BURSA MALAYSIA DERIVATIVES REVAMPS CRUDE PALM KERNEL OIL FUTURES CONTRACT (FPKO) TO MEET THE NEEDS OF THE INDUSTRY
Bursa Malaysia Derivatives Berhad (“BMD”) will launch the revamped Crude Palm Kernel Oil Futures (“FPKO”) Contract, implementing several enhancements to the contract specifications to meet the evolving needs of the industry. The revamped FPKO Contract will be made available to traders on Monday, 8 March 2021.
The Palm Kernel physical market has seen considerable growth over the years and has established itself as one of the region’s most important commodities. In addition, the FPKO Contract will serve as a tool for the lauric oil industry players to hedge their portfolio risk and enables transparent price discovery for the palm complex market players.
The new enhancements aim to create an effective hedging instrument against the physical market and provide an alternative instrument for local and international participants to trade. Improvements to the contract have been applied across five main areas. They include contract grade, delivery points, daily price limits, speculative position limits as well as imposing traceability document requirements.
“After multiple industry consultations, necessary enhancement was made to provide a better contract based on the industry’s needs and create a positive impact on the development of the Crude Palm Oil Kernel Oil (“CPKO”) market. The revised FPKO will cater to industry players’ demand to hedge against the risk of adverse price movement in the lauric oil market. This could also provide new trading opportunities for other market participants and adds diversity to their existing instruments,” said Samuel Ho, Chief Executive Officer of BMD.
“We remain committed to engaging with key market stakeholders to develop more vibrant and attractive markets to our customers all around the world. The revamp will further strengthen BMD’s palm complex offerings and enhance the “stickiness” of traders and hedgers to our marketplace,” concluded Samuel Ho.
For more information on FPKO, please visit https://www.bursamalaysia.com/trade/our_products_services/derivatives/commodity_derivatives/crude_palm_kernel_oil_futures