KUALA LUMPUR: Bursa Malaysia Derivatives Bhd will launch its first currency futures contract, the Mini USD/CNH Futures (FCNH), through a licensing agreement established with Hong Kong Exchanges and Clearing (HKEX) on Dec 11.
It said FCNH will be the country’s inaugural exchange-traded currency futures contract, complementing existing currency markets operated by Malaysian financial institutions.
In a statement, Bursa Malaysia Derivatives said that by introducing the new asset class, traders will be presented with enhanced trading opportunities and arbitrage possibilities across the derivatives markets of Hong Kong and Malaysia.
"Designed as a smaller-sized, cash-settled contract, FCNH offers investors a capital-efficient way to achieve renminbi (RMB) currency hedging over their investment holdings since it does not require investors to exchange the initial sum invested.
"This will be very useful for participants, such as small to medium enterprises (SMEs) and business owners with transactions in China, to hedge their risks on fluctuations in the US dollar and offshore Chinese RMB currencies,” it said.
It said the plan to launch FCNH is also strategic and in line with the recent signing of a licensing agreement with Dalian Commodity Exchange (DCE) on the soybean oil futures settlement price for the Bursa Malaysia DCE Soybean Oil Futures Contract (FSOY), a new product to be listed on Bursa Malaysia Derivatives in 2024.
Bursa Malaysia Bhd chief executive officer and Bursa Malaysia Derivatives chairman Datuk Muhamad Umar Swift said the launch of FCNH is timely given the current volatility in global markets, which has led to increasing demand among market participants and businesses to manage their foreign currency exchange exposure.
"Our licensing agreement with HKEX for FCNH and product collaboration with DCE are testaments to Bursa Malaysia Derivatives’ commitment to forging strategic alliances and deepening global market connections.
"We are optimistic that these efforts will enable market participants to effectively navigate the complexities of international markets and adeptly manage cross-market risks,” he said.
HKEX group head of Emerging Business & FIC, Glenda So, said that at HKEX, building a suite of RMB-related investment and risk management products forms a key part of its strategy.
"We are keen to support our partners with the development of a broader RMB and fixed-income product ecosystem in the region and beyond, connecting capital with opportunities,” she said.
To learn more about trading opportunities with FCNH, the public is invited to log onto the live stream of the FCNH launch on Bursa Malaysia’s Facebook page on Dec 11, at 9.00 am.
The event will include presentations and a panel discussion on ‘Navigating the Path to Diversification in Currency Trading: Challenges, Opportunities, and the Evolving Role of RMB’. - Bernama