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Bursa Malaysia Derivatives records all-time high of 2.3m contracts in October

KUALA LUMPUR: Bursa Malaysia Derivatives Bhd recorded an all-time high of 2.34 million contracts traded in October this year, thanks to the Bursa Malaysia Crude Palm Oil Futures (FCPO) rally.

The volume is 10 per cent higher than the previous recordof 2.13 million contracts traded in March 2020.

In a statement today, the exchange said the achievement is a testament to the effectiveness of its continuous efforts to improve its market depth and liquidity.

For the first time in history of the exchange, the monthly average daily contracts (ADC), also breached the 100,000 contracts threshold, with 106,385 contracts traded in October 2024. 

This is a rise of eight per cent from the previous record of 98,421 contracts, traded in September 2024.

According to the exchange, the notable increase in the exchange's trading volume in October was primarily fuelled by the exceptional performance of FCPO.

A total of 2.03 million contracts were traded in October, surpassing the previous record of 1.71 million contracts in June 2021, by 19 per cent.

It said the surge in FCPO trading volume was mainly driven by the rally in the FCPO third month contract price, which rose to a two-year high at RM4,879 in Oct, a substantial increase from a low of RM3,194 in May 2023. Meanwhile, the exchange also said that the FTSE Bursa Malaysia KLCI Futures (FKLI) market has also shown vibrant activity in recent months. 

The FKLI, which tracks the performance of the underlying KLCI Index, has been experiencing significant movements, reflecting broader economic conditions and market sentiment.

As at Nov 1, 2024, the FKLI was trading at 1603.98 points, with notable fluctuations driven by global market trends and local economic policies.

Commenting on the new records, Bursa Malaysia Derivatives director Mohd Saleem Kader Bakas said the dynamic trading environment highlights the importance of the exchange in providing a robust marketplace for price discovery and risk management across FCPO and FKLI.

He said this is contributing to the overall stability and growth of Malaysia's commodities and financial markets.

Saleem also added the extension of trading hours has proven effective in encouraging greater participation in our markets from international traders.

"This enables swift reactions to market-moving news during the United States and European Union market hours, which has been particularly beneficial for trading the notably volatile FCPO market in recent times," he noted.

According to the exchange, one of the pivotal strategies adopted by the exchange to improve its market depth and liquidity in recent years has been the introduction of after-hours (T+1) trading session (after-hours trading). 

Since its implementation in 2021, after-hours trading has grown significantly, with 1,961,723 contracts traded by October 2024—up 57 per cent from 1,250,427 contracts during the same period in 2023.

Bursa Malaysia Derivatives said it is committed to continually enhance its product offerings to meet the evolving needs of investors and hedgers. 

Recognising the growing demand for biofuel feedstock driven by global sustainability initiatives and biodiesel mandates, the exchange is looking to introduce a used cooking oil futures contract, subject to regulatory approvals. 

The proposed introduction of this contract leverages Bursa Malaysia Derivatives' strength as a global trading hub for edible oils, facilitating market participants with a new avenue for sustainable derivatives trading.

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