By Surin Murugiah
Bursa Malaysia Derivatives Exchange aims to increase the volume traded on the derivatives market by 40% this year by reducing most of its fees and changing the crude palm oil (CPO) futures contract specifications.
Bursa Malaysia Bhd chief executive officer Datuk Yusli Mohamed Yusoff said the new fees would take effect from April 1 and cover the Kuala Lumpur Composite Index (KLCI) futures contracts, CPO futures and financial derivatives futures products.
He said the exchange and clearing fee for KLCI futures contracts would be reduced to RM5 from RM6. The fee for CPO futures would be reduced to RM3 from RM4 while the fee for financial derivatives futures products would be lowered to RM1 from RM3.
Speaking at the exchange’s annual palm oil conference in Kuala Lumpur on March 14, he said Bursa Malaysia was introducing an incentive scheme for locals and brokers for proprietary trades.
The exchange and clearing fee for financial derivatives, day trades and spread trades will be reduced to 50 sen from RM1.50 per trade.
The revised specifications for CPO futures contracts will take effect tomorrow. The changes involve increasing the futures contracts to 24 months with the introduction of six alternate month contracts.
Until now, CPO futures for trading is spot, the next five succeeding months and thereafter, alternate months up to 12 months forward.
Yusli said while the spot month position limit for CPO futures was unchanged, for the other months it would be increased from 3,000 contracts to 5,000 contracts. The position for all months combined will be increased to 8,000 contracts.
On the price limit for CPO futures, it would be changed from static to a dynamically managed one, in line with movement in market prices.
Currently, the limit per day for all non-spot contracts is a plus or minus RM100. Under the proposed changes, it will be a plus or minus 10%.
When at least three non-spot contracts are trading at limit, a 10-minute cooling-off period would apply, followed by a five-minute market interruption after which the price limit will be expanded to plus or minus 15%.
“Our CPO futures is currently a global pricing benchmark for crude palm oil futures. However, global competition in this sector is increasing alongside demand for the commodity making it essential for us to ensure that our CPO futures remains relevant to evolving market needs,†he said.
Yusli said derivatives contribute 12% to the exchange’s revenue while CPO futures make up 57% of its volume. Volume surged to 2.23 million contracts at end-2006 from 480,000 contracts in 2001.
“The revised contract specifications provide greater trading flexibility and increase our CPO futures’ efficiency, making it a more competitive contract,†he said.
On the US dollar trade for CPO futures, he said Bursa was looking to launch it in the second half of 2007 and targeting at foreign investors.
“We live in a global environment. Everyone is doing multi-currency trading; we need to move on,†he said, adding that Bursa was looking at working with banks and brokers to handle the settlement in US dollars.
No Longer Blue about Greenspan View
Last Update: 06-Mar-07 09:56 ET
There are reports today discussing the latest musings from former Federal Reserve Chairman Alan Greenspan. The comments he made that are catching most people’s attention is that there is a “one-third probability” of a U.S. recession this year and that the current expansion won’t have the staying power of its decade-long predecessor.
A little more than a week ago, Greenspan’s assertion that a recession was “possible” late in 2007 was considered to be a catalyst for the biggest one-day point loss for the major indices in roughly four years.
It was a silly response, frankly, since it is a foregone conclusion that anything is possible. Greenspan was simply communicating that reality. The bigger issue is whether a recession is probable, and on that score, Greenspan’s view isn’t all that alarming as a one-third probability suggests there is a far greater likelihood that the economy will avoid a recession.
When considering the latest remarks from Alan Greenspan, then, the thing that stands out most about them is not the remarks themselves, but the market’s reaction to them.
The major indices have started the day on a noticeably higher note despite Greenspan’s latest mention of the “R” word. That is a tacit signal that it is emerging from its brooding sense of negativity and is regaining its ability to discern what is actionable trading news and what is just news.
As an aside, Fed Chairman Ben Bernanke reiterated last Wednesday that there has been no change in the Fed’s economic outlook which calls for 2.50% to 3.00% growth this year and 2.75% to 3.00% growth next year.
–Patrick J. O’Hare, Briefing.com
The following is a statement by Minister in the Prime Minister’s Department Datuk Seri Effendi Norwawi:
I. Sources of Data
The following data sources were used to estimate equity ownership in Malaysia:
i. Records from the annual reports of companies registered with the Companies Commission of Malaysia (CCM);
ii. Equity ownership of public listed companies in Bursa Malaysia Berhad;
iii. Data from Bumiputera institutions such as Lembaga Tabung Haji, Lembaga Tabung Angkatan Tentera and Cooperatives Development Department;
iv. Data from Permodalan Nasional Berhad (PNB), MARA and all SEDCs;
v. Data from Securities Commission on Unit Trust Funds and related trust fund management companies such as PNB; and
vi. Information on ownership in nominee companies based on a survey done in March 2005.
II. Corporate Equity Ownership as at 31st December 2004 (Ref: Ninth Malaysia Plan, Chapter 16, Page 336).
From the above, overall Bumiputera equity ownership as of 31st December is 18.9%.
Calculation of Corporate Equity Ownership by Ethnic Groups based on Companies Commission of Malaysia (CCM)’s Database
· The main source of data to calculate equity ownership is derived from CCM. Among the information used from the annual reports of the companies in this methodology include type of companies and their activities, composition of equity ownership by ethnic groups and nationality.
· As at 31st December 2004, a total of 609,595 active companies were registered with CCM. Equity ownership by ethnic group was calculated based on the latest annual reports submitted by the companies to CCM.
· Only 40 percent of the registered companies submitted their annual returns by the dateline for the Ninth Malaysia Plam (30th June 2005). However, the total value of equity owned by this group of companies (40 percent of the registered companies) comprised 70 percent of the total equity ownership of all companies registered with CCM in 2004. The estimate for the remaining 60 percent of the registered companies was derived from their 2003 annual reports. Breakdown of shareholdings for companies which submitted their annual reports before 2004 and in 2004 are as follows:
III. Par Value vs Market Capitalization
· In calculating the equity ownership, par value was used as it provides a constant measurement to all companies in the corporate sector as compared to the market value, which can only be used on the listed companies.
IV. Equity Ownership by Trust Agencies
· The data on equity ownership in companies held by trust agencies was obtained directly from the agencies such as PNB, Perbadanan Usahawan Nasional Berhad (PUNB), Perbadanan Nasional Berhad (PNS), MARA and SEDCs.
· These agencies were established, amongst others, to assist Bumiputera participation in trade and industry. Breakdown for Bumiputera agencies are as follows:
VI. Equity Ownership by Bumiputera Institutions
· Institutions such as Lembaga Tabung Haji (LTH), LTAT, Koperasi Polis and thrust funds such as Amanah Saham Nasional (ASN) and Amanah Saham Bumiputera (ASB) were established to mobilise savings held by Bumiputera.
· The equity ownership in this category was obtained directly from the institutions involved. Breakdown for Bumiputera institutions are as follows:
Note: Equity own by non-Bumiputera in PNB Unit Trust Scheme, ASM Mara Unit Trust and Cooperatives Development Department are as follows:
Chinese RM 697.5 million
Indian RM 76.7 million
Others RM 8.6 million
VII. Equity Ownership by Nominee Companies
· Nominee companies owned RM139,472.4 million or 25.9 percent of the total corporate equity in 2004. In March 2005, EPU with the cooperation of SSM conducted a survey on 359 nominee companies to ascertain the status of ownership and beneficiaries of shares registered under nominees.
· A total of 179 companies that responded to this survey, owned RM103,713.2 million or 74.3 percent of the total equity held by nominee companies in 2004.
· The composition of equity in the nominee companies by ethnic groups and others is as follows:
VIII. Equity Ownership by the Government
· The major portion of the government equity ownership is in the public listed government-linked-companies (GLCs). Equity held by Employees’ Providence Fund (KWSP), Khazanah Holdings and Minister of Finance Inc was considered as government interest. Shares held by the Government were excluded from the calculation. However, equity held by private companies and individuals in non-listed and listed GLCs such as Petronas, Telekom Malaysia Berhad, TNB and MAS was included in the calculation of equity held by the respective ethnic groups. This approach has been consistently used in all plan documents.
IX. Equity of Listed Companies
· The committee in EPU also calculated equity ownership in listed companies by ethnic group. Based on the calculation, as at December 2005, Bumiputera owned 21.8% or RM44.0 billion of the share capital in Bursa Malaysia Berhad. This figure is different from an earlier quoted figure of 36.64%. In estimating Bumiputera equity, the 36.64%, quoted as Bumiputera shares, included a large portion of shares held by nominee companies and the government.