Day 1 of Gold Futures Trading a Success at Bursa Malaysia
Malaysia's main stock and derivatives bourse has successfully deployed its new precious metals contract. Modest trading started on the Bursa

Choppy gold prices over the last four years have triggered interest among investors seeking trading opportunities in the yellow metal. Malaysia’s Bursa Malaysia, the main equities and derivatives trading venue has finally launched its benchmark Gold Futures contract on the 7th of October.
The exchange saw traders transact in $3.7 million worth of value with over 900 lots traded. The bourse has set its contract size to 100 grams, thus first day volume reached 90.2kg.
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Malaysia has been a slow entrant to major commodities trading, as the country, one of the largest players in palm oil futures, has been sitting on the sidelines and reviewing the opportunities in other commodity contracts.
Bursa Malaysia Derivatives Bhd, CEO, Chong Kim Seng said in a briefing: “We need to become fully-fledged (exchange operator) and diversified. We are aware of the need for more margin hedging instruments.” The exchange first announced its intention to launch the futures contract in July.
Surge in eFX-trading
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Malaysian investors have been attracted to the retail FX market from 2007 onwards. During this period, a surge in trading activity in Malaysia resulted in hundreds of introducer brokers setting up shop (with overseas brokers) and promoting FX as an alternative investment product. Several investors were lured into the belief of quick and easy money, and one broker who had established a local office, informed Forex Magnates in a telephone interview that they had an estimated 100,000 clients from the Southeast Asian country alone.
Malaysia’s central bank, Bank Negara, the main body that regulates foreign exchange, responded to the spike in activity and issued notifications to users about the legal status of spot FX trading, stating that it’s illegal.
Opportunities
The new gold contract is a positive step in Kuala Lumpar’s aim to become a financial hub and compete with neighbouring Singapore. Furthermore, with mini contracts available, both retail and institutional investors can reap the benefits from a speculative and hedging trading approach.
In addition, with the ringgit still under strict capital controls, arbitrage traders could create new liquidity in dollar ringgit, as they trade Comex gold with Bursa Malaysia’s gold and look to hedge their dollar exposure. Forex Magnates expects the exchange to launch domestic currency futures on the back of strong volumes in metals trading.
“In addition, with the ringgit still under strict capital controls, arbitrage traders could create new liquidity in dollar ringgit, as they trade Comex gold with Bursa Malaysia’s gold and look to hedge their dollar exposure.”
Would appreciate it if you could provide more explanation on this, maybe to provide with an example on how the arbitrage trader will benefit from gold price differences in USD (Comex) and ringgit (Bursa).
Hi Kin, Im not a trader however i will give a brief overview
Comex contract in Dollar
Bursa in Rinngit
if a trader trades the two contracts because the COMEX contract is the base contract then they will have some exposure in local rinngit, therefore they can cover or hedge their positions with the USD MYR contract
Hi Kin
This could create a triangular arbitrage opportunity. Use the following example.
USD/MYR = 3.2 (or X)
XAU/MYR = 4,162.24 (or Y)
XAU/USD = 1,300.70 (or Z)
Y/Z should =X. If that is ever not the case, there is a potential arb opportunity (factoring in spread of course). When the rates do get misaligned, there will be corrections eventually because the markets are efficient.