KUALA LUMPUR: Bursa Malaysia Bhd is monitoring and has enhanced the global reference crude palm oil futures (FCPO) for vegetable oil traders’ convenience, in view of Singapore launching its third derivatives market.
“We are keeping a close watch on Singapore’s soon-to-be-launch derivatives exchange, Apex,” said Bursa Malaysia Bhd chief executive officer Datuk Seri Tajuddin Atan.
“We know Apex plans to offer palm olein contracts starting May 2018. This poses stiffer competition as well as more trading interests in palm oil,” he said.
Tajuddin said Bursa had raised position limits for the FCPO to allow traders increase their exposures, without the need to seek additional exemptions.
It also revised daily trading hours, giving traders an additional 30 minutes.
“So the palm futures market now operates from 10.30am to 12.30noon and takes a lunch break. It resumes trading at 2.30pm to 6pm,” he said.
He noted the Bursa Malaysia Derivatives Market had also extended FCPO to three years from the previous two years. These additional tradeable contract months now gives more flexibility for traders to hedge their palm oil exposure.
Tajuddin said the government-driven Malaysian Sustainable Palm Oil certification is now incorporated in trading as Bursa now requires sellers to provide traceability documents to facilitate the easier tracking of the origins of crude palm oil up to the palm oil mill.
Tajuddin was speaking to the media today, after Plantation Industries and Commodities Minister Datuk Seri Mah Siew Keong officiated at the 29th Palm and Lauric Oils Price Outlook Conference and Exhibition (POC2018), here.
Last month, Monetary Authority of Singapore approved of Asia Pacific Exchange Pte Ltd (Apex) to operate a derivatives exchange and a clearing house.
Apex is the city-state's third derivatives exchange, after the Singapore Exchange and Intercontinental Exchange (ICE).
Apex aims to start operations in May 2018, starting with its first contract, a US dollar-denominated physically-delivered palm olein futures. Palm olein is a liquid form of palm oil used in cooking and baking.
In the mid-term, Apex intends to offer futures and options contracts covering commodity and financial derivatives products, including agriculture, energy, petrochemical, metal, interest rates and stock indices.
Apex's founder and chief executive officer, Eugene Zhu Yuchen, is one of the pioneering founders of China's futures market. He previously helmed the Dalian Commodity Exchange and the China Financial Futures Exchange.
Zhu’s aspires Apex to be an exchange that will be the Asian centre for price benchmarks to be referenced by global market participants.
In 2016, Zhu relocated his team of 60 people from China to Singapore. He also roped in Lim Hwee Hua, who was formerly a Singapore Minister in the Prime Minister's Office and the Second Minister for Finance and Transport, to chair Apex's board.
Singapore's approval for Apex on February 23, 2018, comes a month after Deutsche Boerse AG, Europe's largest exchange operator, called quits on its ambition for a futures venue in Singapore, citing investors' preference to trade popular instruments like Stoxx futures in its home German market.