collusive, fraudulent and manipulative activities ; 4. good internal governance and due diligence, supported by robust internal surveillance and reporting mechanisms ; and 5. compliance to prevailing rules, regulations and market codes while extending full cooperation to the authorities. the principles should be universally applied, internalised and practiced by all parties that transact in the malaysian financial market. these principles must be demonstrated consistently in the daily conduct of market participants. outcomes of the adherence to the principles will result in a well - functioning market the principles are intended to result in a fair and effective financial market that efficiently intermediates the funding needs of the economy and resilient in the face of shocks. one particular aspect of the principles is on the adherence to rules and regulations, a critical pillar of financial stability, and a code of conduct expanded to explicitly prohibit transactions in unauthorised markets. this includes, in particular, the ndf market. these principles ought to result in three key outcomes : 1. firstly, balanced perspectives when formulating policy and assessing market development. such balance is needed between growth and stability, whereby growth of the financial market must be consistent with economic fundamentals. we have seen in many instances how the size of the financial market can be disconnected, and has grown too large for the real economy. most of the activities in these outsized markets do not contribute to sustainable growth and consist mainly of speculative activities. speculative activity is a major source of vulnerability not only for the financial market but also to the real economy, which if left unattended, could lead to devastating financial crises. arguments expounding that these activities provide liquidity are delusional, and at best deflective. 2. secondly, the outcome of the principles is to level the playing field among market players. this means a market that cannot be distorted by any institution or individual. all participants, either large or small will have fair access to the market, without fear of being subjected to market collusion and manipulation. it ought to create an efficient, competitive and transparent market that will contribute to economic prosperity. 3. thirdly, the outcome of the principles is a strengthened regulatory framework. the principles of transparency, accountability and good governance will promote market discipline. the principles will serve as guidepost for us to effectively supervise and regulate the market and is necessary, given the increasing complexity of the financial market, exacerbated by the disruptions arising from technological innovations and greater interconnectedness. achieving these three outcomes is

move is obviously driven more by speculative activities and misplaced market sentiment rather than any significant change in the economic fundamentals of the country. given the divergence between offshore and onshore ringgit prices, arbitrage opportunities for non - resident investors persisted. to make things worse, even our own market players, began to consistently take the cue from the ndf market. this placed unwarranted downward pressure on the ringgit. most unfortunate is the lack of concern by regulators where the ndf activities were thriving despite of the adverse impact on the affected currencies. with the extreme destabilising effects of the offshore ringgit ndf market on domestic ringgit pricing, we took a broad spectrum of measures to reduce the speculative and damaging influence of these activities. part of this was our stricter enforcement of non - facilitation rules for offshore derivatives. the long - standing prohibition on domestic players to facilitate transactions of offshore markets was extended to non - resident financial institutions via a compulsory attestation requirement. we also facilitated and managed the exit of significant short - term positions related to the ndf market. certainly, these aggravated the immediate pressures on the ringgit but were very necessary to any eventual stabilisation of the currency. i am pleased to share that a number of global financial institutions have complied with our requirements. but, there are still a few holdouts. we are perplexed as to how these financial institutions can continue to operate or facilitate an activity that clearly contravenes our rules and regulations. we will continue to enforce our measures and look at avenues to deal with those who facilitate the ringgit ndf activities. the destabilising implications arising from the offshore activities gave a bad name to the marketbased mechanism. it corrupted the idea of market openness and the liberalisation process. such destabilising risks bear upon the integration process among financial markets of this region. developing long term solutions through the financial markets committee addressing the speculative impact of the ndf market is only part of the solution. of greater importance is the need to put in place sustainable long - term solutions. with this in mind, the financial markets committee ( fmc ) was established in 2016, and tasked with the responsibility to look into the overall development and strategy for the malaysian financial market. the fmc also looked into the factors that caused imbalances in the demand and supply of foreign currencies in the domestic market, including the reduced capacity of the market to provide