Brokers can offer non-cash rewards to clients

KUALA LUMPUR: Bursa Malaysia Securities Bhd has issued a guidance on rebates on commissions, allowing equities brokers to offer non-cash rewards and icentives to clients.

In a statement yesterday, the stock exchange said this is meant to promote best business conduct among equities brokers.

“The introduction of the guidance will not only encourage fair market conduct by equities brokers in rewarding and retaining clients, but will also promote active retail participation.

“The guidance is also intended to inculcate best practices among equities brokers in the structuring of the types of non-cash rewards and incentives that can be offered by equities brokers to their clients,” it said. 

Brokers must not give any rebate on the commission that results in the client paying less than the minimum commission set out in Schedule 6.

The stock exchange also said non-cash rewards or incentives do not form part of the obligation under Rule 11.02 (3B) and may be offered to clients without being subjected to the minimum commission set out in Schedule 6. 

Bursa Malaysia stated that such non-cash rewards or incentives may be in the form of educational training and research materials. Clients can enjoy free investment seminars or talks, or a free subscription to financial journals or magazines. 

Clients can also accumulate and redeem points that are exchangeable with electronic products such as computers or telephones.

Brokers may also invite their clients to participate in a lucky draw based on their reward points.   

Bursa Malaysia noted the list of non-cash rewards or incentives above are merely examples and are non-exhaustive.