AmBank Group and Maybank have jointly entered the first Malaysia Overnight Rate (MYOR) interest rate swap (IRS) transaction. This is the first time that the new reference rate MYOR, which was introduced by Bank Negara Malaysia 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 the 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 inactive and liquid markets.
This collaboration between Maybank and AmBank 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.
Jamzidi Khalid, Group Treasurer and Deputy Managing Director of Wholesale Banking, AmBank Group added that the transaction complements the on-going efforts to further develop and deepen the Malaysian financial market, in line with industry-led initiatives set out by Bank Negara Malaysia, Financial Markets Committee along with Financial Markets Association of Malaysia (FMAM).
“We are grateful and indeed honoured to work on this landmark MYOR IRS transaction with Maybank. 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 suits our customer’s needs and at the same time, contribute to market breath and liquidity in developing the local interest rates landscape.”
Md. Farid Kairi, Managing Director of Global Markets & Transaction Banking, Maybank said, “This first of its kind transaction marks 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 would like to thank AmBank for their partnership in this transaction and we look forward to continue to support Bank Negara’s initiatives in enhancing the MYOR market”.
