In a joint statement issued on Tuesday, Bank Negara Malaysia and the Securities Commission (SC) said liquidity in the foreign exchange (forex) market recorded a sustainable average daily trading volume of US$12bil.
“The forex swap and forward market accounts for close to half of the average volume. The increase in dynamic hedging activities by global institutional investors has improved market access and further contributed to the liquidity in the forex forward market,” they said.
Bank Negara and the SC said the authorities will continue to engage with key market participants and intermediaries to further develop the depth and breadth of the Malaysian financial markets in ensuring accessibility while preserving stability and transparency.
The statement was issued after their 16th bilateral meeting to advance discussions on areas of mutual interest between both authorities, including sustainability initiatives, digital asset regulations and resilience of the financial markets.
The authorities also said the Malaysian financial markets have remained resilient.
“Conditions in the capital, forex and money markets continued to be orderly, supported by ample domestic liquidity, robust market infrastructures and firm macroeconomic fundamentals,” they added.
During the meeting, the authorities discussed initiatives relating to the sustainability agenda, particularly on the SC’s Sustainable and Responsible Investment Framework (SRI) and Bank Negara's Value-Based Intermediation Strategy (VBI).
Both regulators agreed to embark on a joint research study to develop a clear taxonomy on sustainable economic activities starting with fundraising and lending practices.
Another area being looked at involves understanding the transmission of climate and environmental-related risks to the financial system and economy, and the feedback loop.
“This initiative is an expansion of ongoing collaboration between the authorities in areas of national strategic interest especially in Islamic finance,” it said.
As for digital asset regulations, both authorities have entered into coordinating arrangements which would facilitate industry innovation, fundraising activities for early-stage companies and trading of digital assets.
“The arrangement will also support the oversight of digital asset activities and ensure that systemic risk and financial integrity measures remain effective,” they said.
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