21 May 2018

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Bank Negara Malaysia is further developing the bond market by providing investors with greater access to information with the operationalisation of segregated securities accounts.

The Financial Markets Committee (FMC) said on Monday information such as investor type and flows in the government bond market for both non-resident and resident investors will be made available in the Bond Info Hub website on a more regular and timely basis.

“With a system-based implementation, there will be better efficiency and less reporting burden for investors, which will lower the cost of investing in the Malaysian bond market,” said the FMC, a committee established by Bank Negara in May 2016

The FMC said the operationalisation of the segreated accounts were at the large value payment system, Real-time Electronic Transfer of Funds and Securities System (Rentas) operated by Payments Network Malaysia Sdn Bhd (PayNet). This was part of the strategy to enhance transparency, visibility and strengthen surveillance.

“This is part of the measures to further develop the Malaysian bond market that have been announced in the second series of initiatives by the FMC and Bank Negara on April 13, 2017,” it said.

With the appropriate system infrastructure in place, investors will be provided with greater access to information on the Malaysian bond market, hence facilitating a more informed decision making and better risk management.

The Rentas segregated securities account will be operationalised in two phases with Phase I commencing on May 21, 2018 while full compliance is on Phase II by Sept 30, 2018 to allow for efficient transitioning into the segregated account rules.

Post Sept 30, 2018, all transactions involving RENTAS debt securities will only be facilitated through the segregated securities account.

Given the depth and breadth of the onshore bond market, there is sufficient liquidity to continue facilitating the settlement of ringgit bonds onshore.

To facilitate investors’ transition into the segregated accounts, investors may consult with all local and global custodian banks, including International Central Securities Depositories (ICSD) which will be onboard the Rentas segregated securities accounts.

The segregated securities account rules are specific to Rentas, which only involves settlement of bonds and does not cover the settlement of equities.