While this measure may appear harsh, it has worked to some extent to reduce the NDF related flows into the onshore financial market. In mid-2016, following extensive discussions with financial market players through the FMA, we reviewed the ringgit fixing mechanism to enhance its integrity. The new fixing, now known as KL 2/5  BIS central bankers' speeches  USD/MYR reference rate, uses transaction data in the determination of the reference rate. While it enhances the credibility of the fixing mechanism, the new methodology has also greatly reduced the ability of the offshore NDF related transactions to capitalize on the reference rate process. The initiative, which was implemented smoothly with positive market response, also had the desired outcome in further reducing the volume of ringgit speculative flows. Throughout the year, we have also strengthened our monitoring of compliance to the existing Foreign Exchange Administration (FEA) rules. FIs have been strongly reminded to be cautious in facilitating FX transactions, particularly with NRFI, to ensure that they do not become unwitting facilitators of ringgit speculative activities. Accordingly, we expect banks to conduct robust due diligence and Know-Your-Customer (KYC) process to fully understand clients’ transactions. We believe that the enhancement of such processes will enable banks to detect transactions that could be related to NDF activities in ringgit. Prompt supervisory intervention will be taken against any individuals and banking institutions that are found to facilitate NDF market activities. Another area which we looked at was the exchange traded ringgit products in the offshore markets.

If an issue is on the FPC agenda, given they are responsible for the financial  3  www.bankofengland.co.uk/-/media/boe/files/news/2018/november/boe-and-fca-appoint-new-chair-of-the-sterling-risk-free-referencerates-working-group.pdf 4 https://www.bankofengland.co.uk/events/2019/june/last-orders-calling-time-on-libor 3  All speeches are available online at www.bankofengland.co.uk/news/speeches  3  system as a whole, then we would generally assume it should also be on the agenda of the senior governance committees of the firms who make up that system. To make sure this was the case, the UK regulators – the PRA and FCA – took a decision to send a “Dear CEO” letter to our largest banks and insurers requesting sight of their Board-approved plans for managing the risks around Libor cessation. The Bank and FCA have already responded to the individual firms involved and, this morning, we published thematic findings from the exercise. I encourage all Libor users whatever their size and position in the system - to look at this: the emerging themes from the exercise apply to a wide range of firms, not just those who received our letters. I’ll make a few observations:  i. The letter has achieved one of its original objectives of helping to focus senior minds on this topic. Each firm written to now has a dedicated Senior Manager under the Senior Managers regime with responsibility for overseeing the transition – I can see many are here this morning. ii. The responses to the Dear CEO letter highlighted much of the good work that is already underway; how some firms have mobilised themselves to meet this challenge.