KUALA LUMPUR, Aug 24 — Bursa Malaysia Bhd’s subsidiary, Bursa Malaysia Derivatives Bhd, is set to launch its first mini futures contract, the Mini FTSE Bursa Malaysia Mid 70 Index Futures Contract (FM70), on Aug 27, 2018.

The FM70 is a ringgit-denominated futures contract which tracks the FTSE Bursa Malaysia Mid 70 Index (FBM Mid 70) as its underlying instrument, providing investors exposure to all the 70 companies of the FBM Mid 70 via a single futures contract.

Bursa Malaysia Chief Executive Officer Datuk Seri Tajuddin Atan said the FM70 was designed to make trading in the derivatives market accessible to a wider retail investor base with a relatively low initial margin or starting investment cost.  

"As it tracks the FBM Mid 70, the FM70 contract essentially allows investors to trade and invest in the combined potential of this group of companies which make up part of the top 100 companies listed on the exchange,” he said in a statement today.

The contract value is equivalent to the index points of the FBM Mid 70 multiplied by RM2, which currently brings the value of the contract to approximately RM30,000.

Targeting the retail investors, the FM70 has a low initial margin of RM800, as opposed to other equity index futures products such as the FTSE Bursa Malaysia KLCI Futures (FKLI) contract at an initial margin of RM4,000.

"This mini futures contract takes the legwork out of having to research individual companies to invest in, and is suited to busy investors seeking alternative investment options beyond the securities market. This is in line with our intent to expand the suite of products in the equity derivatives space,” said Tajuddin.

Investors are also able to short-sell the FM70 and capitalise on arbitrage opportunities arising from price differences between FM70 and the underlying index.

In addition, the FM70 can be combined with the FKLI for joint exposure to the top 100 companies in Malaysia, or be used for correlation or spread trading with FKLI to capitalise on periods of divergence and convergence of the two underlying indices. — Bernama