PETALING JAYA: Malaysian financial markets have remained resilient while conditions in the capital, foreign exchange (forex) and money markets continue to be orderly, according to Bank Negara and the Securities Commission (SC).
In a joint statement issued yesterday, they said the orderly conditions were underpinned by ample domestic liquidity, robust market infrastructure and firm macro-economic fundamentals.
“In particular, the Malaysian bond market continues to be vibrant with a deep secondary market having an average daily trading volume of RM5.4bil year-to-date compared to the past three-year average of RM3.6bil,” they said. This was a 50% increase on-year.
They said liquidity in the forex market recorded a sustainable average daily trading volume of US$12bil, of which the forex swap and forward market accounted 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 they would 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
They issued the statement following the 16th Bank Negara-SC bilateral meeting in Kuala Lumpur to advance discussions on areas of mutual interest between both authorities, including sustainability initiatives, digital asset regulations and resilience of the financial markets.
At the meeting, they 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.
Both regulators agreed to embark on a joint research study to develop a clear taxonomy on sustainable economic activities, starting with fund-raising and lending practices.
They also looked into 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 the areas of national strategic interest, especially in Islamic finance,” they pointed out.
As for digital asset regulations, both authorities would work together to facilitate industry innovation, fund-raising activities for early-stage companies and the 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,” the regulators said.