THURSDAY, NOVEMBER 3 KUALA LUMPUR- Bank Negara Malaysia Governor Muhammad Ibrahim to officiate the Launch of Ombudsman Scheme at 1500 (0700 GMT) KUALA LUMPUR- Second Finance Minister Johari Abdul Ghani to deliver keynote address at SCxSC Digital Finance Conference 2016 at 0900 (0100 GMT) PUTRAJAYA- Deputy Prime Minister Ahmad Zahid Hamidi attends Home Ministry Innovation Day and monthly gathering at 0845 (0045 GMT) KUALA LUMPUR- Communications and Multimedia Minister Salleh Said Keruak launches Kuala Lumpur International Youth Discourse 2016 at 1030 (0230 GMT)
Corporate bond issuances
The FMC said the Roundtable also discussed the prospects of corporate bond issuances in Malaysia.
“Corporate issuers had stayed away from the bond market towards the end of last year due to the uncertainty surrounding the overall financial market. Corporate bond yields have since stabilised.
“In the period Jan-March 2017, the corporate bond market was more conducive for issuers with RM8bil raised and a number of corporate issuers are in the pipeline to access the market in 2017,” said the FMC.
The Roundtable also discussed the need to develop the Credit Default Swap (CDS) and Interest Rate Swap (IRS) market and alternative price reference mechanisms to facilitate both issuers and investors in the price discovery process.
“Continued participation and commitment by lead managers after the conclusion of issuances will also add vibrancy to the secondary corporate bond market.
“The Roundtable also deliberated on issues surrounding demand for unrated and lower rated bonds. An idea put forward was for the need of special purpose funds that invest in this space.
“The Roundtable also examined the use of repos as an alternative liquidity management tool and funding instrument for financial institutions. The annual trading volume has been growing since Bank Negara Malaysia liberalised short-selling and reverse repo operations in 2015.
“The trading volume of repos averaged RM195bil per annum since 2012. The Roundtable highlighted the need to review existing regulatory frameworks to allow more diverse participants in the repo market,” it said.
Improving market liquidity
The Roundtable also deliberated on improving market liquidity by introducing more hedging instruments.
This included further expansion of the short selling framework as well as increasing participation in the repo, bond swap and Interest Rate Swap (IRS) market. The further development of onshore hedging will complement the liquidity in the secondary market, particularly on the longer end of the yield curve.
The participants also discussed the development of bond investment products for retail investors and noted the importance of educating retail investors on the basics of investing in bonds.
The discussion also touched on the need for an enhanced surveillance mechanism to enable more effective macro and micro surveillance of financial markets.
One of the key initiatives is to have financial institutions and investors maintain segregated accounts for their investments which will allow bond transactions and portfolio holdings to be monitored on real time basis. This also would allow more detailed analysis and release of macro or aggregate data on important investment trends to the market.
The participants acknowledged and welcomed the efforts by regulators to provide greater transparency in particular with regard to bond market activities.
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