Online brokerage iFast’s Malaysia subsidiary has become the first in Malaysia to offer investment grade bonds to retail investors, with minimum investments as low as 1,000 ringgit (S$332 or US$245).
That followed Malaysia’s Securities Commission’s move to liberalize regulations to provide more access to the 1.3 trillion ringgit (S$431.03 billion or US$318.67 billion) Malaysian bond and sukuk, or Shariah-compliant bonds, iFast said in a filing to SGX on Thursday.
“We expect that 20 percent of the 470 billion ringgit fixed deposit market in Malaysia will shift into retail bonds,” under the new regulatory framework, Dennis Tan, managing director of iFast Capital Malaysia, said in the statement.
As an example, he noted Affin Bank’s bonds yield 5.15 percent a year, while the bank’s fixed deposit offers only 4.05 percent a year.
“The 1,000 ringgit nominal investment amount is going to be a game changer now that the amount is comparable to investing in fixed deposits,” Lim added.
Investors will be able to trade retail-qualified bonds and sukuk via iFast Capital Malaysia’s online portal FSMOne, or through financial institutions using iFast’s business-to-business platform, the filing said.
To become retail qualified, bonds and sukuk must meet certain conditions, including being in the market for 12 months and having a minimum credit rating of A, iFast said.
Previously, only sophisticated investors with at least 3 million ringgit in asset or an annual income of more than 300,000 ringgit could buy bonds via iFast Capital Malaysia, while the minimum investment was 10,000 ringgit, the filing said.