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Financial Markets Committee

Financial markets development initiatives

A well-functioning financial market serves an important role for the development of the real economy. This is even more so for highly open economies like Malaysia, where the exchange rate is an important element in trade and investment. The Bank has continuously undertaken financial markets initiatives as part of its strategy and mandate to broaden and deepen the Malaysian financial markets.  The Bank’s strategy is multi-dimensional, and includes initiatives which aim to reset the direction of the onshore market, strengthen the pillars of the onshore financial markets and enhance market resiliency.

The initiatives that have been introduced thus far are as follows:

(May ‘16)

Establishment of Financial Markets Committee

(July ‘16)

Adopt global best practices

  • Transaction based KL USD/MYR Reference Rate
  • Extension of onshore ringgit market official closing hour

(Dec ‘16)

Rebalance onshore FX demand and supply 

  • 25% retention of export proceeds in foreign currency
  • Ringgit trade settlement among residents
  • Streamline onshore and offshore foreign currency investment limit

Promote FX risk management onshore

  • Active hedging below RM6 million net open position
  • Active hedging for institutional investors
  • Expansion of Appointed Overseas Office framework

(Apr ‘17)

Additional FX risk management flexibilities

  • Streamline passive and dynamic hedging flexibilities for investors
  • Active hedging for corporations 

Improve bond market liquidity

  • Liberalise regulated short-selling to allow all residents to participate

Promote high standards of market integrity

  • New code of conduct for wholesale financial market

Strengthen financial market infrastructure

  • Segregated securities account at the large value payment system, Real-time Electronic Transfer of Funds and Securities System (RENTAS)
  • Adopt the Legal Entity Identifier (LEI) for RENTAS 

(Sep ‘17)

Additional FX risk management flexibilities

  • Hedging of RM exposure arising from trading of palm oil derivative contracts on Bursa Malaysia

(Nov ‘17)

Improve bond market liquidity

  • Introduce regulated Short-Selling of MGII and Islamic banks under bilateral binding promise concept

 Enhance liquidity intermediation

  • Issuance of Bank Negara Interbank Bills (BNIBs) in MYR and USD to onshore licensed banks
  • Expand eligible collateral for Monetary Operations