February 19 2004 - MALAYSIA Derivatives Exchange Bhd (MDEX) has securedfour big players in the palm oil industry as market makers for its palmkernel oil futures to be launched this Friday.

Sources said the market makers are IOI Corp Bhd, Fajar Palmkel Sdn Bhd (amember of the Kuala Lumpur Kepong Bhd group), Wilmar Trading Sdn Bhd andKuok Oil & Grains Pte Ltd.

The market makers will be very useful in providing ample liquidity to thislatest derivatives product to ensure its success. Furthermore, the choicesof the market makers are good as they are the big players in the market.

This would help build confidence in the product, especially major playersin the palm oil industry, a senior palm oil futures trader told BusinessTimes.

A source said the launch of the new palm kernel oil futures is timely asit coincides with bullish sentiments in the futures and the cash markets.

I believe this time around the palm kernel futures would be betterreceived with initial trades to be quite robust. The momentum goingforward for the palm kernel futures contracts is expected to beencouraging, said a futures dealer.

He said investors are now more receptive to new derivatives products astheir knowledge on such investment tools has improved.

Sources said MDEX is looking to complement its existing crude palm oil(CPO) futures with the introduction of CPO option derivatives soon.

They said MDEX is also in the process of re-looking its existing KualaLumpur Stock Exchange Composite Index (KLCI) options to make them moreattractive. One of the possibilities, sources said, could be halving thecontract size. This has been implemented on its KLCI futures which hashelped to significantly boost trading volumes.

Sources said MDEX may also reduce the contract size of the palm kernel oilfutures to make it more affordable in the medium term.

The new palm kernel oil futures provide more choices for derivativesinvestors as well as a good alternative to CPO futures. They can also beseen as a good investment complement with CPO futures, especially tohard-core palm oil investors,” said a futures trader.