New Straits Times - - Business -

an im­por­tant for­eign ex­change earner for Malaysia.

Bursa Malaysia’s palm oil fu­tures mar­ket value adds to this. Each FCPO con­tract is equiv­a­lent to 25 tonnes. So, at more than 11 mil­lion con­tracts, that works out to 286 mil­lion tonnes of palm oil set­tling at the fu­tures mar­ket.

“If Malaysia only has the phys­i­cal mar­ket, we would only be trad­ing around 20 mil­lion tonnes of palm oil. But with Bursa Malaysia’s palm oil fu­tures mar­ket set­tling 11.42 mil­lion FCPO con­tracts amount­ing to 286 mil­lion tonnes, we have traded up more than 14 times that of the phys­i­cal mar­ket,” said Ja­malud­din.

He said Malaysia's com­modi­ties mar­ket has seen tremen­dous growth in the past few years with the in­creas­ing pres­ence of high­fre­quency traders.

This has made FCPO price dis­cov­ery more ef­fi­cient and trans­par­ent and con­trib­uted to mar­ket liq­uid­ity.

It is well known that cur­rent palm oil trades at the Dalian Com­mod­ity Ex­change are many times more than the av­er­age daily vol­ume set­tled at Bursa Malaysia De­riv­a­tives Ex­change.

When asked how Bursa Malaysia is main­tain­ing its global palm oil price bench­mark­ing, Ja­malud­din said it all boils down to the ex­change’s role in nur­tur­ing a thriv­ing ecosys­tem.

This in­cludes en­sur­ing trans­par­ent, ef­fi­cient and con­ve­nient trad­ing en­vi­ron­ment for mar­ket par­tic­i­pants.

“We con­sis­tently en­force rules to en­sure that trad­ing takes place in an open and com­pet­i­tive en­vi­ron­ment.”

In fa­cil­i­tat­ing Is­lamic fi­nance, the ex­change has, since 2009, op­er­ated the Bursa Suq Al-Sila for banks to buy and sell palm oil.

Ja­malud­din said an Is­lamic bank buys palm oil from the spot mar­ket and then sells it to the bor­rower. The bor­rower then sells the palm oil to a third party in the spot mar­ket for cash, us­ing the bank as its agent, thus se­cur­ing the fi­nanc­ing.

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