Malaysian Exchange Launches Options on Crude Palm Oil Futures

Bursa Malaysia Derivatives Berhad has launched Options on Crude Palm Oil futures contract, the first Asian exchange-traded agricultural options contract,

Bursa Malaysia Derivatives Berhad has launched Options on Crude Palm Oil futures contract, the first Asian exchange-traded agricultural options contract, to complement its highly successful Crude Palm Oil Futures contract.

The OCPO, which uses FCPO as its underlying contract, offers another risk management tool for industry participants to better meet their hedging needs. Trading of the options contract commenced on 16 July 2012, with a total of 8 call options contracts traded.

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Malaysian Palm Oil Futures are currently trading at MYR 3053.

Dato’ Tajuddin Atan, Chief Executive Officer of Bursa Malaysia and Chairman of Bursa Malaysia Derivatives said, “By introducing OCPO, we hope to further cement Malaysia’s position as the global premier market for palm oil. As it stands, our FCPO is the global pricing benchmark for crude palm oil. OCPO represents a natural extension to FCPO and its introduction to the market reflects the growing sophistication of the Malaysian derivatives market.

“We hope to attract new market participants such as options traders to our marketplace. We expect trading volume in the underlying FCPO contracts to grow as OCPO users trade both contracts.”

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Through BMD’s partnership with CME Group, OCPO is listed and traded on the CME Globex® electronic trading platform, making it accessible to traders around the world.

The speculative position limits are increased to 10,000 futures equivalent contracts net long or net short for any single month, and 15,000 futures equivalent contracts for all contract months combined. The speculative position limits are combined together with the FCPO contract.

BMD has embarked on a series of awareness and educational programmes to highlight the benefits of OCPO trading and the new opportunities offered to market participants.

Malaysia is a hot destination for Forex brokers as it is home to over 100,000 traders in the worlds most liquid asset class (according to BIS Survey). Investors have been attracted to the high returns available in margin FX. Malaysia’s central bank does not regulate spot FX and recently published disclaimers outlawing Malaysians to invest in FX.

Forex Magnates team wrote a detailed report on the status of FX in Malaysia, available in the current Q2 quarterly reprot.

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