Malaysia will merge Bursa Malaysia's Main and Second boards, revamp the Mesdaq market, relax bond-market approvals and establish a third credit rating agency

BURSA Malaysia’s Main and Second boards will be combined into one catering for big established companies while the Mesdaq market will revamped for smaller companies in efforts to improve the equities market.

The streamlining of the board structure by merging the Main and Second Boards will establish a unified board for more established companies with strong track records, Prime Minister Datuk Seri Abdullah Ahmad Badawi said.

He was announcing several measures to further improve the Malaysian equities market and make it more attractive for foreign equity investors.

The revamp of the Mesdaq market will allow relatively smaller companies to access the equities market at an earlier stage of their life cycle, Abdullah said in his keynote address at the “Invest Malaysia 2008” annual conference today.

Abdullah, who is also Finance Minister, said the government will establish a market-making framework for Bursa Malaysia.

Market-makers could include proprietary traders in commercial and investment banks as well as foreign traders.

“They will be obliged to be present in the market at all time, to provide liquidity for the market,” said Abdullah.

This initiative will help price discovery, promote innovation and enhance liquidity in the market, he said.

To spur interest among financial institutions and to act as the market-makers, Abdullah said the government will offer incentives such as tax concessions and lower fees.

As for the bond market, the government will liberalise the bond market approval framework to increase efficiency and competitiveness, he said at the conference attended by over 600 local and international delegates featuring over 30 corporations.

At present, there is already an existing “green-lane” process for bond offerings made by highly-rated bond issuers.

Such issuances are deemed approved, which means issuers will only be required to submit their applications to the Securities Commission as a matter of formality.

“Moving forward, we will extend this “deemed approved” process to all domestic or foreign issuers that are rated triple-A from domestic rating agencies or a minimum triple-B rating by international agencies.”

He said the government will also extend this “deemed approved” process for the issuance of non-ringgit bonds by all local and foreign issuers with a minimum triple-B rating by international agencies.

“We believe that this measures will enhance the breadth of our bond market, and consolidate Malaysia’s position as a leading bond and Sukuk market within the Asia-Pacific region,” said Abdullah.

The Prime Minister also announced that the government will allow the establishment of a third credit rating agency in the country to ensure better supervision with 49 per cent foreign equity.

Currently, the two rating agencies in the country are Rating Agency Malaysia Bhd and Malaysian Rating Corporation Bhd. — Bernama

Source: http://www.btimes.com.my/