Malaysia’s central bank – Bank Negara Malaysia (Negara) – has issued a statement warning that offshore trading of the ringgit contravenes Malaysian laws.
The statement was issued to the recent introduction of ringgit futures at the Singapore Exchange (SGX) and the Intercontinental Exchange (ICE), with Negara claiming that these products are “inconsistent with Malaysia’s foreign exchange administration (FEA) policy and rules”.
Negara adds: “The Malaysian ringgit is a non-internationalised currency and thus, offshore trading of ringgit, in any form whether as a non-deliverable forward traded out of offshore financial centres or as a futures, options and other derivative contracts on exchanges outside of Malaysia, is against Malaysia’s policy.”
In the statement, BNM reminds market participants that failure to comply with the FEA rules is an offence under the Financial Services Act 2013 and Islamic Financial Services Act 2013.
Malaysia’s central bank, Bank Negara, has announced the loosening of foreign exchange controls as it further liberalises the local FX market.
Under the new regulations, local companies will no longer need to convert foreign earnings back into Malaysian ringgit before re-converting to another currency at a later date, instead exporters will be allowed to automatically sweep export proceeds into their trade foreign currency accounts maintained with onshore banks to meet up to six months’ foreign currency obligations, subject to pre-reporting those requirements.
Refinitiv has been re-appointed by Bank Negara Malaysia as the calculating and distribution agent for the industry interest rate benchmark, Kuala Lumpur Interbank Offered Rate (Klibor).
As the official indicator of conditions in the interbank money market in Malaysia, Klibor offers market participants from both buy-side and sell-side a reliable reference for various investment and product uses, such as portfolio valuation and compliance reporting.
Introduced in 1987, the rate refers to the average interest rate at which term deposits are offered between selected banks in the Malaysian wholesale money market or interbank market. Klibor rates give market participants an indication of market rates for the trading day. In particular, they are used as reference for diverse financial products including interest rate swaps, options, futures and structured products both within and outside Malaysia.