Executive Chairman of MDEX Encik Abdul Jabbar Abdul Majid said the introduction of the MGS Futures contract will add depth to the present range of products offered by the derivatives exchange.
"We believe that the Five-year MGS Futures will be used to hedge long dated interest rate commitment including papers. It will also be a transparent benchmark yield for the investing community.
"At the same time it will be another source of revenue for the brokers, whilst expanding participation by local members of MDEX in the derivatives market," he said.
The contract will have a notional size of RM 100,000 and will be based on a basket of eligible Malaysian Government Securities (MGS) each with a minimum issuance size of RM 500 million and 4½ to 5½ years term to maturity.
It will be traded on the Exchange business days, from 9.00 am to 12.30 pm and 2.30 pm to 5.00 pm on KATS (Automated Trading System). The Five-year MGS Futures contract or "FMG5" will be cash settled using the weightage cash settlement method upon its expiration on the third Wednesday of the delivery month.
Abdul Jabbar said MDEX has targeted potential users of this new contract such as financial institutions, insurance companies, bond portfolio managers, provident funds, asset managers, corporate treasurers, individual investors and MDEX local members.
"At present, the Exchange has four applications to be market makers for the new contract which have been approved, with a fifth application pending approval," he said.
Today, MDEX would like to announce the eligible MGS and its weightage for the proposed FMG5 June 2002 contract.
The eligible MGS for the June 2002 contract comprises of the following six securities:
|
No
|
Maturity Date
|
Issue Code
|
Year Issued
|
Coupon (% p.a)
|
Amount
(RM million) |
Weightage
|
|
1
|
01/12/2006
|
MV86003V
|
1986
|
8.500
|
850
|
16.67%
|
|
2
|
15/03/2007
|
MW86001H
|
1986
|
8.600
|
1300
|
16.67%
|
|
3
|
15/03/2007
|
MT89001A
|
1989
|
6.900
|
500
|
16.67%
|
|
4
|
15/07/2007
|
MW86002T
|
1986
|
8.600
|
1200
|
16.67%
|
|
5
|
15/10/2007
|
MN97001A
|
1997
|
7.284
|
1000
|
16.67%
|
|
6
|
01/12/2007
|
MW86003X
|
1986
|
8.600
|
850
|
16.67%
|
The prices of eligible MGS will be contributed by the 10 Principal Dealers appointed by Bank Negara Malaysia on the designated REUTERS page.
MDEX now provides fully electronic trading to the public using the KATS system and offers four products namely, Kuala Lumpur Stock Exchange Composite Index Futures Contract (FKLI), Kuala Lumpur Stock Exchange Composite Index Options Contract (OKLI), Crude Palm Oil Futures Contract (FCPO), and Three-month KLIBOR Futures Contract (FKB3).
