Malaysia Starts CNH Futures Trading
Posted by Colin Lambert. Last updated: December 10, 2023
Bursa Malaysia has entered the FX futures fray with its first contract, a mini USD/CNH, via a licensing agreement with Hong Kong Exchanges and Clearing (HKEX), a move the exchange says is “a significant stride in the advancement of the Malaysian capital market”.
The exchange suggests the new contract, slated as FCNH, will be very useful for participants, such as small to medium enterprises and business owners with transactions in China, to hedge their risks on fluctuations in the US dollar and offshore Chinese renminbi currencies.
The plan to launch the contract is also strategic and in line with the exchange’s recent signing of a licensing agreement with Dalian Commodity Exchange on the soybean oil futures settlement price for the Bursa Malaysia DCE Soybean Oil Futures Contract (FSOY), Bursa Malaysia says the new FX futures contract will be complementary and serve as a currency hedging tool for market participants interested in trading FSOY, which will be denominated in USD.
“The launch of FCNH is timely given the current volatility in global markets, which has led to increasing demand among market participants and businesses to manage their foreign currency exchange exposure,” says Datuk Muhamad Umar Swift, chairman of Bursa Malaysia Derivatives and CEO of Bursa Malaysia Berhad. “Our licensing agreement with HKEX for FCNH and product collaboration with DCE are testaments to Bursa Malaysia Derivatives’ commitment to forging strategic alliances and deepening global market connections. We are optimistic that these efforts will enable market participants to effectively navigate the complexities of international markets and adeptly manage cross-market risks.”
HKEX Group Head of Emerging Business & FIC, Glenda So, adds, “At HKEX, building a suite of RMB-related investment and risk management products forms a key part of our strategy, and we are keen to support our partners with the development of a broader RMB and fixed-income product ecosystem in the region and beyond, connecting capital with opportunities.”