KUALA LUMPUR (July 24): Bursa Malaysia Bhd has started using the Real-time Electronic Transfer of Funds and Securities System (RENTAS) for payment settlements on Bursa Malaysia Derivatives Clearing Bhd (BMDC).

The settlement of derivatives products via RENTAS is the first phase of the local bourse's plan to fully integrate the system into its settlement processes, said its chief executive officer Datuk Seri Tajuddin Atan.

RENTAS is the only large value payment system in Malaysia that is operated and managed by Bank Negara Malaysia.

It provides multi-currency real-time gross settlement of interbank fund transfers, multi-currency debt securities settlement and depository services.

"The next phase will see the onboarding of the securities market's settlement onto the same platform," said Tajuddin in a statement.

"RENTAS will substantially reduce the settlement risks for the exchange particularly in interbank funds transfers and exchange for value settlement systems such as those for securities settlements. This will further enhance the efficiency of the settlements payments mechanism," he added.

Bursa Malaysia said that with the adoption of RENTAS, BMDC can now use the system to collect settlement obligations from clearing participants before the start of the morning trading session.

It also allows BMDC to perform intraday margin calls for both the morning and the afternoon trading sessions, it said, adding that this is a step forward from the manual settlement process that was previously in place.

Bursa Malaysia said that by implementing its settlement through RENTAS, BMDC will be fully observing one of the principles for financial market infrastructures (PFMI), which is conducting money settlement using central bank money.

The PFMIs are part of a set of 24 key standards that the international community considers essential to strengthening and preserving financial stability.