Bursa Malaysia Bhd said today its wholly-owned subsidiary Bursa Malaysia Derivatives Bhd (BMD) will launch the revamped Crude Palm Kernel Oil Futures (FPKO) Contract and implement enhancements to contract specifications to meet evolving industry needs.
The revamped FPKO Contract will be available to traders on March 8, 2021 according to Bursa's statement.
"The palm kernel physical market has seen considerable growth over the years and has established itself as one of the region's most important commodities. In addition, the FPKO Contract will serve as a tool for the lauric oil industry players to hedge their portfolio risk and enable transparent price discovery for the palm complex market players.
"The new enhancements aim to create an effective hedging instrument against the physical market and provide an alternative instrument for local and international participants to trade. Improvements to the contract have been applied across five main areas. They include contract grade, delivery points, daily price limits, speculative position limits as well as imposing traceability document requirements," Bursa said.
BMD chief executive officer Samuel Ho said in the statement that the revised FPKO Contract will cater to industry players' demand to hedge against the risk of adverse price movements in the lauric oil market.
Ho said the revamped FPKO Contract could also provide new trading opportunities for other market participants and add diversity to their existing instruments.
"After multiple industry consultations, necessary enhancement was made to provide a better contract based on the industry's needs and create a positive impact on the development of the Crude Palm Oil Kernel Oil (CPKO) market.
"We remain committed to engaging with key market stakeholders to develop more vibrant and attractive markets for our customers all around the world. The revamp will further strengthen BMD's palm complex offerings and enhance the 'stickiness' of traders and hedgers to our marketplace," Ho said.