The Malaysian bond market is one of the more developed bond markets in the region. Signs of its dynamism include 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. In 2004, the central bank of Malaysia, Bank Negara Malaysia (BNM) revised its Guidelines on the Offering of Asset-Backed Securities. In 2006, BNM issued additional guidelines for bond pricing agencies and electronic booking systems. In April 2007, BNM revised its Guidelines on the Offering of Structured Products. These guidelines can be found by following the links provided 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, including a link to the BNM website.

Both government and corporate bond markets are active markets for conventional and Islamic bonds. Domestic and foreign investors can buy and sell conventional and Islamic debt instruments through the exchange and over-the-counter (OTC) 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 transferred electronically via BNM’s Real-Time Electronic Transfer of Funds and Securities (RENTAS). Transfer instructions are conducted on a trade-by-trade basis.

In 2006, BNM launched Bond Info Hub, a one-stop center detailing all bond-related information in Malaysia. The link below contains information on the features of 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.