KUALA LUMPUR: The influx of foreigners buying into the cash market, which currently stood at about RM7bil, is expected to have a positive spillover on the derivative market.
Bursa Malaysia Derivatives Bhd chief executive officer Jamaluddin Nor Mohamad said more activities were expected to take place in the derivative market as investors used the platform to hedge their exposure in the equity market.
“We feel that usage of derivatives product is getting wider as more people are becoming aware of the real benefit of futures and option, especially from hedging and risk management.
“So, these are factors that will further support our activity,” he told reporters on the sidelines of a briefing for the Association of Financial Advisers in Kuala Lumpur on Tuesday.
He said the trading of crude palm oil (CPO) futures, the global benchmark for CPO price, was expected to continue to lead the activity in the derivative market with increasing interest in other products, including KLCI futures and gold futures.
Jamaluddin said besides being a hedging tool, the derivative market was also used by foreign investors as a platform to familiarise themselves with the Malaysian securities market.
“Quite a number of participants tend to use derivatives product as a way to first position themselves before investing into the cash market.
“By positioning themselves on the derivative market, it will give them a bit more time in terms of finding the right securities that they want to invest in the cash market,” he added.
Going forward, he said Bursa Malaysia Derivatives aimed to further educate investors on the benefits of derivatives.
“Be it for trading purpose or as hedging and risk management tool, we ensure that we manage the volatility of the operation.
“So at least, we can stabilise the operational income and manage the cost more effectively,” he added. - Bernama
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