BNM announces initiatives to further enhance market liquidity

16 May 2019 / 13:35 H.

KUALA LUMPUR: Bank Negara Malaysia (BNM) has announced further development initiatives to partly address concerns that Malaysia may be excluded from the global bond index.

The initiatives include increasing flexibility for dynamic hedging programme participants to manage foreign exchange (FX) risks.

To facilitate the management of FX risk, taking into account institutional investment profiles, registered institutional investors can now enter into forward contracts to buy ringgit beyond the current 25% (of underlying assets) threshold upon approval by BNM.

It also expanded the dynamic hedging programme to include trust banks and global custodians.

BNM made enhancements to the repo market liquidity and flexibility, as well as enhanced the delivery mechanism for MGS futures settlements.

In addition, the central bank has simplified FX transaction and documentation process and enhanced the ringgit liquidity beyond local trading hours.

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