Bursa Malaysia Derivatives to revamp palm kernel oil futures contract

Oil palm seeds. Photo: Bernama

KUALA LUMPUR: Bursa Malaysia Derivatives Bhd (BMD) is undertaking a revamp of the new crude palm kernel oil futures (FPKO) contract which will be applied across five areas of enhancements, chief executive officer Samuel Ho said.

The five areas are contract grade, traceability document requirements, delivery points, daily price limits, and speculative position limits.

“The revamp of the FPKO contract will be important for two reasons; firstly it will meet the market needs of an effective instrument to hedge against the fluctuation in prices of crude palm kernel oil, and secondly, provide an alternative instrument that can be utilised by local and international participants to trade,” he said on the second day of the Palm and Lauric Oils Price Outlook Conference & Exhibition (POC) 2020.

Hosted by BMD, this year’s POC convened entirely online.

Ho said that market development initiatives are ongoing to enhance the attractiveness of the exchange’s derivatives ecosystem, as well as promote and encourage the use of derivative products as an effective risk management instrument.

BMD is also continuously carrying out engagements with the industry to gather feedback to facilitate the implementation of new products, services and facilities which meet the market’s needs.

“We are currently looking into a new East Malaysia CPO futures contract. The East Malaysia CPO futures contract will be an almost identical contract as the current crude palm oil futures (FCPO) except for the delivery points which will be located in Sabah and Sarawak.

“We are also offering our current two for one incentive. We are offering a waiver of exchange and clearing fees for one FCPO contract traded for every two lots of US dollar crude palm oil futures; refined, bleached and deodorised (RBD) palm olein futures (FPOL); and RBD palm olein options (OPOL) traded in any combination.

“This incentive is valid from now until July 31, 2021,” he said. – Bernama