Foreign Exchange Policy

Dynamic Hedging Framework

The Dynamic Hedging Framework provides market access for registered institutional investors to actively manage FX risk exposure via forward hedging activities with onshore banks or AOOs without the requirement to show any documentation.

Flexibilities provided for registered institutional investors under this framework

• Resident investors:
  • Forward hedging: Enter into forward contracts to buy ringgit against foreign currency (FC) for up to 100% of their invested underlying FC-denominated assets.
  • Unwinding of forward contracts: Freely unwind forward contracts entered for underlying FC-denominated assets.
• Non-resident investors:
  • Forward hedging: Enter into forward contracts to:
    • Sell ringgit against FC up to 100% of their invested underlying ringgit-denominated assets; and
    • Buy ringgit against FC up to 25% of their invested underlying ringgit-denominated assets.
  • Unwinding of forward contracts: Freely unwind forward contracts entered for underlying ringgit-denominated assets.

Interested institutional investors can submit a one-off registration with BNM by submitting the completed participation form to [email protected].

Further Information

1. Framework Overview [PDF]
2. Forward Market Participation Form – Institutional Investors [PDF]
3. Forward Market Participation Form – Trust Banks and Global Custodians [PDF]
4. Notice 1 – Dealings in Currency, Gold and Other Precious Metals [PDF]
5. FAQ – Buying and Selling of Foreign Exchange (FX) by Resident (Notice 1) [PDF]
6. FAQ – Buying and Selling of Foreign Exchange (FX) by Non-Resident (Notice 1) [PDF]