As part of Malaysia's gradual financial sector liberalisation, the Securities Commission (SC) will allow Citi to establish a local brokerage in the country.
The licence, which complements Citi's existing banking licence in Malaysia, allows it to buy, sell and trade securities on the country's capital markets. The bank currently must engage a local broker for these activities.
A representative of the bank said the new brokerage in Malaysia would open within the next six months.
"With Citi's global reach and resources, we believe we can add value to the growth and development of the Malaysian capital markets," said Sanjeev Nanvati, chief executive of Citibank Berhad, the bank's local subsidiary.
Malaysia has been trying for years to "grow and develop" its financial sector. Three weeks after entering office last year, prime minister Najib Tun Razak announced a set of economic liberalisation plans. While limited in the amount of overall financial sector change, they did eliminate the controversial bumiputra requirement that ethnic Malays hold 30% of all publicly listed companies and allowed for five new conventional banking licences and two new Islamic banking licences.
In his 2008 budget speech, then prime minister Abdullah Ahmad Badawi announced the issuance of three new stockbroking licences to "encourage greater flows of funds from the Middle East to Malaysia". In a press release yesterday, the SC cited Citi's presence in the Gulf and commitment to Malaysia as reasons for issuing the licence to the bank.
"We continue to receive strong interest from leading international firms to set up operations in Malaysia, including in the broking industry, indicating confidence [in] the prospects of our capital market," said Zarinah Anwar, chairman of the Securities Commission.
The first of the three new stockbroking licences was given to Nomura in September 2008. Other foreign institutions, including Credit Suisse, J.P. Morgan, Macquarie and UBS, also have trading licences in Malaysia.
In December 2009, Goldman Sachs was granted local fund management and corporate finance advisory licences by the SC.
At the end of December, the total market capitalisation of Bursa Malaysia was M$999.5 billion ($299 billion), up more than 50% from a year earlier.
