The Australian Securities Exchange is taking a new tack in its bid to develop a listed market for debt securities. Later this year it hopes to offer a platform for exchange-traded funds whose underlying assets are government bonds, corporate credit and other debt.The ASX's equity markets' general manager, Richard Murphy, said the exchange had lodged ETF rules for debt securities with the Australian Securities and Investments Commission and hoped to have the regulatory issues out of the way before the end of the year.Murphy said: "We have issuers wanting to issue them. We are very keen on getting debt up and running."The ASX has traded equity ETFs (a type of passive managed fund) for about 10 years. There are eight issuers, 55 funds and A$5.4 billion of funds under management.In recent times issuers have diversified, launching commodity and currency ETFs, but there are still a lot of ETF products sold in North America and Europe that are not available here. "We have been very equity-focused. We have been addressing that issue over the past year," Murphy said.The ASX is also trying to promote debt investment through the development of a retail bond market. ASIC streamlined its prospects' rules for companies using the ASX for credit issues last year, and Commonwealth Bank, Bendigo & Adelaide Bank and Australian Unity are among the issuers that have taken advantage of this relief.ETFs have had some bad press this year because of concerns about their liquidity and counter-party risks. While the majority of ETFs use physical replication, some use derivative structures. Murphy said the ASX was working to increase depth in its ETF market. It has increased the number of market makers from two to six. "Our rule on swap counter-parties is that they must be licensed approved deposit-taking institutions."The assets an ETF provider holds as collateral for a swap must relate to the ETF sector. We are not allowing anyone to dump rubbish assets in a fund."The global head of ETF research at fund manager BlackRock, Deborah Fuhr, said fixed interest ETFs were "the new space" in other markets. BlackRock is a big ETF issuer on the ASX through its iShares range. Fuhr said the company saw an opportunity to meet institutional and retail investor demand for liquid, low-cost debt securities.