Bursa Malaysia Derivatives Berhad (“Bursa Malaysia Derivatives” or “the Exchange”) has recorded an all-time high monthly trading volume for all its products combined with a total of 2.34 million contracts traded in October 2024. The achievement, which surpassed the previous record of 2.13 million contracts traded in March 2020 by 10 percent, is a testament to the effectiveness of the Exchange’s continuous efforts to improve its market depth and liquidity.
For the first time in history of the Exchange, the monthly average daily contracts (“ADC”), also hit a record high, breaching the 100,000 contracts threshold, with 106,385 contracts traded in October 2024. This is a rise of 8 per cent from the previous record of 98,421 contracts, traded in September 2024.
The notable increase in the Exchange’s trading volume in October 2024 was primarily fuelled by the exceptional performance of the Bursa Malaysia Crude Palm Oil Futures (“FCPO”), with a historic monthly trading volume of 2.03 million contracts that month, surpassing the previous record of 1.71 million contracts, established in June 2021, by 19 percent.
The surge in FCPO trading volume was mainly driven by the rally in the FCPO third month contract price, which rose to a two-year high at RM4,879 in October 2024, a substantial increase from a low of RM3,194 in May 2023.
Among the factors driving prices upward include declining Crude Palm Oil (“CPO”) production, strong exports, exchange rate movements, the European Commission’s proposal to postpone the end-2024 deadline to implement the European Union Deforestation Regulation (“EUDR”) and the announced allocation of RM100 million on replanting incentives for small-scale palm oil farmers under Budget 2025.
Meanwhile, the FTSE Bursa Malaysia KLCI Futures (“FKLI”) market has also shown vibrant activity in recent months. The FKLI, which tracks the performance of the underlying KLCI Index, has been experiencing significant movements, reflecting broader economic conditions and market sentiment. As at 1 November 2024, the FKLI was trading at 1603.98 points, with notable fluctuations driven by global market trends and local economic policies.
Commenting on the new record-highs, Mohd Saleem Kader Bakas, Director of Bursa Malaysia Derivatives remarked, “The dynamic trading environment highlights the importance of Bursa Malaysia Derivatives in providing a robust marketplace for price discovery and risk management across FCPO and FKLI, contributing to the overall stability and growth of Malaysia’s commodities and financial markets.”
One of the pivotal strategies adopted by the Exchange to improve its market depth and liquidity in recent years has been the introduction of After-Hours (T+1) Trading Session (“After-Hours Trading”). Since its implementation in 2021, After-Hours Trading volume has seen considerable growth with year-to-date October 2024 volume reaching 1,961,723 contracts traded, surpassing 1,250,427 contracts traded during the same period in 2023, representing an increase of 57 percent.
Saleem added, “The extension of trading hours has proven effective in encouraging greater participation in our markets from international traders, as it enables swift reactions to market-moving news during the United States and European Union market hours, which has been particularly beneficial for trading the notably volatile FCPO market in recent times.”
Beyond its ecosystem enhancement initiatives, Bursa Malaysia Derivatives is committed to continually enhance its product offerings to meet the evolving needs of investors and hedgers. Recognising the growing demand for biofuel feedstock driven by global sustainability initiatives and biodiesel mandates, the Exchange is looking to introduce a used cooking oil futures contract, subject to regulatory approvals. The proposed introduction of this contract leverages Bursa Malaysia Derivatives’ strength as a global trading hub for edible oils, facilitating market participants with a new avenue for sustainable derivatives trading.
