Maybank Kim Eng lauds BNM’S initiatives on market liquidity, accessibility

KUALA LUMPUR: Bank Negara Malaysia’s (BNM) initiatives to enhance market liquidity and accessibility announced yesterday is a step in the right direction, says Maybank Kim Eng.

“Bank Negara announced several initiatives to improve onshore foreign exchange and bond market liquidity. We view the recent development positively and think it is a reinforcement of efforts to deepen and broaden the onshore market.

“Importantly, accessibility to onshore dynamic hedging is widened by including trust banks and global custodians,” said the investment bank.

The central bank said it was taking several development initiatives to improve domestic foreign exchange and bond market liquidity, likely in response to FTSE Russell’s action last month and also in line with the regulator’s intention to continuously broaden and deepen the onshore financial markets.

Maybank Kim Eng said the timing of the announcement was within its expectation, such that it gave ample time to assess the impact on market liquidity from the new measures.

“Bank Negara is not lifting the ban on offshore ringgit non-deliverable forward trading as widely expected, as the effort is focused on developing the onshore market,” it added.

Of the initiatives announced, Maybank Kim Eng has broadly classified them into two categories, namely measures to enhance bond market liquidity, as well as those to enhance foreign exchange market accessibility and liquidity.

“We think this is a marketfriendly measure and a reinforcement of Bank Negara’s efforts at continuously deepening the onshore financial markets,” it said.