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FMC expands overseas ringgit forex market


The AOO framework, first introduced in 2007, has been expanded to include additional transactions and more non-resident financial institutions. - Reuters pic

The AOO framework, first introduced in 2007, has been expanded to include additional transactions and more non-resident financial institutions. - Reuters pic

KUALA LUMPUR: The Financial Markets Committee (FMC), which comprises representatives of Bank Negara and other bodies with prominent roles and participation in the financial market, has announced the expansion of the Appointed Overseas Office (AOO) framework.

In a statement, FMC said the framework, first introduced in 2007, was intended to provide additional flexibilities on ringgit transactions where a non-resident financial institution (NRFI) appointed by a licensed onshore bank could undertake back-to-back transactions to facilitate settlement of trade and ringgit assets between non-resident with a resident.

Following the measures announced last Friday, the framework has now been expanded to include additional transactions and NRFIs outside the licensed onshore banking group, thus allowing non-resident traders and investors greater avenue to settle trade or investment in ringgit through an approved channel.

The additional transactions include foreign exchange hedging (own account/on behalf of client) for current and financial account based on commitment, opening of a ringgit account (book keeping) and extension of ringgit trade financing.

The appointed NRFIs can conduct the transactions on approval from Bank Negara.

The appointed overseas offices are freely allowed to trade the ringgit asset on either spot or forward basis, while for dynamic hedging up to 25% without documentary evidence, they are allowed to do so subject to the non-residental institutional investor having a one-off registration with the central bank.

The appointed overseas offices can also, on Bank Negara’s approval, do ringgit trade financing for settlement of trade of goods and services with a resident and open a ringgit account for book-keeping purposes.

Forex , Bank Negara Malaysia

   

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