In line with the launch of the Capital Market Masterplan (CMP) on 22 February 2001, a number of recommendations were made to enhance the Malaysian domestic bond market particularly with the view of establishing a deeper, broader and more efficient corporate bond market.
Consequently, as at 2011, a total of 15 recommendations were implemented in efforts to expand the Malaysian bond market as follows:
|1.||Implementation of a full disclosure-based framework for the issuance of corporate bonds|
|2.||Introduction of a framework for the issuance of asset-backed securities|
The clarification of existing taxation framework for Special Purpose Vehicles to reflect economic substance, and the removal of stamp duty and Real Property Gains Tax on transactions relating to the issuance of asset-backed securities to encourage asset securitization
|4.||The development and establishment of liquidity in benchmark issues|
|5.||The promotion of aprogramme to issue MGS with a view to establishing them as the immediate benchmark securities for the Malaysian bond market|
|6.||Allowance for regulated short selling of MGS and corporate bonds|
|7.||Allowance for non-financial institutions should to conduct the entire scope of repo activities|
|8.||Establishment of markets in MGS futures and options|
|9.||The easing of EPFâ€™s investment requirements to free up its ‘captive demand’ for MGS|
|10.||Extension of access to trading on the over-the-counter market to a wider range of participants|
Introduction of a phased programme to encourage international financial institutions and multinational corporations to issue ringgit bonds
|12.||Allowance for international ratings for domestic bond issuance|
|13.||Establishment of bond funds to encourage participation of retail investors in the corporate bond market|
|14.||Review of tax framework to encourage issuance and investment in debt securities|
Following the implementation of the recommendations from the CMP, the Malaysian bond market has expanded rapidly since its nascent stage in the 1980s and it is currently the third-largest bond market in Asia (ex-Japan). The Malaysian debt securities andsukuk market is also one of the most advanced in Asia and holds the record as the centre for the largest issuance of Islamic securities in the world.
To continue this growing momentum, the Capital Market Masterplan 2 (CPM2) was launched on 12 April 2011 with a view to boost large-scale transactions, widening access to the bond market, strengthening investor appetite for a wide range of debt products and credit risks, expanding the participation of the investment management industry and retail investors in fixed income investments, and enhancing themarket infrastructure.
The CMP2 has identified seven growth strategies to be implemented in order to create a more robust and vibrant bond market.
|1.||Strengthen disclosure and documentation standards and practices|
|2.||Enhance the CRA regulatory framework|
|3.||Review bond default process and promote active market for pricing of distressed issues|
|4.||Expand participation of investment management industry in bond market|
|5.||Strengthen bond trading and post-trade infrastructure|
|6.||Facilitate greater retail participation in bond market|
|7.||Expand range of fixed income products|