Short Selling, are you sure ?

Short selling, are you ready for it?

On last April 2018, Bursa came out guild line for Intra Day Short Sell (IDSS). Technically, short selling is the sales of stock not own by seller. So, in the first place, the seller need to borrow the stock first.

However, in term of Intra Day Short Sell, the seller can sell the stock in the morning (though he not yet borrow the stock) and close the position (buy back) before market close (in Cimb's case, buy back must be done before 3:00pm). Since the seller close the position on the same day (Intra Day), there's no need to borrow the stock.

If the investor fail to close the position on same day, due to whatever reason (normally due to stock suspend from trading during the day), he may deem as non compliance with the rules and here come with all types of charges (including borrowing fee), higher brokerage and penalty (including suspension of IDSS for the client).

In fact IDSS is mean for experience investors. Basically, investor speculate they can sell high in the morning, the hope to buy back at lower price before market close. In Malaysia, short sell is highly regulated, currently only allow some 280 stocks (list of stock will be reviewed every 6 months) and all sort of rules like the stock can not drop more than 15 cents of 15% from the reference price.

Trading of short sales will also suspend if the short selling volume (RSS+IDSS+PDT) exceeds the daily maximum limit of 3% outstanding shares per security.  Also, there's one rules very confusion, which say that IDSS is not allow for period of 21 days if the company having take over announcement. In this case, how can the investors know for the past few days, there's an take over announcement?

 Hence, if you are still learning in Bursa, better get to know more before start any IDSS.




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