the
orderly development of an innovative and competitive capital
market”
REGULATORY
BODIES….SC
Functions of Securities Commission:
1) Advise MOF matters relating to securities and futures contract
industries.
2) Regulate issue of securities, all matters relating to
securities, futures contract and unit trust scheme.
3) Approving corporate bond issues.
4) Supervise and monitor the exchanges, central depository and the
clearing houses.
5) Promote and monitor proper conduct of members.
6) License and supervise licensed persons in the capital market.
7) Regulate takeover and mergers matters.
8) Encourage R&D to ensure products varieties and enhancement.
9) Consider and suggest reform of law in the capital market.
TERMS USED IN STOCK
TRADING
❑ Ask price- the lowest price any seller is willing to sell at given time
for a
security.
❑ Bid price- the highest price any buyer has declared that they are
willing to pay at a given time for a security.
❑ Bull market- a raising stock market over a prolonged period of
time.
❑ Bear Market- a declining stock market over a prolonged period of
time.
❑ Market order- an order to buy or sell securities at the current
price when the order reaches the market.
❑ Limit order- an order to buy or sell securities at the limit price or
better.
❑ Board lot- comprises or permitted of shares to be traded.
ie; Bursa Malaysia-100 units (Round lot)
TERMS USED IN STOCK
TRADING
◻ Odd Lot- number as shares is less than board lot and also
known as
special lot.
◻ Annual report- a report issued by a company to its
shareholders at the end of fiscal year.
◻ Prospectus- a legal document offering securities or unit trust
funds for sale.
◻ Margin Trading- trading in securities with credit facilities.
◻ Cash Trading- the financing and purchase of securities borne
by the
client entirely.
◻ Contra Trading- settlement on contra basis refers to settling
with their clients for outstanding purchase position against
outstanding sale positions of the same security.
MINIMUM
BIDS
Minimum bids are allowable changes offered to the
purchase price if it is more than the trading price .

◻ Below RM1.00 - 0.5se

◻ RM1.00 - RM9.99 n
◻ RM10.00 - - 1sen
RM99.98 - 2sen
◻ RM100 and above - 10sen
TRADING
PROCEDURE
• Trading session: Monday - Friday
Morning 9.00am to
session : 12.30pm 2.30pm
•
Afternoon
Trading to 5.00pm
done by dealer’s representatives:
session:
1) Paid dealer’s representatives.
✔ Income is by monthly fixed salary.
✔ The employees of stock broking companies.
2) Remisiers
✔ Income is based on commission.
✔ Not the employees of stock broking companies.
✔ Have to pay certain amount of deposits/fees to stock broking
companies for allowing them to operates in the stock broking
companies.
TRADING
PROCESS
1. Client needs to open trading account and CDS
account with stock broking company.
2. Client give order to their dealer representative to
buy or sell securities.
3. Dealer’s execute transaction via WinScore.
4. Order Done /Match.
5. Dealer’s make a confirmation to client.
6. Stock broking company sent contract notes to
client.
7. Clients make payment or get payment in
T+3. (T is the transaction date).
INTERPRETATION OF STOCK
REPORT
News Straits Times on Tuesday 18 December
2012.

TOP GLOVE (600b/612s) 605(3) 615(56) 610(96) 705(30)

PARKSON (325b/335s) 320(7) 323(20) 353(50) 319(76)
TENAGA (710b/720s) 700(12) 712(20) 716(35) 705(56)
 INTERPRETATION OF STOCK
REPORT
The Star dated Monday 10 December
2019.
Year Year Stock Stock Closing +/ - Vol Div. PE Day Day
High Low Code ‘00 Yield High Low
1.33 0.80 5185 Affin 1.05 -0.01 255 1.0 9.8 1.06 1.04

5.75 3.98 5819 HL Bank 5.50 +0.05 2930 6.4 13.6 5.5 5.3

2.52 1.39 *3042 Tesso 2.02 +0.02 5 1.7 11.9 2.35 1.98
50c
10.30 3.02 1015 BAMB@ 6.55 +0.25 2128 0.2 - 9.60 5.45

2.60 0.70 *7242 Globalc 0.95 Susp - - 27.3 - -

4.08 3.74 2674 Alcom 3.90 Unch 24 1.3 210 4.00 3.88
(xd)