‘Off­shore ring­git deals against govt FEA pol­icy’

New Straits Times - - Business -

KUALA LUMPUR: Bank Ne­gara Malaysia is against the re­cent in­tro­duc­tion of the ring­git fu­tures at the Sin­ga­pore Stock Ex­change and the In­ter­con­ti­nen­tal Ex­change (ICE) Fu­tures Sin­ga­pore.

The cen­tral bank said the move is in­con­sis­tent with Malaysia’s for­eign ex­change ad­min­is­tra­tion (FEA) pol­icy and rules.

“The ring­git is a non-in­ter­na­tion­alised cur­rency and there­fore, off­shore trad­ing of ring­git, in any form whether as a non­de­liv­er­able for­ward (NDF) traded out of off­shore fi­nan­cial cen­tres or as a fu­tures, op­tions and other de­riv­a­tive con­tracts on ex­changes out­side of Malaysia, is against Malaysia’s pol­icy,” it said in a state­ment yes­ter­day.

As Malaysia’s for­eign hold­ings is one of the largest in Asia, in­vestors re­port­edly use the liq­uid NDF mar­kets in Sin­ga­pore and Hong Kong to hedge their ex­po­sure.

Bank Ne­gara re­minded all mar­ket par­tic­i­pants to ob­serve the ex­ist­ing FEA rules.

Con­tra­ven­tion of the FEA is an of­fence un­der the Fi­nan­cial Ser­vices Act 2013 and Is­lamic Fi­nan­cial Ser­vices Act 2013, it said.

“Ap­pro­pri­ate ac­tion un­der the law will be taken against any per­son that does not com­ply with pre­vail­ing rules and reg­u­la­tions. For­eign par­tic­i­pants should ac­cess the on­shore ring­git for­eign ex­change mar­ket to meet their fi­nan­cial needs, either di­rectly with on­shore li­censed fi­nan­cial in­sti­tu­tions or their ap­pointed over­seas of­fice,” it added.

Bank Ne­gara says for­eign par­tic­i­pants should ac­cess the on­shore ring­git for­eign ex­change mar­ket.

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