14th September 1998        Source : Bank Negara Malaysia

Issues

Clarification - Part 4

Trading in derivatives on the Kuala Lumpur Commodity Exchange (KLCE), Kuala Lumpur Options and Financial Futures Exchange (KLOFFE) and Malaysia Monetary Exchange (MME)

 

Designated External Accounts

Non-residents wishing to trade on the KLCE, KLOFFE and MME will be allowed to maintain designated external accounts solely for the purpose of trading in derivatives on these exchanges. These designated external accounts have to be funded from the sale of foreign currency. Holders of such designated external accounts are permitted to do the following:
  1. Transfer funds between designated external accounts belonging to the same account holder.
  2. Transfer funds to the clearing members of the Malaysian Derivatives Clearing House (MDCH) for purposes of trading on the exchanges.
  3. Receive funds from clearing members of MDCH arising from trading on the exchanges.
  4. Freely convert balances in such accounts into foreign currency.
  5. "Good faith" money or collateral held in the margin accounts can be in ringgit or any major currency and these balances can be held in any form approved by MDCH.
Existing External Accounts (Non-Designated)

Existing external account holders (which are not designated accounts) may also trade on the above exchanges. However, the rules governing the sources and uses of funds in such external accounts would apply. In addition, no transfers can be made between a designated external account and a non-designated external account even though both accounts are held by the same account holder. Profits from trades done on the exchanges may be sold for foreign currency for repatriation abroad.

Guarantees

 

Payments arising from all outstanding guarantees entered into prior to 1300 hours, 1 September 1998 will not require the approval of Bank Negara Malaysia (as per ECM notices dated 1 December 1994).

Credit facilities by residents to nonresidents approved prior to 1 September 1998

 

  • Credit facilities extended to non-resident stockbroking companies would have to be withdrawn and settled in full by the next review date of the credit facilities but in any event not later than 30 November 1998.
  • Credit facilities extended to nonresident correspondent banks have to be withdrawn with immediate effect.
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