Good evening, ladies and gentlemen. First and foremost, I would like to congratulate Persatuan Pasaran Kewangan Malaysia (PPKM) for hosting yet another vibrant event this year. It is worth acknowledging that this is not merely another annual year-end dinner, but it is also a customary event for financial market players to gather, to strengthen ties and build trust amongst each other.

Financial market review

As we come to the end of 2025, it is certainly important for us to reflect on what the journey has been, so that it can shape the expectations and aspirations on where collectively we can look forward to. The year 2025 has been marked by heightened global tariff uncertainties, shifting expectations on monetary policy actions by global central banks, as well as lingering geopolitical uncertainties. We witnessed significant adjustments across the global financial markets. While the S&P 500 recorded more than 16% increase year-to-date, there was a notable decline of around 12% in early April during the announcement of Liberation Day by the US administration. Gold prices have risen by more than 60% and talks of de-dollarisation and a shift away from US exceptionalism have gained traction this year. In a way, we may be in a moment of profound geopolitical change and structural transformation, presenting both challenges and opportunities. 

Domestic markets are resilient despite global uncertainties

Yet, notably, against this backdrop, domestic financial markets have displayed tremendous resiliency this year. In the domestic government bond market, MGS and MGII yields have declined, reflecting policy rate changes. But yields have been generally stable, anchored by robust institutional, banking and non-resident (NR) investors’ appetites. The secondary market saw healthy two-way flows, with higher daily trading volume, averaging a record-high RM7.5 billion as of November 2025, compared to RM4.7 billion in 2024. This positive development is underpinned by ongoing efforts to broaden and deepen the domestic ringgit securities such as the promotion of interbank repo activity. NR investors continue to see Malaysian government bonds as a stable investment destination as NR investors have been a sizable buyer of government bonds this year, totalling RM20.7 billion as of November. Their holdings of government bonds stand at 21.4%, compared to 21.2% at the start of the year, with significant portion comprising stable and long-term investors.

Meanwhile, the ringgit has emerged as one of the top performing currencies in the Asia-Pacific region, appreciating by 8.2% as of 30 November. This move reflects the Fed’s ongoing rate cutting cycle, along with positive domestic factors such as our strong economic growth and the removal of trade uncertainty following the signing of the Agreement on Reciprocal Trade with the US. But more importantly, our onshore FX market ecosystem has grown significantly – with daily FX turnover averaging nearly USD20 billion in November 2025, representing a 14% increase from 2024 (2024: USD17.6 billion), reflecting deepening liquidity in the FX markets. The Dynamic Hedging programme which facilitates active management of FX exposures, continues to see higher number of registered participants. Currently, the number of registered participants stands at 159, with an asset under management (AUM) of USD49.1 billion.

I would like to take this opportunity to acknowledge the contribution by financial market participants and everyone here tonight – because your efforts and contributions have made all these possible. But of course, the work is not done. We should continue to build from this position of strength. Looking ahead, development of our financial markets should remain a key focus, to further deepen and better secure the resiliency of the onshore financial markets. I seek to share six broad areas of focus, as this developmental collaboration could result in significant benefits.

First, deepening the local currency FX market.  BNM continues to engage in efforts to improve cooperation with our key regional trading partners to promote the use of local currency for cross border settlement. Earlier this year, the Bank alongside Bank Indonesia (BI) and Bank of Thailand (BOT) have adopted a harmonised Local Currency Transaction Framework Operational Guidelines (LCTF OG) to streamline local currency transactions across these three countries while also expanding the framework to include portfolio investments as eligible underlying transactions. Under LCTF, qualified banks or, we call it the Appointed Cross-Currency Dealers (ACCDs) network has been expanded to include new participants. Following the success of the pilot Qualified Resident Investor (QRI) program in April 2024, we have since rolled out the full QRI programme in July 2025. The programme has managed to attract more than USD2 billion inflows from participants and this has been essential in ensuring healthy two-way flows in the domestic FX market. I am glad to say that there has been continued strong interest on QRI, with new entities being onboarded.  

Second, strengthening market integrity. I would also like to reiterate our Malaysia Overnight Rate (MYOR) transition roadmap which was recently published in October 2025. As we all know, Malaysia is transitioning from a submission-based KLIBOR fixing framework to the transactionbased MYOR and its Islamic equivalent, MYOR-i. This is a very crucial development as we need to align ourselves to global practice in ensuring benchmark integrity. By October 2026, market participants are expected to be fully ready at offering and trading MYOR and MYOR-i based products. Following the announcement of the transition, the fixed spread adjustments for fallback rates have been published for 1M, 3M, and 6M tenors by Bloomberg. The KLIBOR Transition Coordination Subcommittee alongside four working groups established under the Financial Market Committee (FMC) are working together to recommend best practices, market conventions and legacy management approaches. A successful transition requires thorough preparation and coordinated actions, and we appreciate the industry-wide effort not just in ensuring a smooth transition but also in building liquidity in the latter new markets.

Third, building a vibrant and deeper Islamic market. Islamic finance continues to be a key focus for BNM. While significant progress has been made in Islamic finance in the past few decades, there is a need for us to undertake efforts to develop a forward-looking Islamic financial ecosystem. The strategy involves broadening the sukuk investor pools by encouraging higher NR participation in MGII trading as well as building a future oriented market infrastructure in Islamic finance. It is worth noting that NR holdings of MGII stood at a mere 8%, compared to 34% in MGS.

In addition, BNM has recently mandated the usage of MYOR-i as the key reference rate for all Islamic financial products. Moreover, there is a need to expedite the deepening of liquidity and risk management instruments within the Islamic market. A survey conducted among PPKM members showed that Islamic derivatives made up only 3.5% of the RM1.3 trillion market as of March 2025. As such, we would urge banks to continue signing more Tahawwut Master Agreements (TMAs), which would enable banks and corporates to effectively manage risks in a Shariah-compliant manner. This in turn, could pave the way for a wider adoption of MYOR-i. Market players should also strive to advance repo instruments to deepen market liquidity. I would like to applaud one notable achievement, that is Malaysia’s first ever Sustainable Sell and Buy-back Agreement (SBBA) transaction conducted in July. Furthermore, the industry-wide effort to enhance the existing SBBA model, which, coupled with the Islamic Collateralised Funding (ICF) Policy Document issued in 2024 are expected to continue boosting momentum in the Islamic Interbank Money Market.

Fourth, digital initiatives. Financial market continues to evolve, and trading behaviours change, and there is a need for the domestic market to adapt. In this instance, BNM recently convened the second Industry Working Group on Asset Tokenisation to explore opportunities in digital money and supply chain finance. Potential area of financial instrument tokenisation includes tokenised deposits and ringgit-backed stablecoins as we balance regulatory oversight with responsible innovation. Apart from that, BNM is committed to ease reporting burden with the launch of ROMS 2.0 and we will continue to work with the industry on automation and system enhancements. It is also worth pointing out that a key global trend has been the increased electronification of trading. According to a survey by the Bank for International Settlement (BIS), the share of electronic trading of overall global FX trading, both direct and indirect, stood at around 60%. There is a clear shift towards electronic trading. As trading volume in both bonds and FX grows, the Malaysian financial markets could strive towards this direction to align with global practice and to reap the benefits of increased trading efficiency and enhanced transparency.

Fifth, corporate bond and sukuk market development. Our domestic Malaysian bond and sukuk market has grown to RM2.2 trillion this year. It is worth pointing out that government securities make up almost 60% of the outstanding, while 40% comprises corporate bonds and sukuk. Despite the sizable corporate bond market share, liquidity remains thin, with daily trading volume averaging RM1 billion, compared to RM6.5 billion in government bonds. NR investors holdings of corporate bonds are also substantially lower at around 2%, underscoring the need to develop and promote the domestic corporate bond market. To spur corporate bond market activity, BNM incorporates market-making activity and participation in secondary trading of corporate bonds and sukuk as part of the assessment criteria in the Principal Dealer (PD) Scorecard, placing emphasis on its importance in overall market development.

Last but not least, investor engagement (including the Financial Sector Blueprint). I would like to ask market players to continue with your investor engagement activities to raise the awareness of Malaysian financial markets. Despite external headwinds and tariff-related uncertainties, our economy remains on firm footing and is on track to expand at the projected range of 4.0-4.8% in 2025. BNM will continue to focus on our initiatives to strengthen Malaysian financial market dynamics by reducing barriers to entry, promoting data transparency and enhancing critical infrastructure to support efficient and resilient market operations.

I would also take this opportunity to add that Malaysia’s Financial Sector Blueprint is reaching its end period in 2026. BNM would soon undertake its next master plan to continuously promote and develop the country’s financial sector and would like to encourage market players to participate in these initiatives.  

I believe that continued collaboration by the government, regulators and the industry will bode well for the country’s prospects, and I would like to thank everyone here today for your role in making the Malaysian market resilient and more vibrant.

Thank you very much and enjoy the rest of the evening.