Derivatives instruments as a risk management tool

Bursa Malaysia Derivatives Bhd (BMD) chairman Datuk Muhamad Umar Swift said that market and product awareness needs to be increased to encourage more institutional users to use derivatives instruments as a risk management tool.

WITH the financial market looking uncertain in the near term, analysts see derivatives instruments as useful for investors to manage their risk.

“By hedging with a derivatives contract, market participants can reduce uncertainty on the future price of a commodity, security or financial instrument, ” said CGS-CIMB futures Sdn Bhd head of futures broking David Tan.