Malaysia to further ease capital mart rules

Malaysia said it will further liberalize its domestic capital markets
from tomorrow, relaxing rules on interest-rate derivatives, debt and
foreign-exchange trading.


Banks licensed in the Southeast Asian nation will be allowed to
trade foreign currencies against one another with Malaysians, the
central bank said in an e-mailed statement today. They’ll also be
permitted to offer ringgit-denominated interest- rate derivatives to
individuals and organizations overseas other than banks, including hedge
funds and insurance companies. At the same time, locals will be given
flexibility to change the currency of their debt to better manage their
liabilities, the monetary authority said.


These measures “will contribute towards increasing the liquidity,
depth and participation of a wider range of players in the domestic
financial markets,” Bank Negara Malaysia said in the statement today.
They are “part of continuous efforts to enhance competitiveness in the
economy and to develop the domestic financial markets,” it said.


The initiative is a first step in the central bank’s new 10-year
plan aimed at tripling the size of the nation’s finance sector by the
end of the decade. Malaysia intends to allow foreign banks to own bigger
stakes in local lenders, grant more licenses and ease short-selling
rules, the central bank said in a report announced by Prime Minister
Najib Razak on Dec. 22. -- Bloomberg

interesting, shorting possibilities and open currency policy