Bursa Malaysia
Encyclopedia
Bursa Malaysia is an exchange holding company approved under Section 15 of the Capital Markets and Services Act 2007. It operates a fully integrated exchange, offering the complete range of exchange-related services including trading, clearing, settlement and depository services.
) dates back to 1930 when the Singapore
Stockbrokers' Association was set up as a formal organisation dealing in securities in Malaya
.
The first formal securities business organisation in Malaysia was the Singapore Stockbrokers' Association, established in 1930. It was re-registered as the Malayan Stockbrokers' Association in 1937. The Malayan Stock Exchange
was established in 1960 and the public trading of shares commenced. The board system had trading rooms in Singapore and Kuala Lumpur
, linked by direct telephone lines.
In 1964, the Stock Exchange of Malaysia was established. With the secession of Singapore
from Malaysia in 1965, the Stock Exchange of Malaysia became known as the Stock Exchange of Malaysia and Singapore. In 1973, currency interchangeability between Malaysia and Singapore ceased, and the Stock Exchange of Malaysia and Singapore was divided into the Kuala Lumpur
Stock Exchange Berhad and the Stock Exchange of Singapore
. The Kuala Lumpur
Stock Exchange which was incorporated on December 14, 1976 as a company limited by guarantee, took over the operations of the Kuala Lumpur Stock Exchange Berhad in the same year.
On April 14, 2004, Kuala Lumpur Stock Exchange was renamed Bursa Malaysia Berhad, following the demutualization exercise, the purpose of which was to enhance competitive position and to respond to global trends in the exchange sector by making themselves more customer-driven and market-oriented. It consisted of a Main Board, a Second Board and MESDAQ
with total market capitalisation of MYR
700 billion (US$189 billion).
Bursa Malaysia has since then focused on various initiatives aimed at improving its product and service offerings, increasing the liquidity and velocity of its markets, improving the efficiency of its businesses and achieving economies of scale in its operations.
On 18 March 2005, Bursa Malaysia was listed on the Main Board of Bursa Malaysia Securities Berhad with a 17% or RM0.50 premium over its retail price of RM3.00.
Source: Bursa Malaysia's History Page - Data updated as at 9 March 2010 --> Bursa Malaysia's History
Source: Bursa Malaysia Annual Report 2009 - Data updated as at 31 December 2009--->Bursa Malaysia's Annual Report 2009
In June 2006, a new index series jointly developed by Bursa Malaysia and FTSE Group
was introduced which is FTSE Bursa Malaysia Index
. On November 7, 2006, the index finally passed the 1,000 mark hurdle and closed at 1,003.28. It was partly boosted by the strong overnight close in the Wall Street
.
On March 10, 2008, trading on the exchange was suspended for one hour due to composite index fall by more than 10 percent or 130 points to 1166.32 points. This was largely by combination of factors such as the United States
Subprime mortgage crisis
and the political uncertainty caused by the 12th General Election
. Dealers expected the move was an overreaction to the election results and the market will correct itself. The index gained 2.1% the next day on the morning session as investor reinvest in plantation stocks and blue chips.
On July 3, 2008, trading on the exchange was suspended for the day when it suffered multiple hardware glitches. The glitches only affected the equities market, not the bonds and commodity market. Trading resumed the next day.
Improved Accessibility
Enhanced Efficiency
Developed New Products and Services
Internationalised Markets
Source: Bursa Malaysia Annual Report 2009 - Data updated as at 31 December 2009--->Bursa Malaysia's Annual Report 2009
Crude palm kernel futures and crude palm oil futures
are primarily traded on Bursa Malaysia in Malaysian Ringgit
(MYR) and US dollar denominated contracts. Their codenames are FPKO, FCPO and FUPO, respectively.
Below is a non-exhaustive list of commodities exchange
s around the world where palm oil futures is traded with different contract specifications:
In August 2009, Bursa Malaysia launched Bursa Suq Al-Sila', the world's first Internet commodities trading platform with crude palm oil (CPO) as its underlying asset that is syariah-compliant. Bursa Suq Al-Sila', formerly known as Commodity Murabaha House, facilitates commodity-based Islamic financing and investment transactions under the Syariah principles of Murabahah, Tawarruq and Musaw-wamah. Under the Bursa Suq Al-Sila concept, the bank buys a commodity from a supplier such as a CPO producer at a principal amount, and sells it to a customer at a profit. The customer then sells back the commodity to the spot market for cash. This initiative is spearheaded by the Malaysia International Islamic Finance Centre.
Among the plantation signatories are Boustead Estate Agency Bhd, Genting Plantations Bhd, IOI Corp Bhd and Sime Darby
Bhd. The financial institutions include Gulf Cooperation Council (GCC) banks Al Rajhi Banking & Investment Corp (M) Bhd, Asian Finance Bank Bhd, Kuwait Finance House (M) Bhd and Unicorn International Islamic Bank Malaysia Bhd. Bursa Malaysia chief executive officer Datuk Yusli Mohamed Yusoff said “This venture brings two of the nation’s main global players; namely the Islamic banks and palm oil
producers together, to further enhance Malaysia's palm oil futures' visibility on the world stage.”
Bursa Malaysia and CME Group
, in 2009, announced plans for crude palm oil futures to be electronically traded on the CME Globex. CME Group will develop a US dollar-denominated, cash-settled contract using Bursa Malaysia settlements as its reference, at its Globex electronic platform in Chicago. CME Group will buy a 25% stake in Bursa Malaysia Derivatives for RM55.6 million to be satisfied in RM1.9 million cash and 76,427 shares of CME Group. To facilitate the proposed equity participation, Bursa will consolidate all its derivatives businesses into Bursa Malaysia Derivatives and its subsidiaries. Under the corporate exercise, Bursa Malaysia Derivatives will acquire the entire issued and paid-up share capital of Bursa Malaysia Derivatives Clearing Bhd from Bursa for a cash consideration of RM37.1 million.
Operating round the clock, the CME Globex trading system is at the heart of CME. Proposed in 1987, it was introduced in 1992 as the first global electronic trading platform for futures contracts. This fully electronic trading system allows market participants to trade from booths at the exchange or while sitting in a home or office thousands of miles away. When Globex was first launched, it used Reuters' technology and network. September 1998 saw the launch of the second generation of Globex using a modified version of the NSC trading system, developed by Paris Bourse for the MATIF (now Euronext). To connect to CME Globex, traders connect via Market Data Protocol (MDP) and iLink 2.0 for order routing.
Jakarta Futures Exchange launched trading of physical crude palm oil (CPO) contracts in June 2009. Indonesia’s Deputy Minister of Agriculture and Fisheries at the Coordinating Ministry for the Economy, Bayu Krisnamurthi, had emphasised that a physical market must be established before futures trading can begin.
In October 2009, Indonesia plans to facilitate trading of crude palm oil and other raw materials on the Indonesia Commodity & Derivatives Exchange (ICDX). In spite of being the world’s largest producer, Indonesia has been unable to set a palm oil benchmark price, with trading centred in neighbouring Bursa Malaysia in Kuala Lumpur.
The Jakarta Futures Exchange, which was launched in 2000, started by offering crude palm oil and coffee futures but trading was “dormant” as operators have preferred to trade the palm oil contracts in Malaysia and coffee futures in London and New York, according to Edi Susmadi, a director of JFX. He attributed the failure to competition from Bursa Malaysia, and the low tech trading system. Max Ramajaya at Wilmar International, the world’s largest processor of palm oil, said: “When you trade on MDEX [Bursa Malaysia] you have better access to information about the market and more insight.
Back in June 2007, Singapore launched the Joint Asian Derivatives Exchange’s (JADE) US dollar-denominated CPO futures contract. JADE was a joint venture between the Chicago Board of Trade (now CME Group) and the Singapore Exchange (SGX). The aim was to provide a fair and transparent platform for price discovery in CPO and allow traders to buy JADE CPO futures and CBOT soyabean oil futures concurrently to manage their edible oils price risk.
However, the JADE CPO futures failed to sustain. CME Group, which acquired CBOT and inherited its investment in JADE, sold its 50% stake to SGX in late 2007. According to reports, both the rubber and CPO futures offered by JADE have failed to attract volumes. JADE merged with the Singapore Commodity Exchange in 2008.
History
Bursa Malaysia previously known as Kuala Lumpur Stock Exchange (KLSE, Bursa Saham Kuala Lumpur in MalayMalay language
Malay is a major language of the Austronesian family. It is the official language of Malaysia , Indonesia , Brunei and Singapore...
) dates back to 1930 when the Singapore
Singapore
Singapore , officially the Republic of Singapore, is a Southeast Asian city-state off the southern tip of the Malay Peninsula, north of the equator. An island country made up of 63 islands, it is separated from Malaysia by the Straits of Johor to its north and from Indonesia's Riau Islands by the...
Stockbrokers' Association was set up as a formal organisation dealing in securities in Malaya
British Malaya
British Malaya loosely described a set of states on the Malay Peninsula and the Island of Singapore that were brought under British control between the 18th and the 20th centuries...
.
The first formal securities business organisation in Malaysia was the Singapore Stockbrokers' Association, established in 1930. It was re-registered as the Malayan Stockbrokers' Association in 1937. The Malayan Stock Exchange
Stock exchange
A stock exchange is an entity that provides services for stock brokers and traders to trade stocks, bonds, and other securities. Stock exchanges also provide facilities for issue and redemption of securities and other financial instruments, and capital events including the payment of income and...
was established in 1960 and the public trading of shares commenced. The board system had trading rooms in Singapore and Kuala Lumpur
Kuala Lumpur
Kuala Lumpur is the capital and the second largest city in Malaysia by population. The city proper, making up an area of , has a population of 1.4 million as of 2010. Greater Kuala Lumpur, also known as the Klang Valley, is an urban agglomeration of 7.2 million...
, linked by direct telephone lines.
In 1964, the Stock Exchange of Malaysia was established. With the secession of Singapore
Singapore
Singapore , officially the Republic of Singapore, is a Southeast Asian city-state off the southern tip of the Malay Peninsula, north of the equator. An island country made up of 63 islands, it is separated from Malaysia by the Straits of Johor to its north and from Indonesia's Riau Islands by the...
from Malaysia in 1965, the Stock Exchange of Malaysia became known as the Stock Exchange of Malaysia and Singapore. In 1973, currency interchangeability between Malaysia and Singapore ceased, and the Stock Exchange of Malaysia and Singapore was divided into the Kuala Lumpur
Kuala Lumpur
Kuala Lumpur is the capital and the second largest city in Malaysia by population. The city proper, making up an area of , has a population of 1.4 million as of 2010. Greater Kuala Lumpur, also known as the Klang Valley, is an urban agglomeration of 7.2 million...
Stock Exchange Berhad and the Stock Exchange of Singapore
Singapore
Singapore , officially the Republic of Singapore, is a Southeast Asian city-state off the southern tip of the Malay Peninsula, north of the equator. An island country made up of 63 islands, it is separated from Malaysia by the Straits of Johor to its north and from Indonesia's Riau Islands by the...
. The Kuala Lumpur
Kuala Lumpur
Kuala Lumpur is the capital and the second largest city in Malaysia by population. The city proper, making up an area of , has a population of 1.4 million as of 2010. Greater Kuala Lumpur, also known as the Klang Valley, is an urban agglomeration of 7.2 million...
Stock Exchange which was incorporated on December 14, 1976 as a company limited by guarantee, took over the operations of the Kuala Lumpur Stock Exchange Berhad in the same year.
On April 14, 2004, Kuala Lumpur Stock Exchange was renamed Bursa Malaysia Berhad, following the demutualization exercise, the purpose of which was to enhance competitive position and to respond to global trends in the exchange sector by making themselves more customer-driven and market-oriented. It consisted of a Main Board, a Second Board and MESDAQ
MESDAQ
MESDAQ was launched on 6 October 1997 as a separate securities market, mostly for listing technology-based companies. It is part of Bursa Malaysia...
with total market capitalisation of MYR
Myr
The symbol myr was formerly used in English-language geology, and remains as the standard usage in astronomy, as a unit of one million years.It is an abbreviation for 'million years' and lower case is used in geology, while upper case is used in astronomy....
700 billion (US$189 billion).
Bursa Malaysia has since then focused on various initiatives aimed at improving its product and service offerings, increasing the liquidity and velocity of its markets, improving the efficiency of its businesses and achieving economies of scale in its operations.
On 18 March 2005, Bursa Malaysia was listed on the Main Board of Bursa Malaysia Securities Berhad with a 17% or RM0.50 premium over its retail price of RM3.00.
Source: Bursa Malaysia's History Page - Data updated as at 9 March 2010 --> Bursa Malaysia's History
Structure
The wholly owned subsidiaries of Bursa Malaysia own and operate the various businesses, as set out below:-- Bursa Malaysia Securities Bhd - Provide, operate and maintain securities exchange
- Bursa Malaysia Derivatives Bhd - Provide, operate and maintain a futures and options exchange
- Labuan International Financial Exchange Inc. - Provide, operate and maintain offshore financial exchange
- Bursa Malaysia Bonds Sdn Bhd - Provide, operate and maintain registered electronic facility for secondary bond market
- Bursa Malaysia Securities Clearing Sdn Bhd - Provide, operate and maintain a clearing house for the securities exchange
- Bursa Malaysia Derivatives Clearing Bhd - Provide, operate and maintain a clearing house for the futures and options exchange
- Bursa Malaysia Depository Sdn Bhd - Provide, operate and maintain a central depository
- Bursa Malaysia Depository Nominees Sdn Bhd - Act as a nominee for the central depository and receive securities on deposit for safe-custody or management
- Bursa Malaysia Information Sdn Bhd - Provide and disseminate prices and other information relating to securities quoted on exchanges within the group
- Bursa Malaysia Islamic Services Sdn Bhd - Operate all Islamic Markets businesses and activities initiated under Bursa Malaysia
Trading Hours
Monday - Friday (except public holidays)- Pre-Open - 8.30 am - 9.00 am
- Continuous Trading - 9.00 am - 12.30 pm
- Midday Break - 12.30 pm - 2.30 pm
- Pre-Open - 2.00 pm - 2.30 pm
- Continuous Trading - 2.30 pm - 4.45 pm
- Pre-Close - 4.45 pm - 4.50 pm
- Trading At Last - 4.50 pm
- Close - 5.00 pm
Offerings & Products
Bursa Malaysia also has a range of progressive products and services which covers equities, derivatives, offshore listings and services, bonds and Islamic offerings:| Securities Market | Derivatives Market | Islamic Offerings | Others |
|---|---|---|---|
Two Markets:
Market capitalisation as at 31 December 2009: MYR Myr The symbol myr was formerly used in English-language geology, and remains as the standard usage in astronomy, as a unit of one million years.It is an abbreviation for 'million years' and lower case is used in geology, while upper case is used in astronomy.... 999 billion / USD299 billion Products:
|
Ten Derivatives Products:
|
Sukuk Sukuk is the Arabic name for financial certificates, but commonly refers to the Islamic equivalent of bonds. Since fixed income, interest bearing bonds are not permissible in Islam, Sukuk securities are structured to comply with the Islamic law and its investment principles, which prohibits the... |
Bond Market - Electronic trading platform for:
Offshore Market
Closed-end funds
|
Source: Bursa Malaysia Annual Report 2009 - Data updated as at 31 December 2009--->Bursa Malaysia's Annual Report 2009
Events
On 18 April 2005, Bursa Malaysia introduced CBRS, a scheme which allows all investors to access research reports of Bursa-listed companies free-of-charge.In June 2006, a new index series jointly developed by Bursa Malaysia and FTSE Group
FTSE Group
FTSE Group is a world-leader in the provision of global index and analytical solutions. FTSE calculates indices across a wide range of asset classes, on both a standard and custom basis...
was introduced which is FTSE Bursa Malaysia Index
FTSE Bursa Malaysia Index
The FTSE Bursa Malaysia Index is a comprehensive range of real-time indices, which cover all eligible companies listed on the Bursa Malaysia Main Board which was introduced to Bursa Malaysia's investors on 2006....
. On November 7, 2006, the index finally passed the 1,000 mark hurdle and closed at 1,003.28. It was partly boosted by the strong overnight close in the Wall Street
Wall Street
Wall Street refers to the financial district of New York City, named after and centered on the eight-block-long street running from Broadway to South Street on the East River in Lower Manhattan. Over time, the term has become a metonym for the financial markets of the United States as a whole, or...
.
On March 10, 2008, trading on the exchange was suspended for one hour due to composite index fall by more than 10 percent or 130 points to 1166.32 points. This was largely by combination of factors such as the United States
United States
The United States of America is a federal constitutional republic comprising fifty states and a federal district...
Subprime mortgage crisis
Subprime mortgage crisis
The U.S. subprime mortgage crisis was one of the first indicators of the late-2000s financial crisis, characterized by a rise in subprime mortgage delinquencies and foreclosures, and the resulting decline of securities backed by said mortgages....
and the political uncertainty caused by the 12th General Election
Malaysian general election, 2008
The 12th Malaysian general election was held on March 8, 2008, in accordance with Malaysian laws for national elections, which states that a general election must be held no later than five years subsequent to the previous elections; the previous general election was held in 2004...
. Dealers expected the move was an overreaction to the election results and the market will correct itself. The index gained 2.1% the next day on the morning session as investor reinvest in plantation stocks and blue chips.
On July 3, 2008, trading on the exchange was suspended for the day when it suffered multiple hardware glitches. The glitches only affected the equities market, not the bonds and commodity market. Trading resumed the next day.
Latest Events
Summary of Bursa Malaysia's 2009 Initiatives/ Events Highlights:Improved Accessibility
- Launch of DMA for the securities market
- Introduction of SBL-Negotiated trades
- Introduction of Market Making for Structured Warrants and Exchange Traded Funds
Enhanced Efficiency
- New fund raising framework and board structure
- Restructuring of minimum tick size
- Shortening of trading halt
Developed New Products and Services
- Launch of FTSE Bursa Malaysia Palm Oil Plantation Index Series
- Listing of foreign IPOs
- Listing of sukuk and bonds
Internationalised Markets
- KLCI enhancement to FBM KLCI
- Strategic partnership with CME
- Launch of Bursa Su Al-Sila'
Source: Bursa Malaysia Annual Report 2009 - Data updated as at 31 December 2009--->Bursa Malaysia's Annual Report 2009
Largest Stocks by Market Value
Source: Information Services, Bursa Malaysia - in billions of RM, Data updated as at 6 January 2011- CIMB Group Holdings BerhadCIMBCIMB Group CIMB Group is a regional universal bank operating in high growth economies in ASEAN. CIMB Group has the widest retail branch network across the region and is an indigenous ASEAN investment bank....
- RM66.59 - Malayan Banking BhdMaybankMaybank , a trade name for Malayan Banking Berhad is the largest bank and financial group in Malaysia, with significant banking operations in Singapore, Indonesia and the Philippines. The bank also has large interests in Islamic banking through Maybank Islamic Berhad and insurance via its Etiqa...
- RM65.97 - Sime Darby BerhadSime DarbySime Darby is Malaysia's leading multinational conglomerate involved in five core sectors: plantations, property, industrial, motors and energy & utilities, with a growing presence in healthcare...
- RM56.49 - Petronas Chemical Bhd, a subsidiary of PetronasPetronasPETRONAS, short for Petroliam Nasional Berhad, is a Malaysian oil and gas company that was founded on August 17, 1974. Wholly owned by the Government of Malaysia, the corporation is vested with the entire oil and gas resources in Malaysia and is entrusted with the responsibility of developing and...
- RM47.36 - Genting GroupGenting GroupGenting Group is an Asian conglomerate. It comprises four listed entities Genting Group is an Asian conglomerate. It comprises four listed entities Genting Group is an Asian conglomerate. It comprises four listed entities (namely holding company Genting Berhad (MYX:3182) and its member companies...
- RM41.96 - Axiata Group BerhadAxiata Group BerhadAxiata Group Berhad , DBA Axiata , is one of the leading telecommunication companies in Asia.- The Group :...
- RM40.88 - IOI Corporation BhdIOI GroupIOI Corporation Berhad commonly referred to as IOI, was incorporated on 31 October 1969 as Industrial Oxygen Incorporated Sdn Bhd. IOI is one of Malaysia's biggest conglomerates that started off from industrial gas manufacturing. It ventured into property development in 1982, followed by oil palm...
- RM40.34 - Maxis Berhad - RM40.20
- MISC Bhd - RM37.59
- Tenaga Nasional BhdTenaga NasionalTenaga Nasional Berhad is the largest Electric utility company in Malaysia and also the largest power company in Southeast Asia with MYR 69.8 billion worth of assets. It serves over seven million customers throughout Peninsular Malaysia and also the eastern state of Sabah through Sabah Electricity...
- RM35.98 - Public Bank BhdPublic BankPublic Bank Berhad is a bank based in Malaysia. Public Bank is currently the biggest domestic bank in Malaysia by shareholders' funds. It focuses on retail customers and small to medium sized enterprises. The bank was founded in 1966 by Teh Hong Piow, the then general manager of Malayan Banking...
- RM33.28 - Kuala Lumpur Kepong BhdKuala Lumpur KepongKuala Lumpur Kepong Bhd. is a Malaysian multi-national company. The core business of the group is plantation . The company has plantations that cover more than 250,000 hectares in Malaysia and Indonesia...
- RM24.15 - PLUS Expressways BerhadPLUS Expressways BerhadThe PLUS Expressways Berhad or Projek Lebuhraya Utara Selatan Berhad is the biggest Highway Concessionaries or Build-Operate-Transfer operator company in Malaysia...
- RM22.95 - Petronas Gas Bhd, a subsidiary of PetronasPetronasPETRONAS, short for Petroliam Nasional Berhad, is a Malaysian oil and gas company that was founded on August 17, 1974. Wholly owned by the Government of Malaysia, the corporation is vested with the entire oil and gas resources in Malaysia and is entrusted with the responsibility of developing and...
- RM22.32 - AMMB Holdings BhdAmBankAMMB Holdings is currently the fifth largest banking group in Malaysia, with more than 200 branches and their outlets , providing individuals and businesses with a range of financial services and products.AmBank Group was founded in 1975 as Arab-Malaysian Development Bank, by Merchant Banking...
- RM21.19 - PPB Group BhdPerlis Plantations BhdPPB Group Berhad is a diversified company which was incorporated in November 1968, and its business beginning with cultivating sugar cane and to extract, process and market sugar...
- RM20.89 - Genting Malaysia berhadResorts World BhdResorts World Bhd started in 1980 in Malaysia. In 1989, Genting Group and Resorts World Bhd underwent a restructuring exercise, which resulted in Resorts World Bhd acquiring from Genting Group of its entire gaming, hotel and resort-related operations inclusive of goodwill and other relevant assets...
- RM20.82 - DIGI.COM Bhd - RM19.44
- RHB Capital BhdRHB BankRHB Bank Berhad is a bank based in Kuala Lumpur, Malaysia. It specializes in commercial banking, corporate and investment banking and international banking services...
- RM18.50 - YTL Power International Bhd - RM17.52
- YTL Corporation Bhd - RM15.97
- Hong Leong Bank BhdHong Leong BankHong Leong Bank is a bank in Malaysia.Hong Leong Bank was founded by Mr LAM Ji Chiew and began its operations in 1905 in Kuching, Sarawak under the name of Kwong Lee Mortgage & Remittance Company. The company granted loans against the security of export commodities such as pepper, rubber and other...
- RM14.77 - British American Tobacco MalaysiaBritish American TobaccoBritish American Tobacco p.l.c. is a global tobacco company headquartered in London, United Kingdom. It is the world’s second largest quoted tobacco company by global market share , with a leading position in more than 50 countries and a presence in more than 180 countries...
- RM13.27 - Telekom Malaysia BhdTelekom MalaysiaTelekom Malaysia Berhad , DBA TM, is the largest integrated solutions provider in Malaysia, and one of Asia's leading communications companies, with a market capitalisation of RM13.9 billion and a workforce of 26,629 employees. Established as the Telecommunications Department of Malaya in 1946, it...
- RM12.74 - Petronas Dagangan Bhd - RM11.92
- UEM LandUEM GroupUnited Engineers Malaysia Berhad or UEM Group is a Malaysian company of Engineering and Constructions, Township and Property Development, Expressways and Asset Facilities Management....
- RM10.56 - Nestle (Malaysia) BerhadNestléNestlé S.A. is the world's largest food and nutrition company. Founded and headquartered in Vevey, Switzerland, Nestlé originated in a 1905 merger of the Anglo-Swiss Milk Company, established in 1867 by brothers George Page and Charles Page, and Farine Lactée Henri Nestlé, founded in 1866 by Henri...
- RM10.34 - Hong Leong Financial Group BhdHong Leong BankHong Leong Bank is a bank in Malaysia.Hong Leong Bank was founded by Mr LAM Ji Chiew and began its operations in 1905 in Kuching, Sarawak under the name of Kwong Lee Mortgage & Remittance Company. The company granted loans against the security of export commodities such as pepper, rubber and other...
- RM9.56 - Malaysian Marine Heavy Engineering Bhd, a subsidiary of PetronasPetronasPETRONAS, short for Petroliam Nasional Berhad, is a Malaysian oil and gas company that was founded on August 17, 1974. Wholly owned by the Government of Malaysia, the corporation is vested with the entire oil and gas resources in Malaysia and is entrusted with the responsibility of developing and...
- RM9.52 - MMC Corporation BerhadMMC Corporation BerhadMMC is an investment holding company with interests in "Transport & Logistics, Energy & Utilities and Engineering & Construction".In Transport and Logistics, MMC holds equity stakes in the Port of Tanjung Pelepas , and In Energy and Utilities, MMC holds equity stakes in MMC is an investment...
- RM8.89
Palm oil futures
Bursa Malaysia is the world's biggest palm oil futures trading hub since 1980. The FCPO, the global price benchmark for the crude palm oil market, is a deliverable contract which is traded electronically on Bursa Malaysia’s trading platform.Crude palm kernel futures and crude palm oil futures
Futures contract
In finance, a futures contract is a standardized contract between two parties to exchange a specified asset of standardized quantity and quality for a price agreed today with delivery occurring at a specified future date, the delivery date. The contracts are traded on a futures exchange...
are primarily traded on Bursa Malaysia in Malaysian Ringgit
Malaysian ringgit
The Malaysian ringgit is the currency of Malaysia. It is divided into 100 sen...
(MYR) and US dollar denominated contracts. Their codenames are FPKO, FCPO and FUPO, respectively.
Below is a non-exhaustive list of commodities exchange
Commodities exchange
A commodities exchange is an exchange where various commodities and derivatives products are traded. Most commodity markets across the world trade in agricultural products and other raw materials and contracts based on them...
s around the world where palm oil futures is traded with different contract specifications:
- MDEX: Bursa Malaysia Derivatives Exchange
- DC: Dalian Commodity Exchange
- NCDEX: India's National Commodity and Derivatives Exchange
In August 2009, Bursa Malaysia launched Bursa Suq Al-Sila', the world's first Internet commodities trading platform with crude palm oil (CPO) as its underlying asset that is syariah-compliant. Bursa Suq Al-Sila', formerly known as Commodity Murabaha House, facilitates commodity-based Islamic financing and investment transactions under the Syariah principles of Murabahah, Tawarruq and Musaw-wamah. Under the Bursa Suq Al-Sila concept, the bank buys a commodity from a supplier such as a CPO producer at a principal amount, and sells it to a customer at a profit. The customer then sells back the commodity to the spot market for cash. This initiative is spearheaded by the Malaysia International Islamic Finance Centre.
Among the plantation signatories are Boustead Estate Agency Bhd, Genting Plantations Bhd, IOI Corp Bhd and Sime Darby
Sime Darby
Sime Darby is Malaysia's leading multinational conglomerate involved in five core sectors: plantations, property, industrial, motors and energy & utilities, with a growing presence in healthcare...
Bhd. The financial institutions include Gulf Cooperation Council (GCC) banks Al Rajhi Banking & Investment Corp (M) Bhd, Asian Finance Bank Bhd, Kuwait Finance House (M) Bhd and Unicorn International Islamic Bank Malaysia Bhd. Bursa Malaysia chief executive officer Datuk Yusli Mohamed Yusoff said “This venture brings two of the nation’s main global players; namely the Islamic banks and palm oil
Palm oil
Palm oil, coconut oil and palm kernel oil are edible plant oils derived from the fruits of palm trees. Palm oil is extracted from the pulp of the fruit of the oil palm Elaeis guineensis; palm kernel oil is derived from the kernel of the oil palm and coconut oil is derived from the kernel of the...
producers together, to further enhance Malaysia's palm oil futures' visibility on the world stage.”
Bursa Malaysia and CME Group
CME Group
The CME Group bases prices for US gasoline on Brent Crude rather than West Texas Intermediate Crude , which many believe is responsible for artificially high gas prices for US consumers...
, in 2009, announced plans for crude palm oil futures to be electronically traded on the CME Globex. CME Group will develop a US dollar-denominated, cash-settled contract using Bursa Malaysia settlements as its reference, at its Globex electronic platform in Chicago. CME Group will buy a 25% stake in Bursa Malaysia Derivatives for RM55.6 million to be satisfied in RM1.9 million cash and 76,427 shares of CME Group. To facilitate the proposed equity participation, Bursa will consolidate all its derivatives businesses into Bursa Malaysia Derivatives and its subsidiaries. Under the corporate exercise, Bursa Malaysia Derivatives will acquire the entire issued and paid-up share capital of Bursa Malaysia Derivatives Clearing Bhd from Bursa for a cash consideration of RM37.1 million.
Operating round the clock, the CME Globex trading system is at the heart of CME. Proposed in 1987, it was introduced in 1992 as the first global electronic trading platform for futures contracts. This fully electronic trading system allows market participants to trade from booths at the exchange or while sitting in a home or office thousands of miles away. When Globex was first launched, it used Reuters' technology and network. September 1998 saw the launch of the second generation of Globex using a modified version of the NSC trading system, developed by Paris Bourse for the MATIF (now Euronext). To connect to CME Globex, traders connect via Market Data Protocol (MDP) and iLink 2.0 for order routing.
Jakarta Futures Exchange launched trading of physical crude palm oil (CPO) contracts in June 2009. Indonesia’s Deputy Minister of Agriculture and Fisheries at the Coordinating Ministry for the Economy, Bayu Krisnamurthi, had emphasised that a physical market must be established before futures trading can begin.
In October 2009, Indonesia plans to facilitate trading of crude palm oil and other raw materials on the Indonesia Commodity & Derivatives Exchange (ICDX). In spite of being the world’s largest producer, Indonesia has been unable to set a palm oil benchmark price, with trading centred in neighbouring Bursa Malaysia in Kuala Lumpur.
The Jakarta Futures Exchange, which was launched in 2000, started by offering crude palm oil and coffee futures but trading was “dormant” as operators have preferred to trade the palm oil contracts in Malaysia and coffee futures in London and New York, according to Edi Susmadi, a director of JFX. He attributed the failure to competition from Bursa Malaysia, and the low tech trading system. Max Ramajaya at Wilmar International, the world’s largest processor of palm oil, said: “When you trade on MDEX [Bursa Malaysia] you have better access to information about the market and more insight.
Back in June 2007, Singapore launched the Joint Asian Derivatives Exchange’s (JADE) US dollar-denominated CPO futures contract. JADE was a joint venture between the Chicago Board of Trade (now CME Group) and the Singapore Exchange (SGX). The aim was to provide a fair and transparent platform for price discovery in CPO and allow traders to buy JADE CPO futures and CBOT soyabean oil futures concurrently to manage their edible oils price risk.
However, the JADE CPO futures failed to sustain. CME Group, which acquired CBOT and inherited its investment in JADE, sold its 50% stake to SGX in late 2007. According to reports, both the rubber and CPO futures offered by JADE have failed to attract volumes. JADE merged with the Singapore Commodity Exchange in 2008.
See also
- Economy of MalaysiaEconomy of MalaysiaThe Economy of Malaysia is a growing and relatively open state-oriented and newly industrialised market economy. The state plays a significant but declining role in guiding economic activity through macroeconomic plans...
- List of East Asian stock exchanges
- List of South Asian stock exchanges
- List of stock exchanges