Bursa Malaysia Bhd has launched a US Dollar-denominated options contract on refined, bleached and deodorised (RBD) palm olein futures (OPOL). This is the world’s first such product for palm olein.
Serving to complement the US Dollar-denominated RBD Palm Olein Futures Contract (FPOL), OPOL broadens the array of possible risk management tools available to players. This is in line with the aim of expanding Bursa Malaysia Derivatives’ product offerings under the palm oil complex.
Bursa Malaysia Bhd Chairman Datuk Muhamad Umar Swift said the move to make available OPOL is in response to market demand.
“The OPOL contract allows for the introduction of more sophisticated strategies to raise the level of derivatives trading and will attract new categories of market participants, such as commercial banks and options writers and traders,” he said in a statement.
“We look forward to taking the Malaysian derivatives industry to the next level with the debut of this world’s first product, underlining the Exchange’s commitment to strengthen Malaysia’s position as the centre for palm oil price discovery and the global premier palm oil market.”
OPOL provides palm oil refiners, end-users of palm olein and foreign palm olein importers with a mechanism for transparent price discovery, regulated trading and hedging against adverse palm oil price movements.
For traders, OPOL is an additional instrument that can be utilised by local and international participants.
Between now and June 30, 2020, all market participants will be entitled to a waiver on the exchange fee and clearing fee on OPOL transactions.
RBD palm olein is a major component of the palm oil value chain. Malaysia produces approximately 10.7 million tonnes of RBD palm olein a year, with approximately 75% for the export market.
Source: Bernama, Jan 13, 2020
This is an edited version of the report.
