The Flow of a Bond Issuance - Part 2 - Primary Level - Users of FAST

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Some of the key players at the Primary level that would use the FAST system are listed below.
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Users of FAST and their roles:

•Issuer. This is the eligible entity approved by the regulators to raise funds through the issuance of sukuks. The issuer will determine the mode of issue (tender or private placement) for the facility. 

•Facility Agent or Lead Arranger. For Government and BNM papers, the Facility Agent or Lead Arranger is BNM. For Cagamas debt securities and Khazanah bonds (guaranteed by the Government), the Facility Agent or Lead Arranger can be Cagamas Berhad and Khazanah Nasional Berhad, respectively. For sukuks, only licensed investment banks, commercial banks and universal brokers that are FAST and RENTAS members are allowed to be lead managers. The Facility Agent or Lead Arranger will be responsible for the overall coordination of the facility. They are required to advise the issuer on all matters relating to sukuks. 

•Principal Dealers – Direct Bidders. Principal Dealers are licensed financial institutions appointed by BNM to carry on the business of dealing in specific securities as principals and/or agents. They have the exclusive right and obligation to, among others, participate in the primary tender of securities, either on their own account or on behalf of clients.

•Tender Panel Members (“TPMs”) – Direct Bidders. TPMs are eligible investors approved by BNM  to bid for PDS issues.  

•Indirect Bidders (FAST members). Indirect Bidders must be fully aware that their bids placed with the Principal Dealers may not be the final bids received by the system, as Principal Dealers have the right to amend the bids - as provided for in the agreement between the Principal Dealers and Indirect Bidders. Indirect Bidders must consult their respective Principal Dealers on which instruments are qualified for amendment, as specified by BNM.

•Underwriters. Underwriters  are obligated to subscribe for underwritten issues that are undersubscribed, i.e. when the total amount tendered for by bidders is less than the issue amount. When TPMs bid higher than the underwritten yield price, the underwriters are also obligated to take up the unsubscribed quantity or the amount of the TPMs’ bids where the rate is higher than the underwritten yield.

•Rating Agencies. They are responsible for regular and timely updates on the credit ratings of bond and sukuk issues.