A framework to facilitate the offering of bonds to retail investors is now under development.
Malaysia's Securities Commission wants direct retail participation to promote growth of the domestic bond market.
While the retail segment currently has access to the bond market via bond funds, Malaysia's Securities Commission has been working towards greater financial inclusion in the bond market to attract foreign investors and increase direct access into the bond market for retail investors.
“In this regard, the SC has been collaborating with the industry to promote retail participation,” said Securities Commission chairman Datuk Ranjit Ajit Singh.
Ranjit noted that to bring Malaysia’s bond market to the next level of growth and competitiveness, all stakeholders needed to focus on several key areas of development, which included promoting retail participation and widening issuer base.
Widening the issuer base, he said, could be achieved through greater product innovation to expand the current product range to include, for example, bonds with variable features that would suit the specific needs of the issuers.
In addition, there was also a need for a change in mindset with regards to the types of financing that could be appropriately satisfied via bond funding.
“The challenge is for us and the market to explore bonds as a viable means of financing smaller and relatively shorter-term projects undertaken by the small and medium-sized companies as well as those operating in niche segments,” Ranjit said.
“With Malaysia’s early mover advantage and as the third largest bond market in Asia, Malaysia has certainly all the credentials to play a significant lead role in the development of the Asian bond market.
“We are already seeing signs of growing cross-border activities on-shore as there are increasing numbers of foreign issuers and international investors participating in the Malaysian bond market,” he pointed out. “This shows that the fundamentals and the infrastructure of our bond market are able to support these activities.”
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