Financial Markets Committee (FMC) would like to provide a market update following the recent measures announced on 2 December. While it is still early to measure the benefits from these initiatives, market reactions have been encouraging. In December 2016, average intraday movement of ringgit exchange rate declined to 68 points, being the difference between the daily highest and lowest exchange rate quoted in the interbank market, as compared to 228 points in November. The onshore FX market recorded daily average volume of USD8.3 billion across all FX transactions as market adjusted to the new environment. Activities in bond market were also healthy with daily average volume of RM4.5 billion. Government benchmark securities rallied by 17–29 bps from 1 December 2016 levels. An auction of 20-year MGII held during the week was well received with bid-to-cover ratio of 3.75 times with strong interest from financial institutions and insurance companies.

On the fund manager hedging framework, where registered domestic and foreign fund managers are able to actively manage up to 25% of their invested portfolio, a number of fund managers have approached BNM with initial four submitted registrations.

FMC, together with BNM, is currently carrying out engagement sessions with parties to gather feedback and arrangements are currently being made to further address the implementation issues.  FMC will continue to monitor financial market development and look forward toward continuous engagement to ensure development of the onshore market in creating a better and conducive financial environment for all.

Financial Markets Committee
9 December 2016

About Financial Markets Committee (FMC)

The FMC is a committee established by BNM in May 2016 and comprises representatives from Bank Negara Malaysia, financial institutions, corporations, financial service providers and other institutions which have prominent role or participation in the financial markets. The Chair of the FMC is BNM Assistant Governor Adnan Zaylani.

The objective of FMC is to broaden the industry engagement with a focus in reviewing and formulating comprehensive strategies for the wholesale financial markets to meet the diverse and complex demands of a more developed and internationally integrated economy. For more information on the FMC, please refer to the following link:  Financial Markets Comittee