Malaysian financial markets still strong


The financial markets in the country have remained resilient with support from ample domestic liquidity, robust market infrastructures and firm macroeconomic fundamentals, according to Bank Negara Malaysia (BNM) and the Securities Commission Malaysia (SC).

In a joint statement issued yesterday, the regulators also said the Malaysian bond market continues to be vibrant with the deep secondary market having an average daily trading volume of RM5.4 billion year-to-date compared to the past three-year average of RM3.6 billion.

“Conditions in the capital, foreign-exchange (forex) and money markets continue to be orderly…liquidity in the forex market recorded a sustainable average daily trading volume of US$12 billion (RM49.56 billion), of which the forex swap and forward market accounts for close to half of the average volume,” BNM and SC said.

The authorities added that the increase in dynamic hedging activities by global institutional investors has improved market access and further contributed to the liquidity in the forex forward market.

“(As such,) the authorities will continue to engage with key market participants and intermediaries to further develop the depth and breadth of the Malaysian financial markets in ensuring accessibility, while preserving stability and transparency,” they said.

Meanwhile, the regulators will be embarking on a joint research study to develop a clear taxonomy on sustainable economic activities, starting with fundraising and lending practices.

BNM and SC said they had discussed initiatives relating to the sustainability agenda — particularly on the SC’s Sustainable and Responsible Investment Framework, and BNM’s Value-Based Intermediation Strategy — at the 16th BNM-SC Bilateral Meeting.

“Another area being looked at involves understanding the transmission of climate and environmental-related risks to the financial system and economy, and the feedback loop.

“This initiative is an expansion of ongoing collaboration between the authorities in the areas of national strategic interest, especially in Islamic finance,” they said.

The authorities added that they have entered into coordinating arrangements to facilitate industry innovation, fundraising activities and trading in relation to digital asset regulations.

“The arrangement will also support the oversight of digital asset activities and ensure that systemic risk and financial integrity measures remain effective,” they added.