Analysis and Assessment of the Growth of the Malaysian Derivative Market
Despite a lack of interest by the local investors, the Malaysian economy and financial market is progressing due to foreign investment in future contracts . The Malaysian derivatives market is composed of the regulator, exchange, intermediary, clearing house and investors (Anonymous, n.d.). Depending upon the regional location, Malaysia is experiencing a growth in its derivatives market.
One of the leading derivative exchanges of Malaysia is Bursa Malaysia Derivatives Bhd (BMD) that has witnessed an increase in its volume due to rising interest of foreign investors . The partnership with Chicago Mercantile Exchange (CME) has boosted the future contracts trade for BMD. This has improved the both the liquidity and access of the local market to the global derivative industry . CME CPO and BMD FCPO have improved the efficiency of the local market through enhanced accessibility and setting of Malaysian derivatives benchmark .
Securities Commission Malaysia has expected a double increase in the capital market by 2020. BMD with its 16 future contracts is contributing to the growth of the derivative market in the country . According to Azila Abdul Aziz, the Malaysian derivatives market is offering products like equity finance, commodity finance, future contracts and equity options. The trading activity of BMD has increased in past years . The Securities Commission is also responsible to look into matters that may lead to fraudulent derivative activities . However, SC has introduced lenient conditions for the derivatives market .
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