MAS finalising rules on retail bonds from corporates

The central bank is in the midst of finalising regulations that will see corporates issue bonds to the retail market at a lower cost, said a senior Monetary Authority of Singapore (MAS) officer.

The rules could also see retail investors tap corporate bonds from as low as $1,000, down from the current minimum denomination of $2,000.

Speaking at an investor conference on exchange-traded funds (ETFs) on Saturday, Ms Merlyn Ee said MAS has noticed a growing interest among retail investors in fixed income.

"In view of this, we are finalising the bond seasoning and exempt bond issuer frameworks," said Ms Ee, executive director of capital markets intermediaries and corporate planning and communications.

"They will allow eligible corporate issuers to issue bonds to retail investors at lower cost and in minimum denominations of $1,000, while ensuring sufficient safeguards for investors."

Turning to ETFs, Ms Ee said MAS has taken on board suggestions that helped facilitate the growth of the product here while balancing the need for investor protection.

The central bank has also made it a requirement for common investment products offered to the public, including share, bond and real estate investment trust offers, to include a product highlight sheet, a summary that allows investors to understand simply the offer of shares or bonds.

But while MAS is pushing ahead with investor education and developing the local investment market, Ms Ee said investors will need to do due diligence and understand the risks involved before taking up the investment.

"While regulations and financial education are important, the best protection is still a discerning and vigilant consumer who does his homework," she said.

"Before making a purchase, find out how the investment will generate the promised returns and be wary when an investment sounds too good to be true."

This article was first published on November 16, 2015.
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