13/7/06 (The Star)  -  KUALA LUMPUR: Bursa Malaysia Bhd will not proceed to sell its crude palm oil (CPO) settlement price licence to Singapore-based Joint Asian Derivatives Exchange (JADE) as its proposal has not received approval from the relevant authorities.

However, approval has been given to Bursa to license its CPO settlement prices to the Multi Commodity Exchange of India Ltd (MCX) and China-based Dalian Commodity Exchange (DCE), Bursa said in a brief statement yesterday.

JADE was set up by Joint Asian Derivatives Pte Ltd – a joint-venture company between US-based Chicago Board of Trade (CBOT) and Singapore Exchange Ltd – to initially trade in an agricultural suite of Asian commodities derivatives and later on, other products including energy and metals.

Bursa has so far signed three memoranda of understanding to sell its CPO settlement price licence to JADE, MCX and DCE.

Industry sources told StarBiz that a meeting was held between Bursa and the Finance Ministry (MoF) last week to discuss, among others, the issue of Bursa licensing its CPO price settlement issues to JADE, a move which was met with strong objections from the local brokerage fraternity.

The brokerage industry had expressed disappointment with Bursa's move, which it saw as a major threat to Malaysia's CPO futures market, the world's largest CPO futures market in terms of volume.

The proposed JADE, slated to begin operations by the third quarter of this year, is meant to be a parallel to Bursa and will conduct trading in the same time zone as the local CPO futures contract.

Futures brokers contacted by StarBiz yesterday expressed relief over the MoF's decision not to approve Bursa's proposal to sell its settlement price licence to JADE.

Futures broker G.M. Teoh said: “I've got this thing to say. Good sense has prevailed.”

He attributed the immediate action and strong support by the entire local brokerage industry to the speedy end to the controversial issue. 

An institutional broker welcomed MoF's decision not to go ahead with the local bourse's proposal to license JADE, but supported its licensing to MCX and DCE.

“These exchanges are trading at different time zones from Malaysia and are also major users of CPO. There will be arbitraging opportunities for the local bourse,” he added. 

The broker also believed JADE was still pursuing its plan to set up a CPO futures on a cash settlement basis. 

“Most definitely the licence is not from Malaysia. Perhaps (it'll be) from Indonesia,'' he said.