Bursa Malaysia to launch FCPO night trading offering closer trend to U.S/Europe markets and higher liquidity | Financial chart 4

Bursa Malaysia has announced another path of improvement to sustain its position as the global price benchmark for crude oil prices to be implemented in 2021. After the launch of a new East Malaysian crude palm oil futures contract in the third quarter which should provide more accurate price discovery options for a region that now accounts for more than half of Malaysia’s CPO production – Bursa Malaysia is now set to launch night trading session for its flagship FCPO contract in the fourth quarter. A common mechanism in widely-traded products, night trading will align palm prices with trends happening in other parts of the globe, specifically soybean oil trading on CBOT futures during US hours and Brent/WTI petroleum trading in London and New York. The recent volatility in crude palm oil prices, which rose to an all-time high exceeding RM4500/ton in May then falling sharply to lose over 20% of value in less than a month, has been linked to dramatic speculative developments. According to Bursa Malaysia CEO, the night trading session would provide an alignment mechanism to ‘manage price risk exposure based on real-time global developments in different time zones’ Night trading sessions will be available for most products on BMD, including palm, gold, tin and bond futures/options.

This should consolidate BMD’s position as the global benchmark for crude palm oil, setting it aside from upstart competitors such as Asia Pacific Exchange’s US Dollar denominated palm futures contract in Singapore.