MDEX To Add Two More Trading Instruments Early Next Year

KUALA LUMPUR, June 11 (Bernama) -- The Malaysia Derivatives Exchange(MDEX), launched Monday, will be a family of five trading instrumentsearly next year.

Its chief operating officer Dr Zaha Rina Zahari told newsmen that the thetwo new products would be Bond Futures and Islamic Index Futures.

As of today, MDEX has brought together the Kuala Lumpur Composite Indexfutures and options, the crude palm oil (CPO) and three-month Kliborfutures.

MDEX is a unified exchange for equity, financial and commodity derivativesand a subsidiary of the Kuala Lumpur Stock Exchange (KLSE).

The exchange came into existence as a result of the merger between theKuala Lumpur Options and Financial Futures Exchange (Kloffe) and theCommodity and Monetary Exchange of Malaysia (Commex).

At a press conference held after the MDEX launch, Zaha Rina said, the BondFutures required a nine-month feasibility study prior to its introduction.

The instrument was expected to be launched in the first quarter 2002, sheadded.

As for the Islamic Index Futures, MDEX needed to determine a commonhalal/haram definition accepted by local and international investors, shesaid.

Zaha Rina said a commonly accepted definition was paramount to enticeinternational funds, especially Islamic-based to invest in it.

The instrument would then undergo feasibility studies and will be launchedat the same time as Bonds Futures.

Feasibility studies include modifying contract size and specifications tomake it attractive for investors and adopt suitable ways from overseasmarkets.

She added that modifying contract size and specifications to smallerdenominations would be more price-attractive and easier to manage.

Zaha Rina also said that MDEX was interim towards a single Malaysianexchange where a comprehensive array of trade instruments were availableunder one roof.

In 2002, the KLSE and the Malaysian Exchange of Securities Dealing andAutomated Quotation (Mesdaq) was expected to be consolidated.

With that achieved it would provide investors the convenience of aone-stop centre offering a wide range of derivatives products andservices, she said.

In the long run, the benefits to be derived will enable investors to widentheir exposure in other investment products.

She highlighted that MDEX would focus on educating, particularlyinstitutional investors to alleviate fears of investing in unfamiliarmarkets.

"They manage huge funds and they would have second thoughts taking risksin unfamiliar instruments or markets," she added.

The idea of trading in derivatives market as a hedging tool is fairly newto local investors if compared with those in other developed capitalmarkets.

MDEX was today launched by Datuk Mohammed Azlan Hashim, executive chairmanKLSE in the presence by Datuk Ali Kadir, chairman Securities Commission(SC) and Datuk Zamani Abdul Ghani assistant governor supervision BankNegara Malaysia.

-- BERNAMA