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Tuesday, 06 Feb, 2018

Bursa’s FCPO to be revamped

KUALA LUMPUR: Bursa Malaysia Bhd says it will be revamping its crude palm oil futures (FCPO) to make them more attractive to investors.

“We aim to introduce new products and will make the necessary announcements as we go along,” chief executive officer (CEO) Datuk Seri Tajuddin Atan said at a media briefing yesterday.

In the meantime, the bourse is focused on improving liquidity of its derivatives market first by understanding the players and reaching out to a new set of investors, he said.

“We are still in the process of getting approvals, decoupling memberships and increasing selling agents,” he said.

Bursa Malaysia Derivatives Bhd CEO Jamaluddin Nor Mohamad said the revamp will include the tracking of crude palm oil origins and tracing Malaysian Sustainable Palm Oil certification, which could be rolled out as soon as the first quarter of 2018.

He said that new products are likely to see variations of palm oil and other financial contracts, although interest rate and bond futures have not been heavily traded.

“Given the stable interest rate environment we have in this country, the demand and usage of these products are not forthcoming,” said Jamaluddin.

For the year ended Dec 31, 2017 (FY17), Bursa Malaysia’s derivatives market saw a decline in the growth of average daily contracts (ADC) and volatility.

Total ADC for FY17 fell 0.3% to 57,677 while the volatility of FCPO and FBM KLCI futures (FKLI) declined 3% each.

“Volatility in commodity prices and the underlying equity market will continue to affect hedging and trading activities of the FCPO and FKLI contracts,” Tajuddin said, adding that it was therefore important to focus on increasing liquidity.

The derivatives market was Bursa Malaysia’s second-largest contributor to operating revenue in FY17 at 15.7% or RM80.6 million. This marked a decline in both value and percentage from RM88.7 million and 18.8% in FY16.

Source : The Edge Markets

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