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Foreign investments in the
bond market have increased by more than four times to RM14.3 billion in just
the three years up to 2007, said the Securities Commission chairman, Datuk
Zarinah Anwar.
"The level of foreign participation in the local corporate bond market has
been on an increasing trend," she said at the post-launch of the Electronic
Trading Platform (ETP) for the Malaysian bond market here Tuesday.
The platform was launched by
Bursa Malaysia on March 10, 2008.She said the bond market, driven by strong
performance of the Malaysian economy over the past ten years, has matured
and experienced remarkable growth in expanding by more than three and half
times in 1997. "These developments are largely facilitated by a robust
regulatory framework which encompasses the issuance, trading and
intermediation segments.
"Our approval process is highly transparent and efficient with approvals
given in 14 working days and moving forward. The existing approved approach
will be extended to all issuers with 'AAA' domestic currency rating or a
minimum 'BBB' foreign currency rating," she said. Zarinah said underlying
these developments was the strong emphasis on the establishment of the
institutional arrangements for the enhancement of price discovery and
transparency in the secondary market.
She said the key result has been the establishment of the bond pricing
agency, which provided a reliable and independent set of fair value prices
for the bond market and complemented prices traded on the over-the-counter
(OTC) market. "Our domestic credit rating agencies have also played an
important role in creating a strong credit culture that promotes reference
pricing for corporate bond issues among our players, and this is set to
expand with the potential establishment of a third credit rating agency,"
she said.
She said the various developmental efforts had clearly yielded positive
results. On the ETP, she said, given the vast benefits of electronic trading
and centralised price dissemination, the trading landscape in many bond
markets was becoming increasingly electronic. She said underscoring this,
today, electronic trading captured more than 50 percent of the bond markets
trading volume in the US. "In South Korea, the electronic trading of
benchmark bonds spearheaded by the Korean Exchange has commanded more than
40 percent of the bond trading.
"The growth is even more spectacular in Europe, with 34 percent of the total
bond trades being executed electronically in 2007 compared to only 22
percent in 2005," she said..
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