Bursa Malaysia Derivatives Berhad (BMD)
| Bursa Malaysia | |
| |
| Founded | 1973 |
|---|---|
| Headquarters | Kuala Lumpur, Malaysia |
| Key People | Amirsham A. Aziz, Chairman; Umar Swift, CEO; K. Sree Kumar, Acting CEO, Derivatives |
| Products | Cash equities, bond futures, equity index futures and options, single-stock futures and palm oil futures |
| Website | www.bursamalaysia.com |
Bursa Malaysia operates the Kuala Lumpur Stock Exchange (KLSE), and is an integrated electronic exchange offering trading, clearing and settlement of cash equities and derivatives, including Palm Oil Futures. The company demutualized in 2004 and listed on its own main board in 2005.
Bursa Malaysia was ranked as the world's 36th-largest derivatives exchange by volume in 2018 with 13.7 million contracts traded, down 2 percent from a year earlier, according to the annual volume survey published by the Futures Industry Association (FIA).[1][2]
History and Ownership[edit]
Bursa Malaysia was created in its current form in 1973 when the end of currency interchangeability between Malaysia and Singapore saw the separation of the Stock Exchange of Malaysia and Singapore into the KLSE and the Stock Exchange of Singapore, which later became Singapore Exchange Limited (SGX).
Its origins date back to the Singapore Stockbrokers' Association, established in 1930, and re-registered as the Malayan Stockbrokers' Association in 1937. The Malayan Stock Exchange was established in 1960, with trading floors in Singapore and Kuala Lumpur linked by telephone.
The Stock Exchange of Malaysia was created in 1964, changing its name to the Stock Exchange of Malaysia and Singapore in 1965 when Singapore seceded from its neighbor, and then to the KLSE in 1973.
The KLSE became a limited company on Dec. 14, 1976 and changed its name to Bursa Malaysia Berhad following demutualization on Apr. 14, 2004, listing on its own main board on March 18, 2005.[3]
Government entities retain 38 percent of the company, with the Capital Markets Development Fund owning 19.3 percent and the Finance Ministry a further 14.5 percent. The exchange said in December 2007 that it was in preliminary talks with the Chicago Mercantile Exchange about an alliance. [4]
Structure and Regulation[edit]
The securities exchange unit lists more than 1,000 companies on its main bourse, the second board for mid-caps and the tech-focused Mesdaq market. The securities business accounted for 56 percent of the group’s S$262.1 million operating revenues in calendar 2006, with derivatives business contributing 12.6 percent.
The company restructured at the start of 2008 into five business areas: Business and Market Development, led by Encik Omar Merican, COO; Regulations, led by Selvarany Rasiah, chief regulatory officer; Market Operations, overseen by Devanesan Evanson, chief of market operations; Corporate Services, led by Puan Nadzirah Abdul Rashidin, CFO; and Technology and Systems, headed by Yew Kim, chief technology officer.[5]
In September of 2009, CME Group Inc. and Bursa Malaysia Bhd. formed a minority share swap to promote trading of Malaysian contracts outside of Southeast Asia. Under the agreement, CME Group took a 25 percent stake in Bursa Malaysia Derivatives. The agreement also allows Bursa Malaysia products to be traded on CME's Globex platform. The first product listed was a dollar-denominated version of BMD Crude Palm Oil futures.[6] In September 2010, Bursa Malaysia Derivatives migrated onto CME Globex.[7]
Bursa Malaysia's brokers were approved to do business directly with U.S. investors following a June 2010 ruling by US regulator the CFTC.
In January 2015 the CFTC issued an order of registration to Bursa Malaysia permitting its members or other participants located in the U.S. direct access to its electronic trading system to trade agricultural commodity, interest rate and security index futures and options.[8]
Products Traded[edit]
The company is regulated by the Securities Commission Malaysia. The company also operates an offshore center, the Labuan International Financial Exchange (LFX), created in November 2000.
Futures and options on the Kuala Lumpur Composite Index are the largest part of the derivatives complex, which also includes futures on crude palm oil, crude palm oil kernel, 3,5 and 10-year MGS Futures and three-month KLIBOR futures. Single-stock futures were launched in April 2006 which, like the crude palm oil futures, are Shariah-compliant.
Crude Palm Oil Futures were launched in October 1990, and became a popular product and a benchmark used for global palm oil pricing. [9] Malaysia and its neighbor Indonesia are the two biggest palm oil producers.
In October 2014, the exchange said it would relaunch its government bond and interest rate contracts by the end of the year. A five-year Malaysian government securities future was traded on the exchange previously but was suspended in 2013 because it had not been active for some time.[10]
On December 12, 2022, Bursa Malaysia Derivatives Berhad launched a cash settled FTSE4Good Bursa Malaysia Index Futures (“F4GM”) Contract, its first Environmental, Social and Governance (“ESG”) based futures contract. The FTSE4Good Bursa Malaysia (“F4GBM”) Index is the underlying instrument. The exchange said the contract aims "to meet growing demand from Malaysian investors to include sustainable investment themes in their portfolios." The F4GBM Index measures the performance of more than 80 Malaysian public listed companies from across the small, medium and large market capitalisation segments that demonstrate strong ESG practices.[11]
Key people[edit]
- Amirsham A. Aziz, Chairman
- Umar Swift, CEO[12]
- K. Sree Kumar, Acting CEO, Derivatives
Dr. Md Tap bin Salleh as its new non-executive and public interest director effective April 1, 2010.[13] Tap, currently president of the Malaysian Institute of Integrity, replaces Dato' Abdul Latif bin Abdullah, who had served a full six-year term in the position. Bursa Malaysia has 13 members of its board of directors.
Annual Volumes[edit]
| Year | Total Annual Volume | Percent Change |
| 2018 | 13,726,567 | (-)2% |
| 2017 | 14,015,364 | (-)1.5% |
| 2016 | 14,226,034 | 1.2% |
| 2015 | 14,060,527 | 14.2% |
| 2014 | 12,313,490 | 15.9% |
| 2013 | 10,621,629 | 10.7% |
| 2012 | 9,596,896 | 13.4% |
| 2011 | ~8,460,000 (est.) | 37.5% |
| 2010 | 6,154,745 | 0.3% |
| 2009 | 6,137,827 | -- |
Bursa Malaysia in the U.S.[edit]
US regulator the Commodity Futures Trading Commission (CFTC) gave Bursa Malaysia's customer protection standards a nod of approval in June 2010 by allowing its registered brokers to solicit US customers without the need to register in the US as futures brokers.[14] Bursa Malaysia, like several other foreign exchanges and regulators, was granted the exemption under the CFTC's Regulation 30.10 that allows some foreign jurisdiction to deal directly with US customers.[15]
Bursa Malaysia Derivatives Chief Executive Officer Chong Kim Seng said the CFTC's decision means Bursa Malaysia's brokers can now offer Malaysian derivatives to American investors and increase their cross-border trading base. The change means Bursa Malaysia brokers no longer have to register with the CFTC as futures commission merchants (FCMs) because, according to the CFTC, "they are subject to comparable customer protection standards in their home jurisdiction".
References[edit]
- ↑ FIA Annual Volume Survey. FIA.
- ↑ 2018 Annual Volume Survey. Futures Industry.org.
- ↑ Official History. Bursa Malaysia.
- ↑ Press Release. Bursa Malaysia.
- ↑ Press Release. KLSE.
- ↑ CME, Malaysia Plan Share Swap to Boost Palm Oil Trade. Bloomberg.
- ↑ [http://www.cmegroup.com/international/files/Bursa_on_CME_Newsbytes.pdf Bursa Malaysia Derivatives Registers Record Volume on One Year Post Migration to CME Globex]. Bursa Malaysia.
- ↑ CFTC Issues Order of Registration for Bursa Malaysia Derivatives Berhad. CFTC.
- ↑ Report. Reuters.
- ↑ Malaysia bourse to broaden offerings. The Financial Times.
- ↑ Bursa Malaysia Derivatives Launches ESG Themed Index Futures Contract. press release via Mondo Visione.
- ↑ {{{name}}}. Bloomberg.
- ↑ Bursa Malaysia Berhad announces appointment of new non-executive and public interest director. Bursa Malaysia.
- ↑ CFTC Issues an Exemption to Bursa Malaysia Derivatives Bhd Permitting U.S. Customers to Deal Directly with Malaysian Brokers. CFTC.
- ↑ Bursa Malaysia Brokers Get CFTC Nod To Trade. Bernama.