Bursa Malaysia Berhad (“Bursa Malaysia or the Exchange”), had on 15 June 2021 introduced the Discretionary Trading (“DT”) framework pursuant to the express interest of Participating Organisations (“PO”) in providing DT service to their clients.
DT is a personalised investment service that allows the clients to appoint their PO to run their trading strategies based on a set of agreed mandates.
The DT framework enables a PO to charge a fee for the provision of DT services which are summarised below:
(i) Profit-sharing fees; or
(ii) Fee-based brokerage which is charged on the value of asset under management.
The framework for DT may be found in Directive No. 5-001 of the POs' Directives and Guidance, which is downloadable as follows:
Pursuant to the above, Bursa Malaysia had on 16 May 2022 introduced the Shariah DT framework to cater for Islamic POs to offer Shariah-compliant DT services to their clients.
The Shariah DT framework provides three (3) different structures for the arrangement between the Islamic POs and their clients, as follows:
(i) Wakalah
(ii) Mudarabah
(iii) Musharakah
The Shariah Advisory Council of the Securities Commission Malaysia had on 28 March 2022 resolved that the Shariah DT fee and profit-sharing structures are permissible.
The framework for Shariah DT may be found in the Best Practices No. 7.16-001 under the Participating Organisations’ Directives and Guidance of Bursa Malaysia Securities Berhad, which is downloadable here: