20/04/0/2011 (Bernama) - Bursa Malaysia Bhd's pre-tax profit for the first quarter ended March 31, 2011 increased to RM58.196 million from RM39.567 million for the corresponding quarter last year.

Its revenue increased to RM116.108 million from RM88.109 million.

In a statement, Bursa Malaysia said its profit after tax and minority interest (PATAMI) of RM40.5 million for the quarter ended 31 March 2011, was a 44 per cent increase compared to RM28.1 million in the corresponding period last year.

Bursa Malaysia's Chief Executive Officer, Datuk Tajuddin Atan said the strong performance this quarter is largely attributed to the increase in trading revenue from two core business activities, securities and derivatives trading.

"We see the return of positive market sentiments and high liquidity, as well as strong expectations from the various government transformation programmes, contributing to an increase in trading activities in the securities market," he added.

He said for derivatives, the increase was largely due to both the cutover of derivatives trading on to the CME Globex trading platform, as well as the increased volatility of commodity prices.

Bursa Malaysia said the securities market recorded an increase of 46 per cent in trading revenue to RM57.7 million in the first quarter compared to RM39.6 million in the corresponding quarter last year.

Daily average trading value was higher at RM2.23 billion compared to RM1.53 billion in the same quarter last year, while daily average trading volume increased 65 per cent to 1.73 billion, it said.

For the quarter ended March 31, 2011, market capitalisation stood at RM1.31 trillion, which was an increase of 24 per cent from the corresponding quarter last year, while market velocity was at a high of 42 per cent.

"We are targeting velocity of 50 per cent within two years, and if market conditions and sentiments remain as buoyant, I believe we may reach this target even earlier," said Tajuddin.

Bursa Malaysia said trading revenue for the derivatives market posted an increase of 53 per cent to RM13.0 million for the quarter, compared to RM8.5 million in the corresponding quarter in 2010.

Total derivatives contracts traded increased to 2.17 million in the first quarter of 2011 from 1.41 million in the same quarter last year.

Bursa's main derivatives product, the Crude Palm Oil Futures (FCPO) contract, recorded an increase of 62 per cent to 1.51 million contracts traded.

Increasing volatility in commodity prices for hedging purposes, as well as the high prices for crude palm oil, contributed to increased volumes for FCPO.

The Kuala Lumpur Composite Index Futures (FKLI) contract also posted a year-on-year growth of 40 per cent in the first quarter, to 0.61 million contracts, it said.

The exchange said its total expenses increased by 19 per cent to RM57.8 million in the first quarter of 2011, attributed to an increase in technology charges arising from the service fees charged by CME for the use of the Globex trading platform, staff costs, market development costs as well as other operating expenses.

The increase in total expenses was partially offset by lower depreciation and amortisation, it said.

Tajuddin said given the recent events in Japan, the Middle East and North Africa countries, investor sentiment has returned to being cautious.

"However, we expect that investors will take cognisance of the potential that developments under the Government Transformation Programme (GTP) will have on several key sectors such as construction, property, financial services, and healthcare, among others.

"Sustained domestic corporate earnings, prospects for mergers and acquisitions coupled by the strong fundamentals of the country are positive factors for investments going forward," he added.

The recent announcement by the Prime Minister during Invest Malaysia 2011 on the fast track scheme for dual licensing that allows experienced securities remisiers to trade derivatives, can have a positive impact on the derivatives market for more cross selling opportunities, he said.

"The increase in proprietary day traders can also lead to greater market vibrancy and liquidity.

"In June, Malaysia will be upgraded to an "Advanced Emerging Market" by FTSE Global from its current "Secondary Emerging Market". We hope to see a rerating of portfolio by investors arising from this upgrade," he added.