Featured Product

    BNM Proposes Strategic Direction for KLIBOR and KLIRR

    May 19, 2021

    BNM published a discussion paper that sets out proposed design and features for the development of an alternative reference rate, potential enhancements to the Kuala Lumpur Interbank Offered Rate (KLIBOR), IBOR fallback language, and a review of the Kuala Lumpur Islamic Reference Rate (KLIRR). BNM, in consultation with the Financial Markets Committee, is conducting a comprehensive review on the continuity of KLIRR and a potential alternative Islamic reference rate that adheres to the global standards for financial benchmarks. The comment period for this discussion paper ends on June 18, 2021.

    BNM currently compiles and publishes the Average Overnight Interbank Rate (AOIR), which is a near risk-free weighted average overnight interbank funding rate that considers the BNM's monetary operations and interbank transactions based solely on transaction data, consistent with the development of major alternative reference rates of major currencies worldwide. Taking into consideration the characteristics of the current AOIR, the Financial Markets Committee identified AOIR as the ARR. Financial Markets Committee also proposed some technical refinements to the AOIR to enhance its robustness and representativeness. The refined AOIR is proposed to be renamed as the Malaysia Overnight Rate (MYOR), with the following proposed features:

    • Calculation methodology. MYOR will be calculated as the volume-weighted average rate of unsecured overnight MYR interbank transactions.
    • Data source. MYOR will capture all eligible transactions sourced from the Real-time Electronic Transfer of Funds and Securities System (RENTAS).
    • Data collection window. All eligible transactions settled via RENTAS throughout the entire business day will be included in the MYOR calculation
    • Publication time. To capture all eligible transactions settled on the same day, the Financial Markets Committee proposes for the publication time of the next business day. This proposed change is in line with the international practices for publication of rates such as the Secured Overnight Financing Rate (SOFR) and the Sterling Overnight Index Average (SONIA), which are published on the following business day.
    • Erroneous data. A re-publication shall be made if the error is more than two basis points away from the correct rate and is identified or reported by 2.00 pm on publication day. The re-publication will be made by 4.0 0pm on the same day. If findings or reports of erroneous calculations are made after the cut-off time, no republication will be made.
    • Contingency arrangements. As a backstop in the event of disruption to the normal production of MYOR, BNM shall, at its discretion, publish MYOR using a simple average of MYOR over the previous three publication days. For exceptional circumstances, BNM reserves the right to determine the appropriate contingency rate.

    With respect to refinements to KLIBOR, the Financial Markets Committee proposes to adopt a phased approach to potentially discontinue rate submissions for the least referenced tenors to ensure the integrity of KLIBOR rates and facilitate transition. In this regard, the two-month and twelve-month tenors will be discontinued first, followed by the six-month tenor. The Financial Markets Committee proposes that market participants are given an advance notice of 12 months in the event that certain KLIBOR tenors are discontinued upon review.


    Related Links

    Comment Due Date: June 18, 2021

    Keywords:  Asia Pacific, Malaysia, Banking, Securities, KLIBOR, Alternative Reference Rates, ARR, KLIRR, Interest Rate Benchmarks, Benchmarks Reforms, BNM

    Related Articles

    EC Rule on Contractual Recognition of Write Down and Conversion Powers

    The European Commission (EC) published the Delegated Regulation 2021/1527 with regard to the regulatory technical standards for the contractual recognition of write down and conversion powers.

    September 17, 2021 WebPage Regulatory News

    APRA Issues Further Guidance on Application of Securitization Standard

    The Australian Prudential Regulation Authority (APRA) published a new set of frequently asked questions (FAQs) to provide guidance to authorized deposit-taking institutions on the interpretation of APS 120, the prudential standard on securitization.

    September 16, 2021 WebPage Regulatory News

    SRB Provides Update on Approach to Prior Permissions Regime

    The Single Resolution Board (SRB) published a Communication on the application of regulatory technical standard provisions on prior permission for reducing eligible liabilities instruments as of January 01, 2022.

    September 16, 2021 WebPage Regulatory News

    APRA Publishes FAQs on Capital Treatment of Overseas Subsidiaries

    The Australian Prudential Regulation Authority (APRA) published a new set of frequently asked questions (FAQs) to clarify the regulatory capital treatment of investments in the overseas deposit-taking and insurance subsidiaries.

    September 15, 2021 WebPage Regulatory News

    EBA Finalizes Guidance to Assess Breaches of Large Exposure Limits

    The European Banking Authority (EBA) published the final report on the guidelines specifying the criteria to assess the exceptional cases when institutions exceed the large exposure limits and the time and measures needed for institutions to return to compliance.

    September 15, 2021 WebPage Regulatory News

    PRA Finalizes Changes to Consolidated Prudential Rules Under CRD5/CRR2

    The Prudential Regulation Authority (PRA) issued the policy statement PS20/21, which contains final rules for the application of existing consolidated prudential requirements to financial holding companies and mixed financial holding companies.

    September 15, 2021 WebPage Regulatory News

    EBA Revises Guidelines on Stress Tests of Deposit Guarantee Schemes

    The European Banking Authority (EBA) revised the guidelines on stress tests to be conducted by the national deposit guarantee schemes under the Deposit Guarantee Schemes Directive (DGSD).

    September 15, 2021 WebPage Regulatory News

    Nordea Bank and EIB Sign Agreement to Fund Green Projects in Nordics

    The European Commission (EC) announced that Nordea Bank has signed a guarantee agreement with the European Investment Bank (EIB) Group to support the sustainable transformation of businesses in the Nordics.

    September 15, 2021 WebPage Regulatory News

    HKMA Endorses Industry Guidance to Support LIBOR Transition

    The Hong Kong Monetary Authority (HKMA) issued a circular, for all authorized institutions, to confirm its support of an information note that sets out various options available in the loan market for replacing USD LIBOR with the Secured Overnight Financing Rate (SOFR).

    September 14, 2021 WebPage Regulatory News

    OCC Issues Booklet on Supervision of Problem Banks

    The Office of the Comptroller of the Currency (OCC) issued a new "Problem Bank Supervision" booklet of the Comptroller's Handbook. The booklet covers information on timely identification and rehabilitation of problem banks and their advanced supervision, enforcement, and resolution when conditions warrant.

    September 13, 2021 WebPage Regulatory News
    RESULTS 1 - 10 OF 7481