The Malaysian bond market is one of the more developed bond markets in the region: increasing market size, active issuance and trading of government and corporate issues, the introduction of new instruments (such as asset-backed securities), and improvements to the regulatory structure are all signs of its dynamism. In 2004, the Central Bank of Malaysia, Bank Negara Malaysia (BNM), revised its Guidelines on the Offering of Asset-Backed Securities while issuing additional guidelines for bond pricing agencies and electronic booking systems in 2006. In April 2007, BNM revised its Guidelines on the Offering of Structured Products, linked below.

Islamic bonds, based on shari’a principles, are also available and play a major role in Malaysia’s capital market development. Descriptions of Malaysia’s Islamic capital market are linked below. The BNM link also focuses on the Islamic capital market.

Both government and corporate bond markets are active markets for both conventional and Islamic bonds. Domestic and foreign investors can buy and sell conventional and Islamic debt instruments through the exchange and over-the-counter markets.

Secondary market regulations are gradually being eased. Rules on hedging have been liberalized to allow residents and nonresidents into hedging arrangements with licensed offshore banks. In Malaysia, nearly all securities are scripless, with securities transfer electronic via BNM’s Real-time Electronic Transfer of Funds and Securities (RENTAS). Transfer instructions are done on a trade-by-trade basis. In 2005, BNM and the Hong Kong Monetary Authority established a large-value payment-system link between Malaysia and Hong Kong, China. RENTAS and Hong Kong, China’s US dollar real time gross settlement system was the first cross-border payment-versus-payment link in the region.

In 2006, BNM released bond info hub, a one-stop center detailing all bond information in Malaysia. The link below provides BNM's Guide to Government Securities 2006, which contains information on the features of Malaysian Government Securities and their market characteristics.

Securitization in Malaysia began in 1986 when the government set up its National Mortgage Corporation (Cagamas), the largest issuer of securitized instruments in Malaysia. It functions as a special purpose vehicle between home mortgage lenders and investors in long-term funds. Securities issued by Cagamas are called "Cagamas bonds" in the domestic market.