DFDL Myanmar Alert: Introduction of CBM’s Online Forex Trading Platform

Central Bank of Myanmar’s Letter

On 21 June 2023, the Central Bank of Myanmar (“CBM“) issued a letter to authorized dealer (“AD“) banks, assigning them the responsibility of reporting forex trading activities in the market. The letter emphasized the mandatory use of the CBM’s online trading system for all transactions conducted between AD banks and customers and among customers.

Responsibility of the AD Banks

AD Banks must submit daily reports of their dealings with customers to the CBM via the online platform. These reports should include lists of companies wishing to sell and buy forex. The submission timeframe for these reports is between 10:00 AM and 11:30 AM.

During the submission process, it is essential to provide comprehensive lists covering buying and selling activities, encompassing trade and non-trade purposes. For companies wishing to sell forex, the following information must be submitted to the CBM after verification by AD banks: company’s name, type of business, amount to be sold, currency type, offer rate, settlement date, expiration date, and source of income (export proceeds, exempted company, CMP (Cut-Make-Pack) and salary).

Similarly, for companies interested in buying forex, the following information must be provided to the CBM after verification by AD banks: company’s name, type of business, amount to be purchased, currency type, the reason for the purchase (if it pertains to trade, specify the type of goods and provide the import license or ID; if it is not trade-related, state the purpose), bid rate, and settlement rate.

AD banks must ensure the accuracy and completeness of the information provided during the verification process before submitting the reports to the CBM.

Role of the CBM

The CBM will securely handle the information regarding the list of buyers and sellers and the proposed transactions between AD banks and customers. It will determine the eligible companies, transaction amounts, and exchange rates by negotiating with AD banks. It will provide the banks with the list of permissible transactions by 1:00 PM. These transactions must be conducted using the T+1 settlement model, meaning the transactions’ settlement or delivery should occur one business day after the trade date. Bank-to-bank purchase and sale dealings must initially be submitted to the CBM through the online trading plan and subsequently executed using the Refinitiv Platform. The CBM website will publish a daily list of completed transactions and the corresponding Weighted Average Rate (“WAR“).

The CBM will finance SWAP and purchase and sell foreign currency in the foreign exchange market to procure essential goods. AD banks must adhere to the specific instructions outlined in the letter while engaging in forex trading. Furthermore, on 22 June 2023, the CBM issued a notice stating that the exchange rate used in the online trading plan represents the market exchange rate. Importantly, CBM has cautioned that exchange rates mentioned on platforms such as social media are considered illegal.

These measures aim to ensure transparency, efficiency, and compliance within the forex trading market while enabling the CBM to manage currency exchange activities effectively and support economic stability.