1. Various type of government securities.

i)

Federal government securities

- Issued by federal government
-

Examples:
a) Treasury bills (T-bills)
Short-term bonds that mature within one year or less from
their time of issuance.They are issued with three-month, sixmonth, and one year maturities.
The bills are discounted securities. Thus, they are issued at a
discount from the face value.
b) Local curency bonds
c) Foreign currency bonds
Is a debt secutity issued in a currency other than the issuers
national currency.
The bond can be purchased by other governments or by
entities or individuals in other securities.
Eurobond :
Issued by a government and company in foreign company.
For example - Japan issued in Us dollar denominations called
Yankee Bonds.
-Japan issued in British pounds called Bulldogs.
- Issued by non-Japanese issuers called
Samurai bonds.

ii)

Municipal government securities

- Issued by the state and local government
-

Types:
a) General obligation Bonds
Municipal securities backed by the full faith and credit of the
issuer endorsing the scheduled payments of principal and
interest.
Most of these debt securities have the added security that
the issuer can increase taxes to make payments.
b) Revenue bonds
Municipal securities with payment secured by revenues
obtained from specific enterprises.
These debt securities can be tax exempt or taxable.

2. Malaysian financial market

i)

Money Market
Consist of the interbank loan market and short term and long term
Malaysian Government Securites (MGS)
Short term instruments
- Malaysian Treasury Bills (MTBs)
: MTBs are the main money market securities
: The main purpose of these issues is to fund government
working capital
: Sold through weekly tenders by primary dealers. These dealers
are selected based on their participation in the government
securities market.
: MTBs are sold by ank Negara Malaysia on behalf of the
Treasury. They are sold on a simple discount basis and are
issued with regular schedule.
-

ii)

Malaysian Islamic Treasury Bills

Capital Market
Malaysian capital market serves the public and private sectors
need for financing requirement.
For the public sector it provides way to investors to finance its
devolopment and working capital.
For the private sector it consist of stock market (known as Bursa
Malaysia in Malaysia) and corporate bond market which provide an
opportunity to acquire long-term finance.

iii)

Islamic capital market

The islamic capital market has provided investment options that are
Shariah compliant for those investing in capital markets.
The key components of an islamic capital market are Shariahcompliant stocks, islamic funds and islamic investment certificates
known as Sukuk.
Main categories of islamic funds :
Equity funds, ijarah funds, commodity funds, murabaha funds and
mixed funds.

iv)

Derivatives Market
Derivatives markets are markets that are based upon another
market, which is known as the underlying market.
The market can be divided into two, that for exchange-traded
derivatives and that for over-the-counter derivatives.
The legal nature of these products is very different as well as the
way they are traded, though many market participants are active in
both.

3. Global Financial Market.

i)

Stock Exchanges of Developed Countries

New York
- Biggest stock exchange in the world by U.S dollar value of its
listed companies securities.
- Stocks of public listed companies started to trade on the exchange
.
London
- The London Stock Exchange is one of the worlds oldest stock
exchanges.
- Global centre for foreign exchange, over the-counter derivatives
and international bonds.
- Fourth biggest stock exchange in the world.
Tokyo
-

ii)

Second biggest stock exchange in the world

Euromarkets
Euromarkets/ Euro currency allow financial instruments to be
dominated in many currencies.
The Euromarkets do not have one central market market place ;
instead market deals are made electronically by links between
banks and other financial institutions 24 hours a day around the
globe.
Euro instruments :
Floating Rate Note (FRN)
- Have a maturity between 5 and 15 years, but the interest rate is
adjusted at regular intervals based on LIBOR( London Interbank
Offered Rate), plus an agreed margin to reflect a particular
customers risk.
Swaps
-

It allows borrowers to change the character of their existing

debts.

Cross-Listing
A broker in the U.S creates this security when he purchases shares of a
foreign company in its local stock market and deposits these shares with a
local custodian bank in the foreign country.
Why firm list on overseas stock market :
1) Production efficiency
2) Market and brand development
3) Raw material and new technology