Malaysia Setting Tighter Ringgit Fixing Rules Against Manipulation

Malaysia plans to tighten rules on the daily setting of a key dollar-ringgit reference rate from tomorrow in an effort to boost transparency and shield the domestic market against manipulation.

Contributor banks will need to update the bid and ask prices continuously from 10:55 a.m. to 11 a.m. local time and the rates can be used for transactions among lenders and the central bank for a minimum offering of $5 million, according to a draft statement from the Financial Markets Association of Malaysia obtained by Bloomberg. The spread for the currency pair will be reduced to a maximum of 10 pips from 20, it said. A pip is the smallest unit of a currency’s price, which in U.S. dollar terms equals one-hundredth of a cent.

The rule changes come after the Monetary Authority of Singapore began a probe of the Association of Banks in Singapore in September to ascertain whether there was any manipulation of benchmarks including daily fixings that are used to settle non- deliverable forwards. Bank Negara Malaysia last month told lenders they must use a ringgit fixing set domestically to settle foreign-exchange contracts involving the currency, a person familiar with the matter said on Jan. 29.


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