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04-08-2008: Room to widen retail participation in bond market

by Sharmila Ganapathy
Email us your feedback at fd@bizedge.com
How to Protect
Your Money
KUALA LUMPUR: The pool of retail investors in the bond market can be widened by allowing the man-on- Protection for your
the-street greater access to government securities.
bank savings up to
RM60,000. Find
Currently, retail investor participation in the domestic bond market is minimal compared to institutional out how.
investors and high net worth individuals who make up the bulk of demand for government and corporate www.pidm.gov.my
bonds. Retail investors’ only exposure into the bond market is via bond funds managed by unit trusts.

Bondweb Malaysia Sdn Bhd chief operating officer Meor Amri Meor Ayob said retail participation in
trading of bonds was definitely possible, however, market education was important, as retail investors in Market
Malaysia were less exposed to workings of the bond market than the more established equities market. Investments
Protect your
With the current uncertain conditions in the equities and corporate bond markets, portfolio & multiply
the safer avenue for retail investors was government securities, he said. your money. Free
investing advice!
“Currently, government bonds are only open to professional investors. To allow www.InvestorsDailyEdge.com
retail investors to participate, a separate retail issue could be created,” Meor Amri
said in a recent interview with The Edge Financial Daily.

However, the retail issues needed to be traded at a different platform than those
Invest and get
open to institutional and higher net worth investors. This is because at present, profit now
trading of government and corporate bonds was done over the counter at inter- Hight profit returns
bank level with a minimum trade amount of RM5 million. every day 1000$
becomes 2000$
Currently, only licensed inter-bank players under the Banking and Financial Institutions Act and universal after 11days
brokers approved by the Securities Commission are permitted to trade government securities. gethighreturndaily.com

However, as it wouldn’t be cost effective for banks to trade retail issues in the same way as they did larger
denominated ones, a better alternative would be for the central bank to allow retail investors to purchase Free Forex
government bonds at their branches or via appointed banks, Meor suggested. Education
Learn to be a
These avenues currently don’t exist and neither do processes that facilitate retail trading in bonds. successful trader.
With Forex,
“A separate clearing house, payment gateway and central depository system need to be created the knowledge is
same way as for equities. Some banks can be appointed to quote at the retail level,” he said. power!
Meor Amri added that retail participation in government bonds had already been implemented with some
success in Indonesia, via its Indonesian retail bonds (ORI).
EdgeDaily Exclusives
The ORI bonds are attractive to retail investors as they offer better yields and lower credit risk than
corporate bonds and other fixed income instruments, Meor Amri said. The recent ORI004 issue for  20-08-2008: Honda
instance had a coupon rate of 9.5%. hopes to sell 200 units of
new Jazz per month
He added that the government of Indonesia had created a separate exchange, payment gateway and  20-08-2008: KLCI ends
central depository to give retail investors access to these bonds. The bonds were issued by the 0.05pts up at mid-day
government to help fund economic growth activities, he said.
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http://www.theedgedaily.com/cms/content.jsp?id=com.tms.cms.article.Article_8bc184... 8/21/2008