Businesses will be given greater flexibility to hedge and principal dealers will be required to quote off-the-run bonds to deepen domestic markets, Bank Negara Malaysia said in a statement on Friday.
The central bank will also improve ringgit accessibility after onshore trading hours via Appointed Overseas Offices, it said.
Malaysia is stepping up efforts to deepen its financial markets after FTSE Russell said in April it may drop ringgit debt from its index due to concerns about liquidity.
Policy makers rolled out several initiatives in May, including increasing the availability of off-the-run bonds to be borrowed via repo and improving the delivery mechanism for sovereign bond futures settlement.
“We have had a very positive engagement with FTSE Russell,” Governor Datuk Nor Shamsiah Mohd Yunus said in Kuala Lumpur.
“They were in town recently and they were very appreciative of the measures that we had in put in place to deepen the onshore market so that real money investors have the required access to
Details of the measures announced on Friday are below:
* Improved ringgit accessibility after onshore trading hours via Appointed Overseas Offices for non-resident investors and companies.
* Principal dealers will quote all off-the-run bonds available under the central bank’s Securities Operations, in addition to existing commitment to provide quotes for benchmark bonds.
* Standard documentation guide for FX transactions will be made available.
* Greater flexibility proposed under revised repo guidelines, including longer tenor limit and wider range of repo securities.
* Resident businesses will be allowed to hedge foreign-currency current-account obligations up to underlying tenure, compared with up to 12 months previously.
* Resident treasury centers in Malaysia can hedge on behalf of their related entities with a licensed onshore bank.
** Non-resident treasury centers registered with the central bank can hedge on behalf of related entities with licensed onshore banks or Appointed Overseas Offices.
* Non-resident businesses can hedge on an anticipatory basis via Appointed Overseas Offices for trade settlement.
* Ringgit credit facilities used by companies for miscellaneous expenses are excluded from domestic ringgit borrowing. - Bloomberg
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