Securities Commission Malaysia launches framework for retail investing in Sukuk and conventional bonds (By IFN)

Monday 10^th September 2012

MALAYSIA: Securities Commission Malaysia launched the Malaysian retail bonds and Sukuk framework on the 7th September aimed at providing retail investors with direct access to debt market instruments. Under the framework, retail bonds and Sukuk can be issued and traded on Bursa Malaysia, the stock exchange, or over-the-counter through appointed banks. Pursuant to this, the Securities Commission has approved Bursa Malaysia’s rules and listing requirements for the retail debt instruments. In its introductory phase, investors will be allowed to invest in Sukuk and bonds sold or guaranteed by the Malaysian government. Once past the initial phase, retail investors’ access to Sukuk and conventional bonds will be expanded to include issuances from public listed companies and banks which are licensed under the Banking and Financial Institutions Act 1989 or the Islamic Banking Act 1983. Authorities are expected to issue rules for this in January 2013. The launch of the framework for retail investing in Sukuk and bonds has been met with positive response from the market. Maybank Investment Bank noted that the phased implementation of retail investing in debt instruments will augur well for investor education and acceptance; helping to pave the way for a more robust fixed income market. It added that retail investors will add a new dimension of demand for debt offerings, injecting further breadth and depth into the capital market; allowing corporate issuers to access an untapped liquidity pool derived from retail investors’ sizeable share of the country’s savings.