Bursa Malaysia Derivatives To Introduce Night Trading By Fourth Quarter Of 2021
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(Image: The Malaysian Reserve/Razak Ghazali)

Bursa Malaysia subsidiary, Bursa Malaysia Derivatives Bhd has said that it will launch an after-hours (T+1) trading session (night trading) in a bid to make Malaysia’s derivatives market more attractive to global traders. This move – which is expected to take effect by the fourth quarter of 2021 – came following Bursa Malaysia Derivatives’ success in obtaining an approval-in-principle (AIP) from the Securities Commission Malaysia (SC) to do so.

In a statement, Bursa Malaysia Derivatives said that Night Trading is a significant development that will align the exchange with global market practices, and that it will be available for most products. It further stated that the practice is set to enhance the price discovery of its offerings, given the substantial growth in the participation of the derivatives market since 2019.

To quote some figures, Bursa Malaysia Derivatives said that the total number of contracts traded in 2020 recorded a 35% growth, which translated to an increase from 13.5 million contracts in 2019 to 18.2 million. Of the total trading volume in 2020, 46% were contributed by foreign participants.

Additionally, 30 June 2021 saw the total monthly trading volume for the exchange’s crude palm oil futures contract (FCPO) hit an all-time high at 1.7 million contracts, which is equivalent to the trading of 42.6 million metric tonnes of crude palm oil. This new high surpassed a previous record that was logged back in March 2020 (1.66 million contracts).

(Image: New Straits Times)

Chief executive officer of Bursa Malaysia Derivatives, Samuel Ho said that the recent volatility in crude palm oil prices demonstrated the need for Night Trading. “It will provide an avenue for market participants to better manage their price risk exposure based on real-time global developments in different time zones. We will continue to work with our stakeholders to ensure smooth implementation of the Night Trading,” he added.

Ho further stated that enhancing the trading ecosystem will help to sustain the strong interest among traders and to further promote the globalisation of the Malaysian derivatives market. “Market participants can look forward to more infrastructure enhancement projects which will be rolled out in stages this year,” he said.

For context, the trading session for derivatives on Bursa Malaysia currently starts at 8.15am or 8.30am (pre-opening) – depending on the type of derivatives. Meanwhile, the day ends at between 3.15pm to 6.15pm (inclusive of market close/surveillance). You can find out more about the trading sessions of Bursa Malaysia’s derivatives market here.

(Source: Bursa Malaysia)

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