SGX Ringgit Futures

Bank Negara Malaysia’s (BNM) warning against ringgit futures trading in Singapore is meant to curb speculation, but market demand is fuelling the interest in the trades of the local unit.

Malaysia’s central bank on Wednesday criticised the Singapore Stock Exchange (SGX) and the Intercontinental Exchange (ICE) for introducing ringgit futures trading, which BNM said was “inconsistent with Malaysia’s foreign-exchange administration (FEA) policy and rules”.

Malaysia has reiterated that the ringgit remains a non internationalised currency, and any offshore trading of the ringgit — whether as a non- deliverable forward (NDF) traded out of offshore financial centres or as futures, options and other derivative contracts outside of Malaysia — is against the national policy.

Oanda Corp head of trading for Asia Pacific Stephen Innes said it appears the central bank remains vigilant on speculative activity related to the ringgit.

“But it’s the market makers and speculators who provide liquidity. So without that market element, ringgit liquidity via onshore liquidity remains a concern,” he told The Malaysian Reserve.

SGX and ICE have not made any statement over BNM’s warnings.

Innes said the SGX’s introduction of ringgit futures trading was due to demand from the international community for ringgit-denominated currency hedges.

“Most certainly SGX and ICE could provide a more vibrant marketplace for ringgit hedges and would attract more investors back into ringgit capital markets, which is a good thing. A regulated exchange is where these products should be trading, and I hope all parties involved will keep the discussion open,” he said.

The Malaysian Reserve

This article is for general information purposes only. It is not investment advice or a solution to buy or sell securities. Opinions are the authors; not necessarily that of OANDA Corporation or any of its affiliates, subsidiaries, officers or directors. Leveraged trading is high risk and not suitable for all. You could lose all of your deposited funds.

Stephen Innes

Stephen Innes

Head of Trading APAC at OANDA
Stephen has over 25 years of experience in the financial markets and currently based in Singapore as the Head of Trading Asia Pacific with OANDA. Stephen's market views focus on the movement of G-10 and ASEAN Currencies. His views appear in Bloomberg, CNBC.Reuters, New York Times WSJ and the Economist. His media appearances include Bloomberg TV & Radio, BBC International, Sky TV, Channel News Asia, ASTRO AWANI and BFM Malaysia. Stephen has an extensive trading experience in Spot and Forward FX, Currency and Interest Rate Futures, Money Market Derivatives and Precious Metals. Before joining OANDA, he worked with organisations like Nat West, Chemical Bank, Garvin Guy Butler, and Sumitomo Mitsui Banking Corporation. Stephen was born in Glasgow, Scotland, and holds a Degree in Economics from the University of Western Ontario.
Stephen Innes