Non-resident banks may trade ringgit-denominated IRS effective March 15 - BNM

KUALA LUMPUR: Bank Negara Malaysia (BNM) has announced that effective March 15, 2021, non-resident banks may trade ringgit-denominated interest rate swap (IRS) without any underlying commitment with any onshore bank or its appointed overseas offices (AOOs).

It said the decision was based on the positive feedback and experience during the pilot.

"This flexibility will encourage the participation of non-resident banks in the onshore IRS market, thus promoting a more liquid domestic market to lower hedging costs for corporates and asset managers, and funding costs for onshore banks," the central bank said in a statement here today.

BNM and Financial Markets Committee (FMC) will continue to engage with market participants to promote a progressive and orderly onshore financial market.

BNM, in consultation with the FMC members, has embarked on various market initiatives to promote deep and vibrant onshore financial markets in recent years.

Following which, in November 2020, a pilot programme was launched to provide flexibility for participating onshore banks and their AOOs to trade ringgit-denominated IRS with non-resident banks without any underlying position.

-- BERNAMA