Central Bank of Malaysia Act 2009 · Updated to 1 Nov 2020 · Chapter 1
31. Measures for financial stability
Feedback & supportWhere the Bank considers it necessary in the interest of financial stability, the Bank may—
Bank
“Bank” means Bank Negara Malaysia or in English, the “Central Bank of Malaysia”;
specify measures, which in the opinion of the Bank would contribute to the resilience of the financial system or limit the accumulation of any risk to financial stability, to a class, category or description of persons engaging in financial intermediation; or
issue an order in writing requiring any person within a class, category or description of persons, including a class, category or description of persons engaging in financial intermediation, to take such measures as the Bank may consider necessary or appropriate to avert or reduce any risk to financial stability.
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Before issuing an order under paragraph (1)(b), the Bank shall give the person an opportunity to make representation.
Notwithstanding subsection (2), an order under paragraph (1)(b)
may be issued first and the opportunity to make representations shall be given immediately after the order has been issued if any delay would aggravate the risk to financial stability.
risk to financial stability
“risk to financial stability” means a risk which in the opinion of the Bank disrupts, or is likely to disrupt, the financial intermediation process including the orderly functioning of the money market and foreign exchange market, or affects, or is likely to affect, public confidence in the financial system or the stability of the financial system. Information for purposes of financial stability
An order issued under paragraph (1)(b) may be amended or modified where the representation is made after the order is issued.
The person referred to in subsection (1) shall comply with such measure or order from the date as the Bank may specify notwithstanding the provisions of any other written law or of any obligations under any contract, agreement or arrangement to the contrary.
The Bank may conduct due diligence or require such person to submit any document or information or appoint an auditor or any other person approved by the Bank to carry out an assessment, to determine whether the person has complied with such measure or order under subsection (1).
The remuneration of the auditor or such other person as approved by the Bank under subsection (6) and other expenses relating to such assessment shall be paid by the person referred to in subsection
.
Notwithstanding subsection (5), any measure or order issued under subsection (1) shall not affect the enforcement by the parties of their rights under a qualified financial agreement.
qualified financial agreement
“qualified financial agreement” means— (a) a master agreement in respect of one or more qualified financial transactions under which if certain events specified by the parties to the agreement occur— (i) the transactions referred to in the agreement terminate or may be terminated; (ii) the termination values of the transactions under paragraph (a) are calculated or may be calculated; and (iii) the termination values of the transactions under paragraph (a) are netted or may be netted, so that a net amount is payable, and where an agreement is also in respect of one or more transactions that are not qualified financial transactions, the agreement shall be deemed to be a qualified financial agreement only with respect to the transactions that are qualified financial transactions and any permitted enforcement by the parties of their rights under such agreement; (b) an agreement relating to financial collateral, including a title transfer credit support agreement, with respect to one or more qualified financial transactions under a master agreement referred to in paragraph (a); or (c) any other agreement in respect of a financial transaction that may be entered into by parties in the financial markets that is prescribed as a qualified financial agreement by the Bank, other than a standardized derivative or an agreement in respect of securities transactions entered into under the rules of a stock exchange and approved clearing house as defined in subsection 2(1) of the Capital Markets and Services Act 2007;
Any person who fails to comply with subsection (5) or any requirements imposed by the Bank under subsection (6) commits an offence and shall, on conviction, be liable to a fine not exceeding ten million ringgit or to imprisonment for a term not exceeding ten years or to both.
40 Laws of Malaysia ACT 701