BNM Launches MYOR and Consults on MYOR-i Reference Rates in Malaysia
The Central Bank of Malaysia (BNM) announced the launch of Malaysian Overnight Rate (MYOR) as the new alternative reference rate for Malaysia. In conjunction with the launch, BNM has published a policy document on MYOR. The policy document sets out the benchmark design, methodology, and governance framework to ensure the integrity and credibility of MYOR. As per the policy, BNM will administer and calculate MYOR as the volume-weighted average rate of unsecured overnight Ringgit interbank transactions, including the overnight monetary operations of BNM (excluding Standing Facilities). BNM will conduct periodic reviews of the MYOR to ensure it remains robust and representative of conditions in the underlying market. This policy document came into effect on September 24, 2021.
BNM has published another policy document that sets out requirements to be observed by the Kuala Lumpur Interbank Offered Rate (KLIBOR) submitters and the designated KLIBOR distributor in undertaking the KLIBOR rate-setting process. This policy document comes into effect on September 30, 2021. In Malaysia, the MYOR will run in parallel to the existing KLIBOR, with periodic reviews to ensure that the financial benchmark rates remain robust and reflective of an active underlying market. This multiple-rate approach is supported by the Financial Stability Board (FSB) and adopted by many other jurisdictions. BNM also announced that it will discontinue, on January 01, 2023, the publication of the two- and twelve-month KLIBOR tenors, which are the least referenced rates in the market for financial contracts. The remaining one-, three-, and six-month KLIBOR tenors, which continue to reflect an active underlying market, will be reviewed in the second half of 2022. Any updates from the review will be communicated thereafter. The Financial Markets Committee will engage the International Swaps and Derivatives Association (ISDA) to ensure continuity of KLIBOR derivatives contracts in the event of a temporary or permanent discontinuation of KLIBOR publication.
As part of ongoing efforts to further develop the Islamic financial market, BNM, in collaboration with the Financial Markets Committee and the AIBIM-FMAM Islamic Market Technical and Development Committee, will develop a new Islamic benchmark rate (Malaysia Islamic Overnight Rate or MYOR-i) to replace the Kuala Lumpur Islamic Reference Rate (KLIRR) by the first half of 2022. In this regard, BNM has published an exposure draft that sets out the benchmark design, methodology, and governance framework to ensure the integrity and credibility of Malaysia Islamic Overnight Rate (MYOR-i). BNM is requesting responses on the exposure draft by October 25, 2021. In a separate joint statement, BNM and the Bank of Thailand (BOT) invited banking institutions from Malaysia and Thailand to indicate their interest to be a Qualified ASEAN Bank (QAB) in Malaysia and Thailand. Banking institutions have been invited pursuant to the bilateral arrangement under the Association of Southeast Asian Nations (ASEAN) Banking Integration Framework between BNM and BOT, which concluded in April 2019.
Related Links
- Notification on MYOR
- Policy Document on MYOR (PDF)
- Policy Document on KLIBOR Rate Setting (PDF)
- Exposure Draft on MYOR-i (PDF)
- Press Release on ASEAN Banking Integration Framework
Comment Due Date: October 25, 2021 (MYOR-i)
Effective Date: September 24, 2021 (MYOR)/September 30, 2021 (KLIBOR rate-setting)
Keywords: Asia Pacific, Malaysia, Thailand, Banking, Securities, MYOR, KLIBOR, Interest Rate Benchmarks, Interest Rate Risk, Alternative Reference Rates, Islamic Finance, MYOR-I, ASEAN, Qualified ASEAN Bank, Benchmark Reforms, BOT, BNM
Previous Article
APRA Issues Interim Update to Policy Priorities for 2021 and BeyondRelated Articles
FINMA Approves Merger of Credit Suisse and UBS
The Swiss Financial Market Supervisory Authority (FINMA) has approved the takeover of Credit Suisse by UBS.
BOE Sets Out Its Thinking on Regulatory Capital and Climate Risks
The Bank of England (BOE) published a working paper that aims to understand the climate-related disclosures of UK financial institutions.
OSFI Finalizes on Climate Risk Guideline, Issues Other Updates
The Office of the Superintendent of Financial Institutions (OSFI) is seeking comments, until May 31, 2023, on the draft guideline on culture and behavior risk, with final guideline expected by the end of 2023.
APRA Assesses Macro-Prudential Policy Settings, Issues Other Updates
The Australian Prudential Regulation Authority (APRA) published an information paper that assesses its macro-prudential policy settings aimed at promoting stability at a systemic level.
BIS Paper Examines Impact of Greenhouse Gas Emissions on Lending
BIS issued a paper that investigates the effect of the greenhouse gas, or GHG, emissions of firms on bank loans using bank–firm matched data of Japanese listed firms from 2006 to 2018.
HMT Mulls Alignment of Ring-Fencing and Resolution Regimes for Banks
The HM Treasury (HMT) is seeking evidence, until May 07, 2023, on practicalities of aligning the ring-fencing and the banking resolution regimes for banks.
BCBS Report Examines Impact of Basel III Framework for Banks
The Basel Committee on Banking Supervision (BCBS) published results of the Basel III monitoring exercise based on the June 30, 2022 data.
PRA Consults on Prudential Rules for "Simpler-Regime" Firms
Among the recent regulatory updates from UK authorities, a key development is the first-phase consultation, from the Prudential Regulation Authority (PRA), on simplifications to the prudential framework that would apply to the simpler-regime firms.
DNB Publishes Multiple Reporting Updates for Banks
DNB, the central bank of Netherlands, updated the list of additional reporting requests and published additional data quality checks and XBRL-Formula linkbase documents for the first quarter of 2023.
NBB Sets Out Climate Risk Expectations, Issues Reporting Updates
The National Bank of Belgium (NBB) published a communication on climate-related and environmental risks, issued an update on XBRL reporting
