LFX TO SEE MAIDEN LISTING THIS MONTH

THE Labuan International Financial Exchange (LFX), launched in November last year, will see its maiden listing this month _ a subsidiary of a firm listed in the US. The listing will raise up to US$5 million (US$1 = RM3.80) with the issuance of 6.5 million to 8.5 million shares, with about two million public shares. Several potential listings are already in the pipeline for the exchange, which was launched by the Labuan Offshore Financial Services Authority (Lofsa) on November 23. "They are currently going through the regulatory approval process," said Bank Negara Malaysia Governor Datuk Dr Zeti Akhtar Aziz, who is also Lofsa chairman. On the lukewarm response to the exchange, LFX assistant general manager Megat Joha said the main reason was lack of market awareness. In its drive to attract new players, LFX is essentially competing with exchanges in Luxemburg and the Cayman Islands, which have been the traditional choice for offshore fund-raising. Megat Joha said one of LFX's strengths is its niche in Islamic instruments. "The exchange is also in a time zone that can cater to trading in a multitude of financial instruments globally, and is accessible 24 hours through associations with other exchanges," he said. Labuan virtually shares the same time zone with other major Asian financial centres such as Hong Kong, Kuala Lumpur, Seoul, Singapore, Taipeh and Tokyo. LFX also promotes extensive use of multimedia and Internet facilities, allowing accessibility through international network communications systems. The exchange does not impose capital gains taxes, contract note duties or exit levies, and charges a minimal corporate tax of RM20,000 or 3 per cent taxable income, whichever is lower. Megat Joha said the exchange is especially suitable for the listing of bond and fund-based companies. "Essentially, we were designed for the listing of bonds and all kinds of funds," he said. For initial public offerings, funds and debt issuance, the minimum listing requirement is US$2 million for equity, US$50 million for investment funds and US$100 million for debt securities. Incorporated under the Offshore Companies Act 1990 with an authorised capital of US$5 million and a paid-up capital of US$1 million, LFX aims to facilitate fund influx through the listing and trading of financial instruments. LFX is a wholly-owned subsidiary of the Kuala Lumpur Stock Exchange. On the future prospects of LFX, Zeti said the exchange will go on an aggressive promotion drive. "We will capitalise on our strengths. Labuan has the ability to achieve its objective," said Zeti, adding that the exchange can also be used as a window for Malaysians who wish to invest abroad. While not targeting local listed companies, LFX can be a listing choice for Malaysian companies with international operations as it offers a funding avenue through the listing of innovative products. The exchange also targets companies in the Asia Pacific with limited resources to set up an exchange or limited number of commercial enterprises to justify having an exchange. For international investors and companies, LFX offers an exchange facility that permits the trading of multi-currency instruments in an unrestricted fashion _ not encumbered by any exchange or selective capital controls.

[ Source : NSTP - Business Times ]