KUALA LUMPUR (Dec 6): The Financial Markets Committee (FMC) of Bank Negara Malaysia has rolled out the Appointed Overseas Office (AOO) framework today, following measures announced by the central bank on Dec 2 to enhance liquidity of the foreign exchange market.

In a statement today, Bank Negara said the framework is intended to provide additional flexibilities on ringgit transactions where a non-resident financial institution appointed by a licensed onshore bank can undertake back-to-back transactions to facilitate settlement of trade and ringgit assets between non-resident with a resident.

The framework which was first introduced in 2007, is now expanded to include additional transactions such as foreign exchange hedging (own account/on behalf of client) for current and financial account based on commitment, opening of ringgit account (book keeping) and extension of ringgit trade financing.

“By including non-resident financial institution outside the licensed onshore bank’s banking group, the expanded AOO framework allows non-resident traders and investors, greater avenue to settle trade or investment in ringgit through an approved channel,” read Bank Negara’s statement.

AOO refers to an appointed overseas parent company, subsidiary company, sister company, head office or branch of a licensed onshore bank’s banking group, excluding a licensed International Islamic Bank.

Appointed Non-resident Financial Institution (NRFI) refers to an NRFI appointed by a licensed onshore bank and approved by Bank Negara. 
 
“Upon approval from BNM” means an appointed overseas office or appointed NRFI requires written approval from Bank Negara, while “freely allowed” means the appointed overseas office does not require approval from Bank Negara.