19 March, 2003 - MALAYSIA Derivatives Exchange Bhd (MDEX) may launch newpalm-oil based financial instruments in the near future following thesuccess of the crude palm oil (CPO) futures contracts.

MDEX executive chairman Abdul Jabbar Abdul Majid said the new instrumentswill broaden interest in palm oil internationally and the industry inMalaysia.

“MDEX will certainly study very carefully the feasibility of launchingoptions on crude palm oil futures and palm kernel oil futures to benefitparticipants in the industry even further,” he told reporters in KualaLumpur yesterday.

Abdul Jabbar was at the 14th annual Palm and Lauric Oils Conference andExhibition: Price Outlook 2003/2004 in Kuala Lumpur yesterday.

The three-day event was launched by Primary Industries Minister Datuk SeriDr Lim Keng Yaik

“Since MDEX made the transition from open outcry to electronic trading in2001, the daily average volume for CPO futures contracts has increased,”Abdul Jabbar said.

He added that volume almost doubled from a daily average of 1,874 lots perday in 2001 to 3,740 lots in 2002. The daily average volume for this yearto date is 4,929 lots.

“This year, the CPO futures recorded the highest single-day record in 23years of derivatives trading in Malaysia with 14,003 lots traded on March5.”

In his speech earlier, Dr Lim said the total CPO futures market turnoverfor 2002 stood at 909,073 lots, representing an underlying national amountof about 22.7 million tonnes of CPO traded, a growth of 89.5 per cent from2001.

The average daily turnover rose to 4,892 lots, while open interest closedat 17,280 lots in 2002. Dr Lim expects total turnover to breach onemillion lots by the middle of this year.

“I would like to see MDEX design a contract for the lauric oils market toserve the interest of the oleochemical sub-sector,” the minister said.

He added that with the help of Indonesia and the Philippines, it is alsotimely for MDEX to introduce an option on CPO futures.

“This will certainly add more depth and flexibility to the hedging andtrading requirements of industry participants,” he said.

Meanwhile, Abdul Jabbar said CPO futures contracts are an effective andtransparent mechanism for the palm oil industry.

“CPO futures were the leading benchmark for the pricing of CPOinternationally and continued to be an important mechanism to meet pricingand hedging requirements for the industry.

“With the continued participation in CPO futures, there is no doubt thatthe collective benefits it brings to the industry will continue to grow,”he said.

In addition to the CPO futures, MDEX offers the Kuala Lumpur StockExchange (KLSE) Composite Index Futures, three-month Kuala LumpurInterbank Offered Rate, Interest Rate Futures and five-year MalaysianGovernment Securities Futures.

Formerly known as the Kuala Lumpur Options & Financial Futures ExchangeBhd, MDEX is an approved exchange under Section 4 of the Futures IndustryAct 1993 and a member of the KLSE Group of Companies.