KUALA LUMPUR: Bank Negara Malaysia is against the recent introduction of the ringgit futures at the Singapore Stock Exchange and the Intercontinental Exchange or 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 thus, offshore trading of ringgit, in any form whether as a non-deliverable 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 are 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,” Bank Negara added.