Bursa Malaysia Derivatives Re-Launches The Mini FTSE Malaysia Mid 70 Index Futures

Bursa Malaysia

Bursa Malaysia Derivatives Berhad (“BMD”) as subsidiary of Bursa Malaysia Berhad (“Bursa Malaysia”), will re-launch the Mini FTSE Bursa Malaysia Mid 70 Index Futures (“FM70”) contract, implementing several amendments to the contract specifications. The revamped FM70 contract will be made available to traders on Monday, 14 December 2020. The new improvements to the FM70 contract specification aim to increase cost efficiency in trading, thereby enhancing its appeal among retail investors.

The revision in the FM70 contract specifications includes the following:

  1. Changes to the contract size with the contract multiplier to RM4 per index point from the previous RM2 per index point; and
  2. The minimum price fluctuation (tick size) has been increased to 5 index points per tick from the previous 1 index point per tick.

Launched in 2018, FM70 is a cash-settled ringgit-denominated futures contract which tracks the FTSE Bursa Malaysia Mid 70 Index (“FBM Mid 70”) as its underlying instrument. Through a single futures contract, the FM70 provides investors exposure to the next largest 70 stocks by market capitalisation listed on Bursa Malaysia after the top 30 stocks on the FTSE Bursa Malaysia KLCI Index.

“FM70 is another unique product in BMD’s suite of equity derivatives contracts that is designed to provide low cost of entry and leveraged exposure for retail traders looking for short term trading opportunities. We conducted multiple industry consultation to improve FM70 as a capital efficient risk management tool. I am happy to note that feedback on our proposed revamp on the FM70 contract has been positive,” said Datuk Muhamad Umar Swift, Chief Executive Officer of Bursa Malaysia.

Despite the increase of contract size, BMD has maintained the exchange and clearing fees of FM70 to help lower the trading cost relative to the contract value. The change in tick size with a higher tick value may allow a faster rate of trading cost recovery within the one to two ticks of price movement. BMD have also engaged with market makers to boost FM70 liquidity in the marketplace.

“BMD will continue to engage key market stakeholders to further develop our ecosystem that will make our markets more vibrant and attractive to our customers around the world,” concluded Datuk Umar. – BusinessNewsAsia.com