Bursa unveils world's first options contract on palm olein

KUALA LUMPUR (Jan 13): Bursa Malaysia Bhd has successfully launched the Options contract on US Dollar Denominated Refined, Bleached and Deodorised (RBD) Palm Olein Futures (OPOL), the world’s first options contract on palm olein.

Serving to complement the existing US Dollar Denominated RBD Palm Olein Futures Contract (FPOL), OPOL broadens the array of possible risk management tools available for palm oil players in line with the Exchange’s aim of expanding Bursa Malaysia Derivatives’ product offerings under the palm oil complex.

Between now and June 30, 2020, all market participants will be entitled to an exchange fee and clearing fee waiver on OPOL transactions.

Chairman of Bursa Malaysia Derivatives Datuk Muhamad Umar Swift said the exchange enhances the current FPOL contract by making OPOL available to the marketplace in response to market demand for an options contract.

“The OPOL contract allows for the introduction of more sophisticated strategies to raise the level of derivatives trading and will attract new categories of market participants such as commercial banks and options writers and traders.

“We look forward to taking the Malaysian derivatives industry to the next level with the debut of this world’s first product, underlining the Exchange’s commitment to strengthen Malaysia’s position as the centre for palm oil price discovery and the global premier palm oil market,” he said in a statement.

OPOL provides palm oil refiners, end-users of palm olein and foreign palm olein importers a mechanism for transparent price discovery, regulated trading and hedging against adverse palm oil price movements. For traders, OPOL is an additional instrument that can be utilised by local and international participants to trade.

RBD palm olein is a major component in the palm oil value chain. Malaysia produces approximately 10.7 million tonnes of RBD palm olein, with approximately 75% for the export market.