KUALA LUMPUR: Bank Negara Malaysia (BNM) has imposed an administrative monetary penalty of RM1.4mil on a financial institution for failure to notify it promptly after learning of its dealers’ misconduct involving the fixing of the US dollar/ringgit exchange rate.
In a statement, BNM said the financial institution, which it did not name, had paid the penalty.
“The financial institution has been strongly censured and issued with an order to address the shortcomings in internal controls to ensure timely notification of material findings and review existing internal policies, procedures and practices as well as to put in place robust surveillance mechanisms to prevent market abuse behaviours,” the central bank said.
“These will be complemented by periodic compliance and audit reviews. The financial institution has given their full commitment to rectify these shortcomings and to prevent recurrence of such breaches.”
BNM reminded all financial institutions that money and foreign exchange (forex) market manipulation activities were prohibited under the Financial Services Act 2013 (FSA).
Financial institutions that are aware of such findings are required to notify the bank immediately as required under the FSA. The bank will not hesitate to take serious enforcement actions on any party that breaches the law.
BNM said it would continue to closely monitor market activities to ensure that market participants are not involved in any money and forex market manipulation activities.
On Dec 27 last year, BNM announced that a financial institution had failed to quickly report on an audit finding in relation to its dealers’ misconduct and that it had begun the due process.
Among the actions that BNM could have taken, other than imposing monetary penalties, are the issuance of a written order to comply, making public reprimands and the issuance of a written order to mitigate or remedy the breaches.
The Financial Markets Committee established by BNM introduced several measures last month to curb ringgit speculation.
BNM has urged banks to disregard the offshore rates from the ringgit non-deliverable forward market due to its damaging influence over the onshore pricing of the local currency,
In mid-2016, in collaboration with the Financial Markets Association of Malaysia, the central bank reviewed the ringgit fixing mechanism to enhance its integrity. Under the new methodology, transaction data are used to determine the reference rate, which is known as KL USD/MYR reference rate.