Malaysian retail investor can now tap into the RM1.3 trillion bond and sukuk market after Securities Commission Malaysia announce the latest liberation of the bond and sukuk market. Among the main highlight is the introduction of seasons corporate bond and sukuk framework.
Below are simple FAQ for as mention in the SC website:
- What is the seasoning framework?
- The seasoning framework is a framework to facilitate the distribution1 of corporate bonds or sukuk (bonds) that were originally issued to sophisticated investors2 in the primary market to retail investors in the secondary market (Seasoning Framework).
- Under the Seasoning Framework, bonds that were originally issued to sophisticated investors in reliance on an exemption under section 229(1) or section 230(1) of the CMSA can be re-denominated into smaller lot sizes and distributed to retail investors in the secondary market without a prospectus, provided that the bonds have been issued for a period of at least 12 months in the primary market (seasoning period) and all eligibility criteria stipulated in the Guidelines on Seasoned Corporate Bonds and Sukuk (Guidelines) are met.
- What types of bonds may be made available to retail investors under the Seasoning Framework?
- Only the following types of bonds that meet the minimum eligibility criteria set out in the Guidelines may be distributed to retail investors in the secondary market under the Seasoning Framework:
- plain vanilla bonds issued by eligible issuers; and
- perpetual and subordinated bonds issued by:
- licensed banks, licensed investment banks and licensed Islamic banks;
- the holding company of any of the entities in (a); or
- a public company established by any of the entities in (a) and (b) for the purpose of issuing bonds to meet capital adequacy requirements.
- Who may purchase seasoned bonds?
- All investors, both sophisticated and retail, may purchase seasoned bonds.
- How can investors purchase seasoned bonds?
- Investors can purchase seasoned bonds through any of the Eligible Distributors permitted to distribute seasoned bonds. Currently, the following entities are Eligible Distributors:
- licensed banks;
- licensed investment banks;
- licensed Islamic banks;
- a holder of a Capital Markets and Services License (CMSL) for dealing in securities; and
- a holder of a CMSL for dealing in securities restricted to OTC bonds.
- A list of these Eligible Distributors will be published and updated on the Bond and Sukuk Information Exchange (BIX Malaysia) website from time-to-time to help investors identify who they are. Investors may call any of the Eligible Distributors for further information on seasoned bonds available for purchase.
- What information is available to investors to help them make their investment decision?
- Where can investors refer their complaints or disputes in relation to seasoned bonds?
- In the event of a complaint or dispute, an investor should first contact the Eligible Distributor. If the investor is unable to get a satisfactory resolution to the complaint or dispute with the Eligible Distributor, the investor may refer the matter to the Securities Industry Dispute Resolution Center (SIDREC). For further information on SIDREC, including the process for making a claim, please refer to SIDREC’s website.
Do you have any further question? Please send an email to [email protected]
and we will try to assist.