Malaysian investors can soon trade Hong Kong exchange-traded funds and real estate investment trusts directly on Bursa Malaysia in ringgit without foreign exchange conversion, according to details finalized in a late July memorandum of understanding between the Securities Commission Malaysia and the Securities and Futures Commission of Hong Kong. The landmark framework, taking effect in September alongside a simplified dual-IPO listing process, aligns with both regulators’ goals to deepen regional capital market connectivity.
Regulatory Framework and Cross-Listing Mechanics
The cross-listing initiative establishes a direct trading channel utilizing standard board lots of 100 units, with holdings reflected directly in investors’ Central Depository System accounts, according to confirmation from the Securities Commission Malaysia. Trades will clear and settle through Bursa Malaysia’s existing infrastructure. Underlying assets remain subject to home-market regulatory oversight, while local market arrangements ensure timely disclosures for Malaysian participants.
Lim Chia Wei, managing director at Malacca Securities, notes that the ringgit-denominated structure eliminates foreign exchange considerations. Dennis Jee, acting CEO of Moomoo Malaysia, states that the setup complements existing digital broker access by catering to investors who prefer domestic trading hours and familiar settlement frameworks. Paula Ip, CEO of the Hong Kong Investment Funds Association, adds that Hong Kong fund managers are eager to leverage the city’s exchange-traded product market, which reached US$94 billion in assets under management across 250 products as of June.
Impact on Asset Managers and Dual-IPO Listings
The memorandum of understanding introduces a simplified dual-IPO framework designed to help companies tap capital pools in both jurisdictions. During the Think Business, Think Hong Kong symposium on August 11, Hong Kong Exchanges and Clearing CEO Bonnie Chan stated that the framework allows capital-intensive firms, particularly in the artificial intelligence sector, to broaden their investor base. Tradeview Capital CEO Ng Zhu Hann points out that early movers on Bursa Malaysia can capture distinct investor attention outside of Hong Kong.
Pro Tip: Asset managers evaluating cross-border opportunities should assess whether their proposed products offer differentiated exposure—such as Shariah compliance or Asean diversification—rather than duplicating existing domestic offerings, according to Kenanga Investors CEO Datuk Ismitz Matthew De Alwis.
Local fund houses are adjusting their operational playbooks. Datuk Ismitz Matthew De Alwis of Kenanga Investors Bhd notes that Malaysian ETFs can evolve into regionally accessible products by offering strategies that complement Hong Kong’s China focus. Meanwhile, Alan Inn, country head of CGS International Securities Malaysia, expects the dual-flow provision and single prospectus rules to attract more Hong Kong companies to seek primary or secondary listings on Bursa Malaysia.
Execution Challenges and Historical Context
Industry stakeholders emphasize that execution remains critical to avoiding low trading volumes. Several local ETFs have recorded zero trading volume over recent three-month periods, highlighting ongoing challenges with retail awareness, product range, and liquidity.
A precedent exists in the 2009 Declaration on Mutual Co-operation on Development of Islamic Capital Market, signed by the Securities Commission Malaysia and the Securities and Futures Commission, which established a framework for mutual recognition of Islamic collective investment schemes. Federation of Investment Managers Malaysia CEO Kaleon Leong notes that despite that long-standing channel, few Hong Kong Islamic funds have launched in Malaysia, signaling that commercial demand and product relevance dictate ultimate adoption.
To support implementation, the Securities Commission Malaysia convened an industry roundtable with stakeholders from both jurisdictions and established a joint task force with Bursa Malaysia to centralize coordination and address industry queries ahead of the September rollout.
Frequently Asked Questions
Do Malaysian investors need a foreign currency account to trade these Hong Kong ETFs?
No. According to the Securities Commission Malaysia, investors can trade the cross-listed products on Bursa Malaysia in ringgit without any currency conversion.
What is the board lot size for the cross-listed products?
The standard board lot size is set at 100 units, matching local trading conventions on Bursa Malaysia.
How does the dual-IPO framework work?
The framework utilizes a simplified listing process and a single prospectus, allowing eligible companies to seek concurrent or secondary listings on both the Stock Exchange of Hong Kong and Bursa Malaysia.
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