Bank Negara Malaysia (BNM) is pleased to announce the launch of MYOR-i. The introduction of MYOR-i will spur the development of innovative Shariah-compliant financial products which will further deepen Malaysia’s Islamic financial market. It will also reinforce a holistic Shariah-compliant ecosystem and enhance best market practices and standards.

MYOR-i, the first transaction-based Islamic benchmark rate in the world, is developed in accordance with the Principles for Financial Benchmarks [1]. BNM’s Shariah Advisory Council (SAC) has also confirmed that MYOR-i is Shariah-compliant. MYOR-i will replace the Kuala Lumpur Islamic Reference Rate (KLIRR), which will be discontinued with immediate effect.

BNM has collaborated with the Financial Markets Committee (FMC) [2] and the AIBIM-FMAM [3]Islamic Market Technical and Development Committee (IMTDC) on the development of MYOR-i. The policy document is now published on BNM’s website with the following key features and governance standards:

• MYOR-i is administered and calculated by BNM. It is a volume-weighted average rate of return on Shariah-compliant unsecured overnight Ringgit interbank transactions. This includes BNM’s Islamic overnight monetary operations [4].
• MYOR-i is currently based on the Commodity Murabahah instrument. New Shariah-compliant instruments may be included in the future.
• MYOR-i for any given Kuala Lumpur business day will be published on BNM’s website at 12 p.m. on the following business day.
• BNM will conduct periodic reviews of MYOR-i to ensure that it remains robust and representative of conditions in the underlying market.

The establishment of MYOR-i as the Islamic benchmark rate will be a catalyst in driving Islamic financial product innovation and creating transparency for market players to negotiate and standardise their financial contracts, thus achieving efficient pricing across all financial instruments. This will help to deepen the onshore Islamic financial market and enhance its role in financing real economic activities in Malaysia.

For enquiries, the public can reach out to the Financial Benchmark Review team of BNM at [email protected].

See also:

• Malaysia Islamic Overnight Rate (MYOR-i) and aggregate volumes
• Malaysia Islamic Overnight Rate (MYOR-i) Policy Document

Footnotes

[1] The Principles for Financial Benchmarks is developed by the International Organization of Securities Commissions (IOSCO). It provides an overarching framework of principles for benchmarks used in financial markets.

[2] The FMC is a committee established by BNM in May 2016. It comprises of representatives from BNM, financial institutions, corporations, financial service providers and other institutions who have prominent roles or participation in the financial markets.

[3] AIBIM: Association of Islamic Banking and Financial Institutions Malaysia
FMAM: Financial Markets Association Malaysia

[4] Excludes Standing Facilities.