KUALA LUMPUR: Bank Negara Malaysia’s (BNM) Financial Markets Committee has rolled out an expanded appointed overseas office (AOO) framework following measures announced by the central bank last Friday to enhance the liquidity of the foreign exchange market.

The measures, which took effect on Monday, are aimed at liberalising and deregulating the onshore ringgit hedging market, streamlining treatment of investment in foreign currency assets, and providing incentives and treatment of export proceeds.

In yesterday’s statement, BNM said the new AOO framework is to provide additional flexibilities in ringgit transactions where a non-resident financial institution appointed by a licensed onshore bank can undertake back-to-back transactions to facilitate settlement of trade and ringgit assets between a non-resident and a resident.

The framework is expanded to include additional transactions such as foreign exchange hedging for current and financial accounts based on commitment, opening of ringgit accounts and extension of ringgit trade financing.

 “By including non-resident financial institutions outside the licensed onshore bank’s banking group, the expanded AOO framework allows non-resident traders and investors [a] greater avenue to settle trade or investment in ringgit through an approved channel, “ said BNM.