Institutional Securities Custodian Program (ISCAP) was first initiated in early October 2004 and was officially launched in January 2005 to enhance secondary bond trading especially on the off-the-run issues. It supports Bank Negara Malaysia's strategic goal of improving bond market liquidity by releasing captive holdings of bonds which are usually held to maturity by institutional investors and financial institutions (FIs). ISCAP will allow institutional investors and FIs who choose to participate in this program to lend a pre-defined set of scripless securities (uncollateralised lending) to Bank Negara Malaysia in exchange for a lending fee. Bank Negara Malaysia will then borrow these securities and use it as part of the repo operations to manage liquidity in the interbank market.

ISCAP's Objectives

• Enable participating institutional investors and financial institutions to enhance total returns from these specified scripless securities currently held for long term through the receipt of lending fee from Bank Negara Malaysia;
• Increase local market activity of repo transactions with the release of selected scripless securities currently held-to-maturity by institutional investors/FIs;
• Increase the number and range of instruments available to Bank Negara Malaysia for the conduct of market liquidity management, thus allowing the Bank flexibility to use the most effective and appropriate instrument for monetary policy implementation.