BNM expands short-selling for MGS to all resident entities

KUALA LUMPUR: Bank Negara Malaysia (BNM) has expanded the regulated short-selling of Malaysian Government Securities (MGS) to all resident entities, including investors and issuers effective May 2, 2017.

Previously, only licensed banks and licensed investment banks are allowed to conduct regulated short-selling of MGS.

Financial Markets Committee (FMC) chairman and BNM assistant governor Adnan Zaylani Mohamad Zahid said this move will help improve liquidity in the bond market.

He said BNM will be getting the financial industry's feedback on the future development of the regulated short selling market for MGS, with the issuance of a concept paper today.

Adnan also introduced a streamlined framework with additional hedging flexibilities, including allowing registered non-bank entities to have a net forward hedge position up to 100% of their underlying assets and manage an additional 25% of FX exposures, as well as the expansion of currency pairs of GBP/MYR, EUR/MYR and JPY/MYR in addition to the current USD/MYR and CNH/MYR for hedging.