KUALA LUMPUR: Bank Negara Malaysia (BNM) and the Securities Commission Malaysia (SC) said the Malaysian financial markets have remained resilient after concerns over the possibility that Malaysia may be dropped from the FTSE World Government Bond Index (WGBI).
In a joint statement released today, the authorities said conditions in the capital, foreign exchange (FX) and money markets continued to be orderly, supported by ample domestic liquidity, robust market infrastructures and firm macroeconomic fundamentals.
In particular, the Malaysian bond market continues to be vibrant with a 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.
“Liquidity in the FX market recorded a sustainable average daily trading volume of US$12 billion, of which the FX swap and forward market accounts for close to half of the average volume. The increase in dynamic hedging activities by global institutional investors has improved market access and further contributed to the liquidity in the FX forward market.”
BNM and the SC said they 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.
The authorities met at the 16th BNM-SC Bilateral Meeting to advance discussions on areas of mutual interest between both authorities, including sustainability initiatives, digital asset regulations and resilience of the financial markets.
Meanwhile, BNM and the SC said they have entered into coordinating arrange-ments for digital asset regulations, which will facilitate industry innovation, fund-raising activities for early-stage companies and trading of digital assets.
“The arrangement will also support the oversight of digital asset activities and ensure that systemic risk and financial integrity measures remain effective.”
Digital assets are prescribed as securities and have been regulated by the SC since Jan 15.
At the meeting, the authorities also discussed initiatives relating to the sustainability agenda, particularly on the SC’s Sustainable and Responsible Invest-ment Framework (SRI) and BNM’s Value-Based Intermediation Strategy.
Given the alignment between SRI and VBI, both regulators agreed to embark on a joint research study to develop a clear taxonomy on sustainable economic activities starting with fundraising and lending practices.