PETALING JAYA: The Financial Markets Committee (FMC), set up by Bank Negara in May, is expanding the ringgit foreign exchange market overseas in a move to attract companies and investors to settle their ringgit trade via an approved channel.
The expanded Approved Overseas Office (AOO) framework will include foreign financial institutions, the FMC said in a statement yesterday.
This framework, which was first introduced in 2007, was intended to provide additional flexibilities on ringgit transactions where a foreign financial institution appointed by a licensed domestic bank can undertake back-to-back transactions to facilitate settlement of trade and ringgit assets between non-resident with a local party.
“By including non-resident financial institution outside the licensed onshore bank’s financial group, the expanded AOO framework allows non-resident traders and investors greater avenue to settle trade or investment in ringgit through an approved channel,” it said.
This announcement followed the Dec 2 measures announced by the FMC on the initiatives to develop the onshore financial market.
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.
While an appointed non-resident financial institution (NRFI) refers to an NRFI appointed by a licensed onshore bank and approved by Bank Negara.