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MONEY MARKET :smiley: - Coggle Diagram
MONEY MARKET :smiley:
DESCRIPTION OF MM INSTRUMENTS :pencil2:
NEGOTIABLE INSTRUMENTS OF DEPOSITS (NIDs) :explode:
Deposit document issued by a bank to a customer
Can be sold before maturity
Minimum deposit is RM 100,000 per certificate
Maximum deposit is RM 10 million per certificate
BANKERS’ ACCEPTANCE (BA) :explode:
Bill of exchange drawn on a bank
Negotiable instrument – can be sold to investors
Created to finance a customer for trade transaction
MALAYSIAN GOVERNMENT SECURITIES (MGS) :explode:
Yield instrument :!:
Issued by BNM to obtain funds from public specifically to finance national development projects. :!:
Quoted in price terms per RM 100 nominal value. :!:
REPURCHASE AGREEMENT (REPO) :explode:
Yield instrument
Sale of financial instrument by a bank with an undertaking to repurchase back at agreed price on specified future date.
Collaterized deposit arrangement
TREASURY BILLS :explode:
A discounted Instrument
Issued by Bank Negara Malaysia
Used to raise short-term funds to finance government’s expenditures
BANK NEGARA BILLS :explode:
Issued by Bank Negara Malaysia :!:
Maturity not exceeding a year :!:
Often used for Open Market Operations (monetary policy tool) :!:
MONEY MARKET
Short-term mobilization of funds. :check:
Trade financial instruments such as :
Khazanah bonds :<3:
Bank Negara bills :<3:
Treasury bills (T-Bills) :<3:
Bankers acceptance (BA) :<3:
Cagamas bonds :<3:
Cagamas notes :<3:
Purpose of Credit Rating :
Ensure investors’ confidence in MM. :star:
Provide mechanism to investors to choose which bonds should be invested based on ratings :star:
To evaluate creditworthiness :star:
OBJECTIVES :red_flag:
Ensure participants are able to trading MM instruments
Participant :silhouettes:
Banking Institutions
Non-Financial Institutions
BNM
Coorporation
Cagamas
Broker Agent
MONEY MARKET RISKS & SOLUTION
Credit Risk
Borrower Unable to PAY for the money (Default in Payment) :no_entry:
Establish credit limit (authorized maximum amount that an institution can borrow from another institution) :check:
Interest Rate Risk
Bank revenue are effected with the fluctuation Interest Rate. :no_entry:
Predict rates and prices of financial instruments :check:
Need to have financial tools to analyze and predict interest rates. :check:
Liquidity Risk
2 Situation:
Banks do not have enough funds to meet commercial / trading requirements. :no_entry:
Banks are unable to convert existing assets into cash at reasonable market price . :no_entry:
Have a mixture of ST and LT instruments for faster liquidation. :check:
Operational Risk
Bad Operational Sytem In Money Market :no_entry:
Train employees on the latest financial system :check: