FCPO market set to be more vibrant

KUALA LUMPUR: Traders in the US can now directly access Bursa Malaysia via the CME GLOBEX® to buy and sell the increasingly influential contract called the crude palm oil futures.

Yesterday, the US Commodity Futures Trading Commission (CFTC) had granted registration as a Foreign Board of Trade (FBOT) to Bursa Malaysia's unit Bursa Malaysia Derivatives.

In a statement yesterday, Bursa Malaysia said the approval was pursuant to Section 4(b)(1) of the Commodity Exchange Act and Part 48 of the CFTC’s regulations. 

 "This timely move paves way for market opening and added vibrancy through enhanced market access and time-to-market. This will further boost trading and liquidity in our market," said Bursa Malaysia chief executive officer Datuk Tajuddin Atan.  

"The benefits of Direct Market Access (DMA) will certainly be an incentive to draw US traders especially since Malaysia is the global marketplace for palm oil derivatives and the global benchmark for palm oil namely the Malaysian-ringgit denominated Crude Palm Oil Futures (FCPO),” he added.

Also present at the Washington D.C. meeting were Bursa Malaysia Derivatives senior executive vice president of business development & marketing K. Sree Kumar and the US Commodity Futures Trading Commission chairman Mr. Timothy G. Massad.

BMD provides, operates and maintains a futures and options exchange and clearing house. 

In 2014, BMD charted an impressive growth with total volume traded growing by 17 per cent to above 50,000 contracts compared to the volume in 2013 of 43,490. 

Tajuddin highlighted that last year, the FCPO hit an all time record of 10.1 million contracts. This was a significant 27 per cent growth from 2013's eight million-odd contracts. 

Following the US authority's approval, BMD may now permit identified members and other participants located in the US to enter trades directly into its electronic order entry and trade matching system on CME GLOBEX® to trade BMD products.

CME Group owns 25 per cent of BMD. CME Group chief executive officer Phupinder Gill noted this strategic partnership has paved the way for the internationalisation of BMD through the migration of its products onto the CME GLOBEX® trading platform. 

Securities Commission chairman Datuk Ranjit Ajit Singh noted this milestone development reinforces the strong regulatory collaboration between Malaysia and the US at both the bilateral and global levels.