PETALING JAYA: AmBank Group and Malayan Banking (Maybank) have jointly entered into Malaysia’s first overnight rate (MYOR) interest rate swap transaction with a notional value of RM500 million in a further development towards adopting MYOR as the preferred benchmark for the ringgit cash and derivatives market.
The deal marks the first use of MYOR, which was introduced by Bank Negara Malaysia (BNM) in September 2021 as an alternative to the Kuala Lumpur Interbank Offered Rate in such transactions.
Both financial institutions pointed out that, globally, alternative reference rates, such as MYOR, were introduced to improve the integrity of financial benchmark rates as part of a transition to transaction-based rates, arising from the London Interbank Offered Rate reforms following the global financial crisis. The alternative reference rates are meant to be more robust benchmark rates and based upon transactions in active and liquid markets.
AmBank Group’s group treasurer and wholesale banking deputy managing director, Jamzidi Khalid, said the transaction complements the on-going efforts to further develop and deepen the Malaysian financial market, in line with industry-led initiatives set out by BNM, Financial Markets Committee and Financial Markets Association of Malaysia.
“This represents a major milestone in the Malaysian financial market, and we look forward to seeing further development as we move a step closer towards embracing the reform.”
Jamzidi said the transaction demonstrates its enthusiasm and commitment to deliver timely effective solutions that suits customers’ needs and at the same time, contribute to market breadth and liquidity in developing the local interest rate landscape.
Maybank’s global market & transaction banking managing director, Md Farid Kairi, believes the transaction marks a significant milestone for the development of the MYOR benchmark, which is critical to enhance the robustness of interest rate benchmarks and provide clients with greater flexibility of timely and relevant financial solutions to suit their needs.
