KUALA LUMPUR (Aug 26): UOB Malaysia, RHB Bank Bhd (KL:RHBBANK) and Malayan Banking Bhd (KL:MAYBANK) have executed the first brokered Malaysia Overnight Rate (MYOR)-based three-month interbank money market transaction in the country, incorporating a two-day lookback calculation convention.

In a joint statement, the banks said the transaction took place on Aug 14, calling it a significant milestone in the country’s money market and supports industry efforts to adopt risk-free rate-based market conventions.

MYOR, first introduced in Sept 2021, is the average interest rate that banks charge each other for overnight loans in Malaysia that is calculated and managed by Bank Negara Malaysia.

The banks said the landmark interbank transaction enhanced transparency by making funding levels and spreads visible to a broad network of market participants, compared with bilateral transactions where such information is limited to the counterparties involved.

UOB Malaysia, which anchored the transaction, said it reflects the strong collaboration between the three banks in supporting the evolution of the country’s financial markets.

“By establishing a transparent benchmark for MYOR-based funding, we are contributing to greater price discovery and helping to build confidence in the adoption of risk-free rate conventions,” said UOB Malaysia country head of corporate and investment banking Christina Cheah.

RHB managing director of group wholesale banking Nurjesmi Mohd Nashir added that the transaction showed how market participants can work together to use MYOR-based conventions to support the development of Malaysia’s money market.

Farid Kairi, Maybank's deputy group chief executive officer of global banking and managing director of global markets said the transaction "marks an important first step in establishing the foundation for deeper liquidity, while setting the stage for widening the aperture for more MYOR-linked solutions and supporting robust price discovery for market participants".