(Yicai) March 19 — The first futures contract that uses Chinese commodity prices as a benchmark for settlement on an exchange of a member association of Southeast Asian nations has officially begun trading.
Bursa Malaysia Dalian Commodity Exchange's soybean oil futures, also known as FSOY, began trading on the Bursa Malaysia Derivatives Exchange yesterday as the settlement price authorization agreement signed by DCE and BMD last year officially came into effect, the two exchanges said separately known statements yesterday.
FSOY is identical in underlying assets to soybean oil futures traded on the DCE, with each lot comprising 250,000 tonnes. According to BMD, FSOY is available for trading between 9:00 a.m. and 6:00 p.m. Malaysian time Monday to Friday and 9:00 p.m. to 11:30 p.m. Monday to Thursday.
“We are pleased to be the first exchange outside of China to be licensed to integrate DCE’s commodity futures settlement prices into our product offering,” said BMD Chairman Datuk Muhamad Umar. “In addition to our existing futures contracts, market participants can now use FSOY as a risk management tool to hedge against price fluctuations during times of market volatility and the evolving complexity of international markets.”
“The launch of FSOY is a pragmatic result of cooperation, in line with the Belt and Road Initiative and celebrating the 50th anniversary of diplomatic relations between China and Malaysia,” a DCE spokesperson said. “It expands the tools available to participants in the global oil and fats industry to manage price risks and strengthens the links between the two countries’ futures markets.”
“In the future, the DCE will continue to look for ways to improve communication and deepen cooperation with foreign exchanges, steadily increase the degree of their opening-up, and serve the stable and healthy development of global commodity trading,” the spokesman added.
China is the world's largest importer and consumer of soybeans. The DCE and the BMD are the world's leading futures markets for refined palm oil and crude palm oil, respectively.
As the first non-palm oil edible oil futures contract, FSOY can expand international markets' ability to hedge oil prices and inform international traders about the Chinese and Malaysian futures markets, the DCE said.
Publisher: Futura Costaglione
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