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Malaysia to allow short selling of corporate bonds

Move is part of the SC’s effort to enhance the liquidity of the secondary bond market

Malaysia’s securities regulator will allow certain corporate bonds to be sold short.

New guidelines, published by the Securities Commission Malaysia (SC), permit principle dealers to short ringgit-denominated debt securities.

The bonds must have a minimum credit rating of “AA” or be guaranteed by the Government of Malaysia.

In issue size of at least RM500 million (US$113 million) also applies and the securities must be non-convertible and non-equity linked an

The move forms part of SC’s effort to enhance the liquidity of the secondary bond market.

It is also in line with SC’s on-going commitment towards sustaining the overall development and growth of Malaysia’s bond market.

Outside of fixed income, Malaysia is already the seventh largest market in Asia Pacific in terms of equity lending revenues, according to IHS Markit data.

Revenues jumped 40% over in 2016 and although the total remains low by regional standards at $32m it is over 10 times that generated five years ago.

This content is provided by Euromoney Seminars for informational purposes only, and it reflects the market and industry conditions and presenter’s opinions and affiliations available at the time of the presentation.