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KUALA LUMPUR, Jan 19 -- AmBank Group and Malayan Banking Bhd (Maybank) Maybank have jointly entered into the first Malaysia Overnight Rate (MYOR) interest rate swap (IRS) transaction.
This is the first time that the new reference rate MYOR -- introduced by Bank Negara Malaysia (BNM) in September 2021 as an alternative to the Kuala Lumpur Interbank Offered Rate (KLIBOR) -- is being used for an IRS transaction.
The landmark transaction between both banks for a notional value of RM500 million sets a new footprint for further market development towards adopting MYOR as the preferred benchmark for Ringgit cash and derivatives market.
Globally, alternative reference rates such as MYOR have been introduced to improve the integrity of financial benchmark rates as part of a transition to transaction-based rates, arising from the London Interbank Offered Rate (LIBOR) reforms following the global financial crisis.
“These alternative reference rates are meant to be more robust benchmark rates and based upon transactions in active and liquid markets.
“Maybank and AmBank's collaboration is a step towards introducing MYOR-based products to the market with the aim of providing hedging instruments that can support varying risk management strategies,” the banks said in a joint statement today.
Jamzidi Khalid, AmBank Group treasurer and deputy managing director of Wholesale Banking said the transaction complements the ongoing efforts to further develop the Malaysian financial market, in line with industry-led initiatives set out by BNM, Financial Markets Committee and Financial Markets Association of Malaysia.
“This represents a major milestone in the Malaysian financial market, and we look forward to seeing further development as we move a step closer towards embracing the reform.
“The transaction demonstrates the bank’s enthusiasm and commitment to deliver timely effective solutions that suit our customer’s needs, and, at the same time, contribute to market breadth and liquidity in developing the local interest rates landscape,” he added.
Maybank global markets and transaction banking Md Farid Kairi said the move was a significant milestone for the development of the MYOR benchmark, which is critical to enhance the robustness of interest rate benchmarks and provide clients with greater flexibility of timely and relevant financial solutions to suit their needs.
“We look forward to continuing to support BNM’s initiatives in enhancing the MYOR market” he added.
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