Driving Efficiency and Global Competitiveness – How Automation Can Transform Malaysia’s Capital Markets

In recent years, Malaysia’s capital markets have demonstrated notable resilience and growth. In 2023, the market expanded by 5.6%, reaching RM3.8 trillion, up from RM3.6 trillion in 2022. The Securities Commission Malaysia (SC) has been instrumental in this progress, implementing initiatives to enhance market vibrancy and attract investors. Key measures include the automatic promotion of eligible publicly listed companies from the ACE Market to the Main Market of Bursa Malaysia, the reduction of stamp duty, enabling fractional share trading through stockbrokers, and the introduction of the Foreign Exempt Scheme framework.

These efforts aim to position Malaysia’s capital markets on a global scale, fostering a more dynamic and inclusive financial ecosystem.

However, the Malaysian market still faces a myriad of challenges in today’s dynamic financial landscape. These challenges range from market volatility and regulatory compliance to operational inefficiencies and heightened competition.

Key Challenges

• Market Volatility: The Malaysian stock market has experienced significant fluctuations, influenced by factors such as global economic uncertainties, political instability, and external shocks. For instance, in 2022, Bursa Malaysia was Asia’s second worst-performing stock market, impacted by surging COVID-19 cases and other headwinds.
• Regulatory Compliance: Adhering to evolving regulatory frameworks demands substantial resources. Ensuring compliance with local and international standards necessitates continuous monitoring and reporting, which can strain operational capacities.
• Operational Inefficiencies: Manual processes in trade settlement, reconciliation, and reporting can lead to errors, delays, and increased operational costs. These inefficiencies hinder the ability to respond swiftly to market changes and client needs.
• Competitive Pressures: The entry of innovative stockbroking models and fintech firms has intensified competition. To remain relevant, traditional institutions must enhance their service offerings and operational agility.

To navigate these complexities, many institutions are turning to automation of their middle and back-office processes as a strategic solution. Automation in the financial services sector offers quantifiable benefits that significantly enhance operational efficiency and reduce costs.

Implementing automation in middle and back-office operations using innovative, secure, and modular platforms like NOVA Post Trade+ offers several advantages:

• Enhanced Efficiency: Automation streamlines processes such as trade settlement and reconciliation, reducing manual intervention and the associated risk of errors. This leads to faster transaction processing and improved accuracy. Robotic Process Automation (RPA) can automate nearly 80% of the manual tasks involved in migration, reducing the timeline by 40% and achieving error-free execution.
• Cost Reduction: By automating routine tasks, institutions can lower operational costs. A McKinsey report highlights that large-scale process automation can significantly shrink a bank’s cost base while increasing efficiency. McKinsey & Company reports that automation and artificial intelligence could perform up to 10 to 25 percent of work across bank functions in the coming years, leading to significant cost reductions.
• Improved Compliance: Automated systems can ensure consistent adherence to regulatory requirements by providing real-time monitoring and reporting capabilities, thereby reducing the risk of non-compliance.
• Scalability: Automation allows institutions to handle increased transaction volumes without a proportional rise in operational costs, facilitating growth and scalability.

In conclusion, automation of middle and back-office processes presents a viable pathway for Malaysian stockbrokers and investment banks to overcome prevailing challenges. By embracing automation, these institutions can enhance efficiency, reduce costs, and maintain competitiveness in an increasingly complex financial environment.

Here’s why leading brokers in Asia Pacific trust NOVA:

• Zero initial investment – reduce total cost of ownership (TCO) while modernising your legacy systems.
• RPA-driven migration for faster implementation and automate repetitive tasks.
• Easy integration with popular front-ends and third-party platforms.
• E-invoicing compliance through API connectivity.
• Supports modern trading needs: Fractional trading, digital assets, and Shariah compliance.
• Customizable & scalable to match your growth.
• Proven success: Over 15% of Malaysia’s trade volumes and 27% of trade values settle on NOVA.

Take your post-trade operations to the next level with technology that’s built for Malaysia’s market dynamics.

For more details, write to us at info@contemi.com to book a demo.