Bursa Malaysia’s subsidiary, Bursa Malaysia Derivatives Berhad, will launch the Mini FTSE Bursa Malaysia Mid 70 Index Futures Contract (“FM70”) on Monday, 27 August 2018, the first mini futures contract to be traded on the Exchange’s derivatives market.
The FM70 is a Ringgit Malaysia denominated futures contract which tracks the FTSE Bursa Malaysia Mid 70 Index (“FBM Mid 70”) as its underlying instrument, providing investors exposure to all the 70 companies of the FBM Mid 70 via a single futures contract. The contract value is equivalent to the index points of the FBM Mid 70 multiplied by RM2. Currently this brings the value of the contract to approximately RM30,000.
Targeted at retail investors, the FM70 has a low starting investment cost or initial margin* of RM800, as opposed to other equity index futures products such as the FTSE Bursa Malaysia KLCI Futures (FKLI) contract which tracks the top 30 companies on Bursa Malaysia as its underlying instrument, and has an initial margin of RM4,000. The FM70 also presents opportunities for leveraged trading, as investors can start trading a contract valued at approximately RM30,000 with an upfront cost of just RM800.
“With a relatively low initial margin or starting investment cost, the FM70 is a product designed to make trading in the derivatives market accessible to a wider retail investor base. As it tracks the FBM Mid 70, the FM70 contract essentially allows investors to trade and invest in the combined potential of this group of companies which make up part of the top 100 companies listed on the Exchange,” said Datuk Seri Tajuddin Atan, Chief Executive Officer of Bursa Malaysia.
“This mini futures contract takes the legwork out of having to research individual companies to invest in, and is suited to busy investors seeking alternative investment options beyond the securities market. This is in line with our intent to expand the suite of products in the equity derivatives space,” he added.
Investors are also able to short-sell the FM70 and capitalise on arbitrage opportunities arising from price differences between FM70 and the underlying index. In addition, the FM70 can be combined with the FKLI for joint exposure to the top 100 companies in Malaysia, or be used for correlation or spread trading with FKLI to capitalise on periods of divergence and convergence of the two underlying indices.
As with all of Bursa Malaysia Derivatives’ products, the FM70 can be traded electronically on CME Globex®, the Chicago Mercantile Exchange (CME) Group’s global electronic trading platform.
More details on the FM70’s contract specifications are available on www.bursamalaysia.com. Information on how to invest and trade in Bursa Malaysia’s derivatives market is available on www.bursamarketplace.com, which also offers a simulated trading experience. Investors may also contact their licenced futures broker to invest in and trade the FM70.
*Initial margins are determined by Bursa Malaysia and will be revised from time to time.
Mini FTSE Bursa Malaysia Mid 70 Index Futures Contract Specifications
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CONTRACT |
MINI FTSE BURSA MALAYSIA MID 70 INDEX FUTURES CONTRACT |
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CONTRACT CODE |
FM70 |
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UNDERLYING INSTRUMENT |
FTSE BURSA MALAYSIA MID 70 INDEX (“FBM Mid 70”) |
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CONTRACT MULTIPLIER |
RM2.00 per 1 index point |
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CONTRACT UNIT |
FBM MID 70 multiplied by the Contract Multiplier. |
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MINIMUM PRICE FLUCTUATION |
1 index point = RM2.00 |
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PRICE LIMITS
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1. In the first trading session of the day, the price limit for the respective contract months is 20% (or a percentage as determined by the Exchange from time to time) in either direction from the previous Business Day’s Daily Settlement Price. 2. In the second trading session of the day, the price limit for the respective contract months is 20% (or a percentage as determined by the Exchange from time to time) in either direction from the same day’s first trading session’s last traded price. 3. The price limits in the above paragraphs do not apply to trades in: (a) the spot month Contract; and (b) the second contract month during the 5 final Business Days before the Final Trading Day of the spot month. |
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CONTRACT MONTHS |
Spot month, the next month and the next two calendar quarterly months. The calendar quarterly months are March, June, September and December. |
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TRADING HOURS |
First trading session: 0845 hours to 1245 hours (Malaysia time); and Second trading session:1430 hours to 1715 hours (Malaysia time) |
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FINAL TRADING DAY |
1. The last Business Day of the contract month. 2. Trading in the expiring month Contract ceases at 1715 hours (Malaysia time) on the Final Trading Day. |
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SETTLEMENT METHOD |
Cash Settlement based on the Final Settlement Value. |
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FINAL SETTLEMENT VALUE
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ATTRIBUTION / DISCLAIMER
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FBM Mid 70 is calculated by FTSE International Limited (“FTSE”). All intellectual property rights in the FBM Mid 70 vests in FTSE and Bursa Malaysia Berhad (“BURSA MALAYSIA”). “FTSE®”, “FT-SE®” and “Footsie®” are trademarks of the London Stock Exchange Plc (the "LSE") and The Financial Times Limited ("FT") and are used by FTSE under licence. Neither FTSE nor BURSA MALAYSIA nor LSE nor FT makes any warranty or representation whatsoever, expressly or impliedly, either as to the results to be obtained from the use of the FBM Mid 70 and/or the figure at which the FBM Mid 70 stands at any particular time on any particular day or otherwise. Neither FTSE nor BURSA MALAYSIA nor LSE nor FT shall be liable (whether in negligence or otherwise) to any person for any error in the FBM Mid 70 and neither FTSE nor BURSA MALAYSIA nor LSE nor FT shall be under any obligation to advise any person of any error therein. |
