MALAYSIAN Derivatives Exchange Bhd (MDEX) will look into the possibility of introducing three-year Malaysian Government Securities (FMG3) futures and long-term 10-year FMG10 based on the success of the country's first bond futures contract, the five-year FMG5.
“Based on our meeting with financial market participants today, the success of the medium term bond futures launched in March last year has encouraged us to look into the short term FMG3 and the long term FMG10 as new risk management tools,” MDEX chief operating officer Dr Zaha Rina Zahari said.
According to Zaha, the average daily volume for FMG5 in the first year of launch has reached the MDEX target of 500 lots, which is considered a “reasonable success.''
“What is more heartening is the open interest is consistently above 5,000 lots - a benchmark used by institutions to trade derivative products,” she said.
Zaha told reporters this after announcing the forthcoming MDEX Annual Palm & Lauric Oils Conference & Exhibition: Price Outlook 2003-2004 in Kuala Lumpur yesterday. The conference will be held from March 17 to 19.
Open interest in FMG5 touched a high of 10,500 lots on Nov 29 last year. The highest daily volume of 2,245 lots was reached on Jan 24 this year.
The FMG5 is a cash-settled futures contract to buy or sell five-year MGS at a future date. The MGS are medium to long-term borrowings by the government for financing long-term development projects and are generally considered gilt-edged securities is-sued via auction and subscription with interest payable semi-annually.
“We will be talking to market players and liasing with Bank Negara to look at the various baskets which qualify for the FMG3 and FMG5,” Zaha said.
Earlier, she said the annual conference was expected to attract a record 1,200 participants, both locally and abroad.
“It is going to be an exciting conference as prominent speakers will be addressing important issues on palm oil as well as other global oils and fats,” Zaha said.
According to Zaha, the Price Out-look 2003-2004 theme is also “timely” as both market players and producers would be able to obtain comprehensive insight on the prospect of the various commodities.
Among the topics to be discussed are Sustainable palm oil production in Malaysia and the price outlook for 2003-2004 presented by United Plantations Bhd vice-chairman Carl Bek-Nielsen, The market outlook for oils & fats in China by China Food and Agricultural Services chairman Mi-chael Goetti and Impact of India's drought on palm oil price outlook 2003 by Gordrej International Ltd director Dorab Mistry.