Executive Summary
There are many reasons behind future growth prospects for Malaysian derivatives markets. For starters, Malaysia represents the third largest country in terms of output across the ten member states of ASEAN (the Association of Southeast Asian Nations). Malaysia is also the leading market for sukuk listings, Islamic banking and Shari’ah-compliant investing. In terms of location, Malaysia is in close proximity to China, Indonesia, Thailand and Singapore, making it an ideal spot for local companies to benefit from pan-Asian growth and financial opportunities.

A CME Group investment in the Bursa Malaysia Derivatives Berhad (BMD) has been the catalyst that raised the profile of Malaysia in global markets and provided a new source of liquidity with enormous potential. As foreign investors often use futures as a preferred access vehicle, both execution and infrastructure are supported by the CME, while apprehension around market structure and order handling are mitigated.

BMD’s focus on transitioning the market to become more electronic and enhancing straight-through processing will help to reduce costs and improve trading efficiencies. Getting local market participants more actively involved, in addition to marketing efforts targeted at foreign investors will also increase interest and trading activity.

The reasons for why foreign investors will continue to access Malaysian derivatives contracts are amongst the primary themes of this report. Today, both Palm Oil and Kuala Lumpur Index futures are the most commonly known, but new product development, innovation, and introduction of greater automated market-making will help to facilitate greater interest in the market.

Based on recent outreach, TABB Group has concluded that Malaysia is in the midst of transitioning to a more developed marketplace that can support and grow into a wider hub for pan-Asian trading and development. Most importantly, we have concluded that Malaysia is becoming a more interesting market for global investors to consider and participate in.
 

TABB Group Vision Note
Malaysian Derivatives Trading: Growth and Opportunities Ahead
This 20-page, 15-exhibit vision note presents the foundation for a better understanding of Malaysian derivatives trading. The report is based on outreach to global banks including some of the largest FCMs in the world, in addition to foreign and domestic exchanges, and technology and infrastructure providers.