The framework for retail bonds and sukuk was developed pursuant to the Securities Commission Malaysia (SC) Capital Market Masterplan 2 to facilitate greater retail participation in the bonds and sukuk market. It is intended to meet retail investors’ demand for access to a wider range of investment products.

Access for retail investors to bonds and sukuk was largely available through bond and sukuk unit trust funds and exchange traded funds. With the retail bonds and sukuk framework, retail investors will now have direct access to bonds and sukuk.

Under the retail bonds and sukuk framework, issuers may now choose to issue bonds and sukuk to retail investors either on the exchange (Bursa Malaysia) or over-the-counter1 (OTC) via appointed banks. This allows issuers to have access to a larger pool of investors.

1 “over-the-counter” refers a mode of trading in securities such as bonds and sukuk via a dealer/bank network as opposed to on a formal exchange such as Bursa Malaysia. As OTC bonds and sukuk are not traded on the exchange, if an investor wants to buy or sell a bond, he or she must contact the bank that makes the market in that bond to do so. Quotes on the pricing of the bonds are also provided by the banks concerned.