Bursa Malaysia Derivatives Berhad (Bursa Malaysia Derivatives) will very quickly be launching its first forex futures contract, the Mini USD/CNH Futures (FCNH) by a licensing settlement established with Hong Kong Exchanges and Clearing (HKEX.
The upcoming launch of FCNH on 11 December 2023 is a big stride within the development of the Malaysian capital market as will probably be the nation’s inaugural change traded forex futures contract, complementing present forex markets operated by Malaysian monetary establishments. An exchange-traded forex futures contract may also help mitigate counterparty credit score dangers, in addition to present a clear, regulated and simply accessible market.
With the introduction of the brand new asset class inside Bursa Malaysia Derivatives’ choices, merchants will probably be introduced with enhanced buying and selling alternatives and arbitrage potentialities throughout the derivatives markets of Hong Kong and Malaysia.
Designed as a smaller-sized, money settled contract, FCNH affords buyers a capital-efficient solution to obtain RMB forex hedging over their funding holdings because it doesn’t require buyers to change the preliminary sum invested.
This will probably be very helpful for individuals, equivalent to small to medium enterprises (“SMEs”) and enterprise house owners with transactions in China, to hedge their dangers on fluctuations within the US Greenback and offshore Chinese language Renminbi (RMB) currencies.
The plan to launch FCNH can be strategic and consistent with the Alternate’s latest signing of a licensing settlement with Dalian Commodity Alternate (DCE) on the soybean oil futures settlement value for the Bursa Malaysia DCE Soybean Oil Futures Contract (FSOY), a brand new product to be listed on Bursa Malaysia Derivatives in 2024. FCNH will probably be complementary and function a forex hedging device for market individuals interested by buying and selling FSOY, which will probably be denominated in USD.
“The launch of FCNH is well timed given the present volatility in world markets, which has led to growing demand amongst market individuals and companies to handle their international forex change publicity,” stated Datuk Muhamad Umar Swift, Chairman of Bursa Malaysia Derivatives and Chief Government Officer of Bursa Malaysia Berhad.
“Our licensing settlement with HKEX for FCNH and product collaboration with DCE are testaments to Bursa Malaysia Derivatives’ dedication to forging strategic alliances and deepening world market connections. We’re optimistic that these efforts will allow market individuals to successfully navigate the complexities of worldwide markets and adeptly handle cross market dangers.”
HKEX Group Head of Rising Enterprise & FIC, Glenda So, stated, “We’re happy to be working along with Bursa Malaysia Derivatives for the launch of its Mini USD/CNH Futures. At HKEX, constructing a set of RMB-related funding and danger administration merchandise varieties a key a part of our technique, and we’re eager to help our companions with the event of a broader RMB and fixed-income product ecosystem within the area and past, connecting capital with alternatives.”
FCNH is a cash-settled contract denominated in RMB. The Ultimate Settlement Value refers to HKEX’s mini-USD/CNH Ultimate Settlement Value. Market individuals can commerce FCNH throughout the Morning and Afternoon Buying and selling Session (9:00 a.m. to six:00 p.m. Malaysia Time, Monday to Friday) and the After-Hours (T+1) Buying and selling Session (9:00 p.m. to 2:30 a.m. Malaysia Time, Monday to Thursday).
To be taught extra about buying and selling alternatives with FCNH, the general public is invited to log onto the reside stream of the FCNH launch at Bursa Malaysia’s Fb web page on 11 December 2023, at 9:00 a.m. The occasion will embrace displays and a panel dialogue on ‘Navigating the Path to Diversification in Foreign money Buying and selling: Challenges, Alternatives, and the Evolving Position of RMB.’