29 March 2017
Kuala Lumpur
Reporter: Drew Nicol
Malaysia mulls short selling expansion
The Central Bank of Malaysia is considering expanding the country’s short selling and repo frameworks in a bid to improve market liquidity.

In a recent roundtable hosted by the central bank’s financial markets committee, 30 delegates representing domestic and institutional financial entities discussed the health of the country's bond market.

Proposals were tabled for further expansion of the short selling framework to include bonds, as well as increasing participation in the repo, bond swap and interest rate swap markets.

In a statement on the discussion, the Central Bank of Malaysia said: “The further development of onshore hedging will complement the liquidity in the secondary market, particularly on the longer end of the yield curve.”

The group also examined using repos as an alternative liquidity management tool and funding instrument for financial institutions.

The annual trading volume has been growing since the Central Bank of Malaysia liberalised short selling and reverse repo operations in 2015.

The trading volume of repos averaged RM 195 billion (USD 44.18 billion) per annum since 2012. According to the central bank, the roundtable highlighted the need to review existing regulatory frameworks to allow more diverse participants in the repo market.

Adnan Zaylani Mohamad Zahid, assistant governor at the Central Bank of Malaysia, said: “The next phase of development of the onshore bond market requires support and commitment from issuers, investors and market makers to improve liquidity, add breadth to financial market and support issuances for government and corporate bonds”

“The focus should be on diversifying the investor base, having a stable composition of investors and increasing transparency that will enhance market stability.”

More repo news
The latest news from Securities Lending Times
Join Our Newsletter

Sign up today and never
miss the latest news or an issue again

Subscribe now
ICMA: NSFR makes EU repo less attractive
23 June 2017 | London | Reporter: Drew Nicol
The association also point to increased automation of highly manual and labour-intensive processes of the market as a way to mitigate rising costs and create efficiencies
UK Money Markets Code to rebuild trust
22 June 2017 | London | Reporter: Drew Nicol
Industry representatives drafted the code in partnership with the Bank of England (BoE) to replace the previous guidance, which has been judged to be outdated
Dealerweb claims significant US repo market share
20 June 2017 | New York | Reporter: Drew Nicol
The Dealerweb marketplace now captures 18 percent of US repo activity in inter-dealer trading
Howard/Miller adjusts fund’s lending programme
19 June 2017 | New York | Reporter: Drew Nicol
The fund will no longer include securities lending activities in leverage calculations from August
SIX adds US equity and fixed income to CO:RE
15 June 2017 | London | Reporter: Drew Nicol
SIX Securities Services has added US equities and fixed income treasuries to the list of available securities for its repo triparty platform
Global political turmoil driving bond trading
15 May 2017 | London | Reporter: Drew Nicol
Geo-political events in the US and Europe were the most significant drivers of fixed income trading in the 12 months ending March, according to NEX Group
SIX expands equity repo baskets list
08 May 2017 | Zürich | Reporter: Drew Nicol
Natixis has signed up to SIX Repo’s two new European equity index baskets