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BURSA MALAYSIA SEALS DERIVATIVES PALM OIL PRICE LICENSING AGREEMENT WITH MCX
BackAug 24, 2006
24 August 2006
BURSA MALAYSIA SEALS DERIVATIVES PALM OIL PRICE LICENSING AGREEMENT WITH MCX
Bursa Malaysia Berhad has entered into a licensing agreement to grant the Multi Commodity Exchange of India Ltd (MCX) a non-exclusive and non-transferable license to use Bursa Malaysia's Derivatives Palm Oil Price. This initiative is a result of a Memorandum of Understanding (MOU) between the two exchanges signed on 30 March 2006.
Through the licensing agreement, Bursa Malaysia will permit MCX to use Bursa Malaysia's Derivatives Palm Oil Price as the basis for settling MCX's palm oil derivatives contracts and as the reference in connection with the creation, marketing, trading, clearing and settlement of such contracts on MCX.
"This is a significant step for both the exchange and our palm oil derivatives market. First, it spells the further expansion of Bursa Malaysia's regional alliances. Second, it solidifies our position as the benchmark of global derivatives palm oil pricing," said Yusli Mohamed Yusoff, Chief Executive Officer, Bursa Malaysia Berhad.
The agreement with MCX will provide a benchmark price reference for risk management to the palm oil sector of India, allowing Indian palm oil producers, users and investors access to globally aligned prices and trading practices.
MCX will be charged a fee equivalent to USD0.20per round-turn for all crude palm oil trades executed on MCX. The agreement also stipulates a minimum annual fee of USD50,000 for Bursa Malaysia should MCX be unable to meet a monthly minimum of USD4,167 via the USD0.20 per round-turn fee.
Bursa Malaysia operates the world's largest derivative exchange dealing in palm oil contracts. The Crude Palm Oil Futures contract launched in October 1980 is one of the most actively traded derivatives contract offered by Bursa Malaysia, representing almost 50% of Bursa Malaysia's derivatives business.