On Jun. 28, 2024, MLY CB issued policy document and FAQ on Islamic collateralized funding; provides guidance, establishes standards re Islamic repo transactions in IIMM.
Utilized for sourcing and providing funding for liquidity management purposes.
The new policy document will replace the existing SBBA guidance notes; consolidates various Islamic repo instruments, including SBBA, CCM, into a single framework.
The policy document is effective from Jun. 30, 2025.
In Jul. 2024, MLY CB issued ruling on sell and buy back agreement, see #219908.
On Oct. 2, MLY CB drafted guidelines on Islamic collateralized funding.
MLY CB issued exposure draft (ED) on Islamic collateralized funding.
Outlines the proposed standards and guidelines re Islamic financial instruments used in the Islamic interbank money market (IIMM) comprising sell and buy back (SBBA).
Also comprising collateralised commodity murabahah (CCM) transactions used to source and provide funding for liquidity management in the IIMM.
Guidelines
Set out the scope of SBBA transaction and CCM transaction for a banking institution.
Set out regulatory requirements and MLY CB's expectations in relation to an SBBA transaction or a CCM transaction entered into by a banking institution
Specify requirements such as that banks shall ensure that the legal ownership of SBBA securities sold under SBBA or reverse SBBA shall be transferred to the purchaser.
The CCM securities pledged by a CCM pledgor may be transferred to the CCM pledgee.
Ensure maximum tenure of SBBA transaction/CCM transaction is not over 5 years.
Banking institution shall ensure SBBA/CCM transaction is governed by a written agreement that specifies all terms, conditions, the duties and obligations of all parties.
Banking institution shall establish a risk management framework which enables identification, measurement and continuous monitoring of all relevant/ material risks.
Formulate and implement risk management measures to address relevant risks .
Specify foreign exchange policy as well as reporting and settlement requirements.
Effectiveness
Consultation is open for opinions which shall be submitted by Oct. 31, 2023.
Jun. 2024 Policy Document
On Jun. 28, 2024, MLY CB issued policy document and FAQ on Islamic collateralized funding; provides guidance, establishes standards re Islamic repo transactions in IIMM.
Utilized for sourcing and providing funding for liquidity management purposes.
The new policy document will replace the existing SBBA guidance notes; consolidates various Islamic repo instruments, including SBBA, CCM, into a single framework.
The policy document is effective from Jun. 30, 2025.
In Jul. 2024, MLY CB issued ruling on sell and buy back agreement, see #219908.
