KUALA LUMPUR, Sept 19 — Bursa Malaysia Derivatives Bhd (BMD) today launched the enhanced three-, five- and 10-year Malaysian Government Securities (MGS) futures products, or better known as FMG3, FMG5 and FMGA, respectively.
In a statement, BMD said the enhancement to FMG3, FMG5 and FMGA would create a “Malaysian Sovereign Bond Futures Curve”, which serves as a benchmark for local and foreign investors to estimate the impending interest rates while managing their physical cash MGS exposures.
Almost 50 per cent of the MGS contracts were foreign holdings, it said.
BMD said the enhancement of the three MGS products were in three areas; extension of the close of trading time, the final settlement price and the maturity range.
The extension of the close of trading time from 5pm to 6pm for FMG3 and FMGA is to synchronise with Bursa Malaysia’s Electronic Trading Platform (ETP) operation time.
The final settlement price is now largely derived from the volume weighted average prices mechanism of actual cash MGS transactions in the market trades reported in the ETP on the final trading day, which previously was based on Reuters’ settlement methodology.
Meanwhile, the maturity range for FMG3 has increased from a range of 2.5-3.5 years to 2-4 years while that for FMGA is extended from 8-10 years to 8-11 years.
BMD Chairman and Bursa Malaysia Bhd Chief Executive Officer, Datuk Seri Tajuddin Atan, said the enhancement of FMG3 and FMGA was intended to make the products more appealing to investors and hedgers which was only available for FMG5 before.
“In addition, the extended trading hours offer greater flexibility to traders to seize any opportunistic market movements,” he said.
The changes were made after industry consultation and approval from the Securities Commission Malaysia in July this year.
FMG3, FMG5 and FMGA fall within the financial product category.
BMD is a 75 per cent-owned subsidiary of Bursa Malaysia Bhd. — Bernama
