Bursa Malaysia Derivatives Berhad (“Bursa Malaysia Derivatives” or “the Exchange”) will be launching its enhanced Gold Futures (FGLD) contract on 19 September 2022, following its suspension in March 2021 to allow for a review of the contract specifications. The revamp of the FGLD contract is part of the Exchange’s efforts to provide investors with immediate exposure to the international gold price movements. It is also intended at providing investors with greater trading opportunities amidst gold market volatility.
The enhanced FGLD is a cash-settled contract that is quoted in US Dollar (USD) and settled in Malaysia Ringgit (MYR) based on a fixed multiplier of 40, from which the final settlement value as well as profit and loss are derived. The final settlement value no longer requires any foreign exchange rate adjustment given that the contract's fixed multiplier already serves as the rate to compute the MYR contract value. The enhanced FGLD contract's final settlement price is determined by the London AM Fix Price, which is the internationally recognised gold benchmark price.
“The introduction of the enhanced Gold Futures contract is timely, given the current market volatility where investors tend to turn to safer investment options. Gold Futures will provide an alternative trading avenue to the domestic investors, which can further propel the attractiveness of Malaysia’s derivatives market,” said Datuk Muhamad Umar Swift, Chairman of Bursa Malaysia Derivatives and Chief Executive Officer of Bursa Malaysia Berhad.
“With the enhanced contract specifications, the Gold Futures contract is aligned with the global convention, in which gold is traded in USD. This provides investors exposure to the international gold standard pricing without the corresponding need for currency conversion due to the use of a contract multiplier,” said Mohd Saleem Kader Bakas, Acting Director of Bursa Malaysia Derivatives Berhad. “We hope to see increased participation in the derivatives market, particularly from retail investors trading Gold Futures, as an alternative to holding physical assets to safeguard their investments against rising inflation rates.”
Datuk Umar Swift added, “Bursa Malaysia Derivatives will continuously enhance its product offerings to meet the ever-changing market needs and assist market participants in navigating headwinds in today’s challenging environment.”
A launch ceremony for this enhanced Gold Futures contract will be held at Bursa Malaysia on 19 September 2022 from 9:00 AM to 11:00 AM, which will include an industry panel discussion “Is Gold a Safe Haven in a Volatile and High-Interest Rate Environment?”. The event will be streamed live on Bursa Malaysia’s Facebook page. Members of the public are invited to attend virtually, to learn more about trading opportunities with FGLD from industry thought leaders.
