SECURITIES

MARKET
INTRODUCTION

• Securities - An investment traded in market

either debt instruments or equity instruments.
• Securities market – a market place to trade the
securities. E.g. stock market, bond market
• Securities market can be divided into:
• Primary market
• Secondary market
SECURITIES MARKET

FINANCIAL
MARKET

MONEY CAPITAL
MARKET MARKET

MARKETABL
FOREIGN STOCK BOND DERIVATIVE
E
EXCHANGE MARKET MARKET MARKET
SECURITIES
PRIMARY MARKET

• A market for company or government to issue

new securities to the public to raise fund.
• Several methods:
• Initial Public Offering
• Sale Shares to Employees
• Private Placement
• Right Offering
• Bonus issue
• Seasonal offering
INITIAL PUBLIC OFFERING (IPO)

• The company raises funds by selling the new

shares to the public
• The shares are purchased by public investors
• The new issue is made with an investment bank
as the underwriter
WHY PRIVATE COMPANIES GO
PUBLIC BY ISSUING IPO?
• To raise capital
• To raise more fund from public.

• Confident
• Needs to fulfil certain requirements stated by Bursa
Malaysia.

• Expansion
• Get publicities for all activities from Bursa Malaysia.

• Higher profile
• Must have a good record to maintain the reputation of
company.
SALE SHARES TO EMPLOYEES

• ESOP – Employee Share Ownership Plan

• Shares are sold to employees at a discount
price
• To give opportunity for employees to own
equity of the company
PRIVATE PLACEMENT

• Shares are sold directly to selected investors.

• Normally issued to institutional investors such
as Tabung Haji or PNB
• There is no involvement of underwriter
RIGHTS OFFERING

• New shares are sold to existing common

shareholders to maintain their proportion of
ownership.
• Pre-emptive rights – allow existing shareholders
to buy the new shares first before it is offered
to the public
OTHERS

• BONUS ISSUE
• Company gives reward to the existing shareholders
with new shares

• SEASONAL OFFERING
• An issue of securities from an already-public company
(has already issued common share before)
SECONDARY MARKET

• Market deals with previous securities issued by

the company to investors.
• A market place where trading the existing
securities.
• Example: Bursa Malaysia
PRIMARY VS SECONDARY
MARKET
PRIMARY MARKET SECONDARY MARKET

• A market where new securities • A market where existing

are bought & sold for the first
time between issuer & investors
• New issues of bonds, common
shares, preferred shares are sold
here.
• The issue is backed by
underwriter
• Proceeds go to the issuer
securities are traded among
investors
• Once security begins to trade
among investor, it becomes part
of the secondary market
• No underwriter
• Proceeds go between investors

UNDERWRITER?
An organisation, normally an investment
bank, that guarantees a minimum level of
subscription to a share or debt issue. If public
subscriptions fail to reach the minimum level,
the underwriter takes up all the shortfalls.
FUNCTIONS OF BURSA
MALAYSIA
• Provides liquidity market
• Provides the facility to trade
• Provides clearing and settlement for share
transaction
• Provides information
• Protects all members
 MAIN MARKET VS ACE MARKET
Main Market
 Merged between Main Board and 
Second Board
 Established company to raise fund. 
 Not engaged with a sponsor
 Market Capitalization Test: a total 
market capital at least RM500 million
upon listing.
 Uninterrupted profit after tax (PAT) of
three to five full financial years (FY) with
aggregate of at least RM20 million, and
 PAT at least RM6 million for the most
recent full FY
 Minimum price for IPO is RM0.50 each 
ACE Market
Transformed from MESDAQ Market
An alternative market for all companies
or sectors to raise fund.
 ACE Market engaged a sponsor to
assess the suitability for listing and
sponsors need to remain with the
company at least three years post
listing.
No minimum operating track record or
profit requirement.
No minimum price for IPO
LEAP MARKET

• known as Leading Accelerator Platform (LEAP) –

June 2017
• aims to provide small and medium-sized
enterprises (SMEs) with fund raising access and
visibility through the capital market.
MARKET INDICES
WHAT ARE TRADED ON BURSA
MALAYSIA?
• Ordinary shares / Common shares
• Preference shares
• Bond
• Warrants
• Exchange Traded Funds (ETFs)
• Real Estate Investment Trusts (REITs)
• Derivatives
• Financial derivatives
• Commodity derivatives
• Equity derivatives
TRADING TIME

• MONDAY – FRIDAY
• 1st session : 9.00 a.m. – 12.30 p.m.
• 2nd session : 2.30 p.m. – 5.00 p.m.
TYPES OF TRANSACTION

Cash Margin Contra

transaction transaction transaction
• Fully cash • Partial • Occurs
between when the
paid in client
cash and (investors)
the make the
balance buy and
come sell order
from at the
cashborro same time
w from
broker
TYPES OF ORDER

Stop-
Market Limit
loss
order
An order order
to buy
order
An order
and sell placed to
An order
stock at sell a
to buy or
best price security
sell at a
or based when it
specified
on the reaches a
price
best certain
market price
price
TYPE OF MARKET MOVEMENT