The Financial Markets Committee^[1] (FMC) has been appointed as the committee to oversee the development of an alternative reference rate (ARR) for Malaysia and to deliberate on the continuity of Kuala Lumpur Interbank Offered Rate (KLIBOR).

Financial benchmark reforms are underway internationally to improve the integrity of global interest rate benchmarks or reference rates, in line with the Financial Stability Board’s (FSB) recommendation. The Bank envisages the identified ARR will run in parallel with the existing KLIBOR, thus providing sufficient time for market participants and stakeholders to prepare for the adoption of ARR.

The FMC comprises representatives from Bank Negara Malaysia, Securities Commission Malaysia, financial institutions, insurers, fund managers and corporate treasurers. It will be the key forum to discuss the latest international developments on financial benchmarks and is responsible for providing recommendations on the strategic direction for the financial benchmark rates in Malaysia.

The first key task for the committee would be to conduct an initial public consultation on the identification of a suitable ARR and enhancements to the KLIBOR framework if it is retained. The FMC will also deliberate on industry-wide standards to facilitate the adoption of ARR for financial contracts currently referencing KLIBOR.

Regular updates on the progress achieved by the FMC, including its assessment and recommendations, will be published for reference by all market participants.

^[1] The Financial Markets Committee is a committee established by BNM in May 2016 and comprises representatives from Bank Negara Malaysia, financial institutions, corporations, financial service providers and other institutions which have prominent roles or participation in the financial markets.