business
Bursa Malaysia plans to boost options trading, says official
Ppen interest on crude palm oil options has climbed to more than 6,000 contracts earlier this year from negligible levels in 2015. – The Malaysian Insider file pic, March 8, 2016.Bursa Malaysia Derivatives plans to boost palm oil options trading following a recent increase in demand from financial institutions and producers, a senior exchange official said on Tuesday.
The open interest on crude palm oil options has climbed to more than 6,000 contracts earlier this year from negligible levels in 2015, "which is very encouraging", K. Sree Kumar, acting chief executive of Bursa Malaysia told Reuters in an interview.
"It can grow into a retail contract very soon, we have to step up," he said.
"This will be across all our options products, we have an options for the index as well."
Bursa launched options in 2012 but it has struggled to boost volumes until the last few months. It now plans to promote participation from retail investors.
Bursa, which runs the global benchmark crude palm oil contract, expects to see growth of about 10% in traded volumes in 2016 from last year, he said on the sidelines of the industry conference organised by the exchange.
The 2016 growth is "almost similar to what we had last year and we are confident as we see the volumes are very encouraging this year", Sree Kumar said.
There are about 2,000 people from 60 countries attending the meeting.
The exchange has struggled to increase liquidity for US dollar denominated contracts since it launched those in 2009-10 and 2014.
"It has been challenging but we will continue to run these contracts," Sree Kumar said.
Participation by US investors in Bursa Malaysia's domestic Malaysian palm oil contract priced in ringgit has increased since the Commodity Futures Trading Commission granted approval in January 2015.
Regarding the disclosure of speculative positions on Malaysian palm oil futures, Sree Kumar said the exchange had no immediate plans to start but was willing to consider it.
"It is something we need to work with our regulators as well. There is no immediate plan but it does help create more transparency, especially for the retail people." – Reuters, March 8, 2016.
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