Bank Negara Malaysia issues exposure draft on Code of Conduct for Malaysia Wholesale Financial Markets

An exposure draft on Code of Conduct for Malaysia Wholesale Financial Markets was issued by Bank Negara Malaysia (“BNM”) on 9 November 2021, seeking public feedback by 6 December 2021.

BNM has taken into account the preliminary feedback from selected market participants via the ACI-Financial Markets Association of Malaysia (“FMAM”) and benchmarked against global best practices in this exposure draft. The proposed enhanced requirements are:

intended to address the key gaps and global development on market conduct matters.; and
to be observed by market participants (as defined in the Financial Services Act 2013 and Islamic Financial Services Act 2013, respectively) to uphold integrity and principles of fair market practices, which is essential to support confidence, ensure an orderly functioning of the wholesale financial markets and preserving financial stability.

ASEAN Taxonomy for Sustainable Financing

The ASEAN Taxonomy for Sustainable Finance (“ASEAN Taxonomy”) was developed to serve as a common building block that enables an orderly transition and fosters sustainable finance adoption by the ASEAN member states. On 10 November 2021, the ASEAN Taxonomy Board (“ATB”) released Version 1 of the ASEAN Taxonomy which will provide a frame for discussion with official sector and private sector stakeholders to work together on the development of the ASEAN Taxonomy.

The ASEAN Taxonomy is intended to serve as a reference point to guide capital and funding towards activities that can help promote the systemic transformation needed for the ASEAN member states. There are two main elements to the ASEAN Taxonomy:

the “Foundation Framework” which is applicable to all member states and allows a qualitative assessment of activities; and
the “Plus Standard” with metrics and thresholds to further qualify and benchmark eligible green activities and investments.

Version 1 elaborates on the key components of the ASEAN Taxonomy:

the environmental objectives and essential criteria for assessment of economic activities which acts as the foundation to, among others, promote transition to low carbon and environmentally sustainable practices;
a sector-agnostic decision tree to guide users of the ASEAN Taxonomy in classifying economic activities under the “Foundation Framework”,

which are designed to be readily applicable to all member states including the stakeholders in the financial sector and business enterprises;

a list of focus sectors that the “Plus Standard” will cover including the stacked approach which will be utilised to determine thresholds and technical screening criteria. The “Plus Standard” can be adopted by member states or its stakeholder which require more guidance, based on its individual readiness.