Central Bank eyes electronic auctions

 

The Central Bank is hoping to move its daily foreign exchange auctions to an electronic system before the end of the year, according to U Win Thaw, head of the bank’s Foreign Exchange Management Department.

Myanmar’s private sector lenders bid to buy or offer to sell dollars in exchange for kyat at daily auctions.

These help the Central Bank set the daily kyat-dollar exchange rate, and theoretically allow the Central Bank to provide foreign exchange when there is a shortage in the market – although the demand for dollars is often too high for the Central Bank to accept all bids.

Private sector banks that wish to take part in the auctions have to submit bids or offers manually to the Central Bank in an envelope.

But the Central Bank plans to move the auctions to an electronic system provided by media and information firm Thomson Reuters, U Win Thaw said.

Thomson Reuters signed an agreement with the Central Bank in December 2015 to provide the system, which runs on the Thomson Reuters Eikon platform. This platform also provides the Central Bank with financial data on things like global commodity prices and currency levels.

Every country’s Central Bank uses either a Thomson Reuters or a Bloomberg platform and sometimes both, said U Win Thaw, adding that other Central Bank departments, aside from foreign exchange, should have access to the same international financial information.

Myanmar’s private sector banks still use telephone calls for inter-bank foreign exchange trades, said U Win Thaw.

But the Thomson Reuters platform also provides an electronic system for interbank foreign exchange, and the firm has signed up many local banks to its FX trading system, Alfred Lee, the firm’s managing director for Financial and Risk in Southeast Asia, told The Myanmar Times.

Some 40 percent of Myanmar’s banks have already signed with Thomson Reuters to use the platform, and the Central Bank will start electronic auctions later this year as soon as a majority of the banks are ready, U Win Thaw said.

Almost all the branches of the nine foreign banks operating in Myanmar use the same platform, he added.

The platform will initially only allow the Central Bank to record banks’ auction bids and offers, but in time the Central Bank will also be able to use the platform to collect data on other financial transactions that the banks make, said U Win Thaw.

Once the system is active, Thomson Reuters will provide the service to the Central Bank free of charge for one year, and the commercial banks will be able to access the platform for free as well for six months, he said.

Securities firms can also make use of the platform, and a spokesperson at the Thomson Reuters office in Yangon said the firm had recently signed CB Securities to its online trading platform.

There are 10 Myanmar securities firms approved to provide stock trading services to investors in Yangon’s bourse.

Source: The Myanmar Times

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