RINGGIT-DENOMINATED: Small-sized contracts to provide
greater accessibility and affordability
Malaysia's first precious metal futures contract, the Gold Futures Contract (FGLD), will start trading on Monday,
allowing all market players, especially domestic retail investors, to trade gold on Bursa Malaysia’s derivatives exchange.
The cash-settled gold futures contract trades in small sizes of 100g and the price will be quoted in ringgit.
Bursa Malaysia chief executive officer Datuk Tajuddin Atan said the aim is to create a comprehensive marketplace where there is something for every type of investor on Bursa Malaysia.
“We are confident that the new Bursa gold futures contract, because it is traded on our highly regulated exchange, will become the trusted way to trade gold in Malaysia,” Tajuddin,
who is also Bursa Malaysia Derivatives Bhd chairman, said at a media briefing yesterday.
Bursa Malaysia Derivatives CEO Chong Kim Seng said the ringgit denomination minimises the risks associated with foreign currency fluctuations, thus providing the convenience and
flexibility to trade gold futures on Bursa.
“In Malaysia, gold is a highly desirable commodity from a cultural standpoint, so the minimum contract size of 100gm for Bursa FGLD provides greater accessibility and affordability,”
he said, adding that traders who want to do hedging can trade in multiples.
Gold bullion for delivery of up to one year will be benchmarked against the London Gold Fix Price, which is the global benchmark for spot gold prices.
This, according to Chong, provides confidence in price transparency, thus making it as close as possible to the true price of gold.
He is optimistic that due to gold’s anti-inflationary quality, the FGLD will be well-received by investors, adding that they should open gold futures trading accounts with licensed and
regulated futures brokers, whose details are available on the Bursa website.
On the potential response to the FGLD, Bursa Malaysia Derivatives senior executive vice president (product & market development) Jeffrey Tan Seng Hui said: “There is a lot of latent
demand for gold investment here and we have a well-functioning marketplace ... an avenue for investors to get exposure to gold prices.”
Gold price was about RM142,000 per kg yesterday.