KUALA LUMPUR: Maybank Investment Bank Bhd (Maybank IB) has issued four new structured warrants linked to crude palm oil futures (FCPO) traded on Bursa Malaysia Derivatives.
The warrants are available for trading starting today, positioning Maybank IB as one of the first issuers of this financial instrument referencing a commodity, it said in a statement today.
On Jan 2, 2024, Bursa Malaysia officially classified commodity futures contracts as 'securities' under Chapter 5 of the Main Market Listing Requirements. This reclassification allows futures contracts for commodities such as CPO, crude oil, and gold to be the underlying asset for warrants.
Chief executive officer Michael Oh-Lau highlighted that the commodity futures structured warrants introduction offers diversification and options for investors, enabling them to broaden their exposure beyond traditional equity investments.
"We are excited to be among the first issuers of structured warrants over FCPO, marking a significant development in the Malaysian capital market," he said.
According to Maybank IB, the availability of FCPO structured warrants allows investors to gain exposure to CPO price movements through a local share trading account.
Structured warrants are leveraged financial instruments that come with no margin call, thereby capping losses at the initial capital, it said.
To support investors further, Maybank IB provides a Live Matrix tool on its warrants website, which helps users assess indicative bid/ask prices at different FCPO price levels. This tool enhances transparency and aids in risk management for entry and exit points.
FCPO contracts on Bursa Malaysia Derivatives (BMD) are denominated in ringgit and have served as a global price benchmark for the crude palm oil market since October 1980.
Over the past four decades, FCPO has been actively utilised by participants in the edible oils and fats industry for risk management, as well as by fund managers and financial institutions to navigate market price fluctuations.
In October 2024, the monthly trading volume on Bursa Malaysia Derivatives reached an all-time high of 2.34 million contracts, surpassing the previous record of 2.13 million contracts set in March 2020.
The increase was driven by FCPO's monthly trading volume of 2.03 million contracts, exceeding its prior record of 1.71 million contracts in June 2021. For more information, visit warrants.maybank2u.com.my. - Bernama
