KUALA LUMPUR (May 17): Bank Negara Malaysia’s (BNM) initiatives to enhance market liquidity and accessibility announced yesterday, has been lauded by Maybank Kim Eng as a step in the right direction because they are market-friendly measures. 

“BNM announced several initiatives to improve onshore foreign exchange (FX) and bond market liquidity. We view the recent development positively and think it is a reinforcement of efforts to deepen and broaden the onshore market.

“Importantly, accessibility to onshore dynamic hedging is widened by including trust banks and global custodians,” said the research firm in a note today.

BNM said it was taking several development initiatives to improve domestic FX and bond market liquidity, likely in response to FTSE Russell’s action last month and also in line with the regulator’s intention to continuously broaden and deepen the onshore financial markets.

Maybank Kim Eng said the timing of the announcement was within the research firm’s expectation, such that it gave ample time to assess the impact on market liquidity from the new measures.

“BNM is not lifting the ban on offshore ringgit non-deliverable forward trading as widely expected, as the effort is focused on developing the onshore market,” it added.

Of the initiatives announced, Maybank Kim Eng has broadly classified them into two categories, namely measures to enhance bond market liquidity, as well as those to enhance FX market accessibility and liquidity.

“We think this is a market-friendly measure and a reinforcement of BNM’s efforts at continuously deepening the onshore financial markets,” it said.