Page 54 - CMP3

Diagram 4
ALTERNATIVE MARKETPLACES CAN ENABLE GREATER VALUE PROPOSITION FOR THE CAPITAL MARKET (ILLUSTRATIVE)
Alternative fundraising marketplaces
Venues with both primary listing and secondary market trading
Alternative equity trading marketplaces
Trading venues with cross-trading capabilities on existing listed equities
Alternative trading marketplaces for other asset classes
Trading venues for asset classes beyond equities
• Fundraising for specific segments, including technology or high-growth companies
• Differentiated product offerings e.g. ETFs and depositary receipts
• Differentiated order types and pricing structure
• Electronification of OTC markets e.g. bonds, derivatives and repo
• Dedicated marketplaces by asset type • Expansion of existing alternatives
e.g. ECF, P2P financing and IEOs
Source: SC.
Alternative fundraising marketplaces cater to specific issuer segments, such as early stage and growth stage companies. These companies have different business models and risk profiles, which may require seed capital, working capital or capital for growth. The current ECF and P2P financing platforms in Malaysia are examples of such marketplaces, with IEOs on the way to offer further options for innovative digital businesses. Within the region, some incumbent exchanges or alternative venues have already established dedicated marketplaces, which adopt a different regulatory approach and listing rules that cater to new issuer segments. One such example is Bursa Malaysia’s launch of the LEAP market in 2017. The SC had taken a proportionate regulatory approach to this space, aiming to facilitate innovation while also managing any emerging risk. While the market has started with smaller-size fundraising to limit the investment risk, these platforms may scale to larger-size fundraising and cater to a wider range of issuers and investors as they become more familiar with these financing models and instruments.
Globally, public equity investors, whether institutional or retail, have become increasingly sophisticated, demanding faster and lower-cost access to data and markets as well as the ability to execute more sophisticated trading strategies. To cater to such investor needs, alternative equity trading marketplaces have emerged with differentiated equity-related product offerings, pricing structures and order types. Some specialise in offering low friction, no-frills and low latency proposition for cost-sensitive and speed- sensitive trading firms, while others have differentiated product offerings such as innovative ETFs and depository receipts – all of which allows investors broader access to adjacent or derivative equity products. The SC will explore with incumbents and new market operators to further enrich the domestic equity product range to cater to diverse investor needs.
Beyond equities, there are other marketplaces which offer broader trading opportunities in other asset classes, including bonds and derivatives, which are today largely OTC. In more developed markets, there are trading venues that facilitate ‘electronification’ of OTC trading, including the provision of multi-dealer-
52 SECURITIES COMMISSION MALAYSIA