Bank Negara Malaysia announces the launch of MYOR-i (Malaysian Islamic Overnight Rate) adding that the introduction will spur the development of innovative Shariah-compliant financial products which will further deepen Malaysia’s Islamic financial market. It will also reinforce a holistic Shariah-compliant ecosystem and enhance best market practices and standards.
MYOR-i, the first transaction-based Islamic benchmark rate in the world, is developed in accordance with the Principles for Financial Benchmarks. BNM’s Shariah Advisory Council has also confirmed that MYOR-i is Shariah-compliant. It will replace the Kuala Lumpur Islamic Reference Rate (KLIRR), which will be discontinued immediately.
The Central Bank collaborated with the Financial Markets Committee and the AIBIM-FMAM Islamic Market Technical and Development Committee on the development of MYOR-i. The benchmark will be administered and calculated by BNM and will be a volume-weighted average rate of return on Shariah-compliant unsecured overnight Ringgit interbank transactions. This includes BNM’s Islamic overnight monetary operations MYOR-i is currently based on the Commodity Murabahah instrument. New Shariah-compliant instruments may be included in the future.
MYOR-i for any given Kuala Lumpur business day will be published on BNM’s website at 12 p.m. on the following business day. The Central Bank will conduct periodic reviews of MYOR-i to ensure that it remains robust and representative of conditions in the underlying market.
Bank Negara adds the establishment of MYOR-i as the Islamic benchmark rate will be a catalyst in driving Islamic financial product innovation and creating transparency for market players to negotiate and standardise their financial contracts, thus achieving efficient pricing across all financial instruments. It will help to deepen the onshore Islamic financial market and enhance its role in financing real economic activities in Malaysia.