8
Globalising Crude Palm Oil Futures
Globalising Crude Palm OilFutures
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Alongside Bursa Malaysia Derivatives
(BMD)’s FCPO contract, the global price
benchmark for crude palm oil, a new
USD-denominated contract, cash-settled
to the physically-delivered FCPO, is
now also available to the global trading
community on CME Globex.
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With Chicago Mercantile Exchange’s (CME)
launch of the Crude Palm Oil Futures (CPO)
contracts, CME Group customers will be able to
trade the world’s most consumed edible oil in a
cash-settled, USD-denominated contract, with
the safety and liquidity of CME Globex.
The CME CPO contract, as a USD-denominated
palm oil futures contract, complements the
existing Malaysian MYR-denominated Crude
Palm Oil Futures (FCPO) contract. CPO is a
cash-settled contract which does not involve
physical delivery of the underlying crude palm oil.
CPO also consolidates Malaysia’s position as the
leading price discovery centre for palm oil traded
globally. Additionally, now that BMD utilizes
CME Globex as its electronic trading platform for
futures, including the Malaysian FCPO contract,
customers can more easily engage in spreading
and arbitrage opportunities between the CME
CPO and the BMD FCPO contracts.
This expansion of the edible oil product suite
also creates opportunities for cross-trading with
soybean oil based on the historically strong
correlation between these products and global
supply and demand models. Together, crude palm
oil and soybean oil account for about 61 percent
of all the edible oil in the world, with palm kernel
oil accounting for an additional 4 percent of oil
consumed.
Key Features of CME’s Crude Palm Oil Futures• USD-denominated
• Cash-settled to the physically-delivered
BMD FCPO contract
New CME Group Commodity Trading Opportunities
1
BMD FCPO CBOT Soybean Oil5,000
4,500
4,000
3,500
3,000
2,500
2,000
1,500
1,000
500
0
80
70
60
50
40
30
20
10
0
FCP
O (
Rin
git
t/M
T)
Soy
bea
n O
il (c
ents
/lb
)
May 95 May 96 May 97 May 98 May 99 May 00 May 01 May 02 May 03 May 04 May 05 May 06 May 07 May 08 May 09
HISTORICAL PRICE RELATIONSHIP BETWEEN CBOT SOYBEAN OIL AND BURSA MALAYSIA DERIVATIVES CRUDE PALM OIL FUTURES (1995-PresenT)
source: cmegroup.com/palmoil
• Electronically traded on CME Globex
• Reduced capital requirements due to
cross-product margin efficiencies with
other CME Group contracts
Liquidity and FlexibilityWith a total daily volume of more than
600,000 contracts, CME Group offers deep,
liquid agricultural futures markets that
provide customers with diversification benefits
and consistent price volatility averaging 20
percent to 40 percent on an annual basis.
Learn more atwww.cmegroup.com/palmoil
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BMD’s FCPO contract is a deliverable contract
that is now traded electronically on the CME
Globex electronic trading platform. The global
benchmark price for market players in the oils
and fats industry, the FCPO contract provides
the opportunity to:
• Manage price risk – plantation companies,
refineries, exporters and millers can use
the FCPO contract to manage risk and
hedge against the risk of unfavourable
movements in the price of the underlying
crude palm oil in the physical market
• Speculate – traders can use the FCPO
contract to gain leveraged exposure to
movements in crude palm oil prices
• Gain immediate exposure into the
commodity market – via the FCPO
contract, global fund managers and
proprietary traders are able to be part of the
active commodity market instantaneously
The most liquid and successful crude palm oil futures contract in the world, the FCPO contract
is one of the product offerings of BMD, in a range of commodity, financial and equity derivatives
products which includes:
• Crude Palm Kernel Oil Futures (FPKO)
• USD-denominated Crude Palm Oil Futures (FUPO)
• Equity Index futures and options
• Single Stock Futures
• Interest Rate futures
• Government Securities futures
For further information please visit www.bursamalaysia.com/derivatives/
Bursa Malaysia Derivatives (BMD) FCPO Contract: The Global Price Benchmark for Crude Palm Oil
2
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CME Globex is the world’s leading electronic trading platform, providing access to the broadest
array of futures and options products available on any exchange. With customers trading around
the globe and virtually around the clock, CME Globex offers:
• High speed trade execution
• Vast capabilities to facilitate the most complex and demanding trading
• Direct market access and central counterparty clearing
• Fairness, transparency and anonymity
• Global distribution and international hubs
To find out more about CME Globex, including the range of connectivity options available, as well as how to connect,please visit www.cmegroup.com/globex
Advantages of CME Globex
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CME Group and Bursa Malaysia partner for greater global participationOn 17 September 2009, CME Group
and Bursa Malaysia joined in a strategic
partnership which aims to contribute to the
overall growth of Malaysian capital markets
by improving global access to the Malaysian
derivatives market. This partnership includes
licensing the settlement prices of the Crude
Palm Oil Futures (FCPO) contract as well
as facilitating global distribution of Bursa
Malaysia Derivatives contracts through the
CME Globex electronic trading platform
– improving accessibility and elevating
the presence of the benchmark Malaysian
derivatives worldwide.
About CME GroupAs the world’s largest and most diverse
derivatives marketplace, CME Group
(www.cmegroup.com) is where the world
comes to manage risk. CME Group exchanges
offer the widest range of global benchmark
products across all major asset classes,
including futures and options based on interest
rates, equity indexes, foreign exchange,
energy, agricultural commodities, metals,
weather and real estate. CME Group brings
buyers and sellers together through its CME
Globex electronic trading platform and its
trading facilities in New York and Chicago.
CME Group also operates CME Clearing, one
of the largest central counterparty clearing
services in the world, which provides clearing
and settlement services for exchange-traded
contracts, as well as for over-the-counter
derivatives transactions through CME
ClearPort. These products and services ensure
that businesses everywhere can substantially
mitigate counterparty credit risk in both listed
and over-the-counter derivatives markets.
About Bursa MalaysiaBursa Malaysia is one of the largest bourses in
Asia with about 1,000 listed companies offering
a wide range of investment choices to the
world. Operating a fully-integrated exchange,
Bursa Malaysia offers the complete range of
exchange-related services including trading,
clearing, settlement and depository services.
Bursa Malaysia Derivatives Berhad (BMD),
a subsidiary of Bursa Malaysia Berhad, is a
futures and options exchange that offers the
most liquid and successful FCPO contract in
the world. Following the strategic partnership
with CME Group, BMD products have now
migrated to the CME Globex electronic trading
platform with the aim of bringing greater access
and reach of the Malaysian derivatives offerings
to the global market.
4
Realising Value for Customers
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For further information and to learn more
about the strategic partnership between
CME Group and Bursa Malaysia visit
www.cmegroup.com/bmd or
www.bursamalaysia.com/derivatives/ or
contact a representative listed below.
CME Group’s USD Crude Palm Oil (CPO) Futures Contract· Nelson Low (CME Group Asia) [email protected]
· Jeffry Kuijpers (CME Group EMEA) [email protected]
· Susan Sutherland (CME Group Americas) [email protected] BMD’s Crude Palm Oil (FCPO) Futures Contract· Jeffrey Tan (BMD Product & Market Development) [email protected]
· Wan Intan Wan Suffian (BMD Marketing) [email protected]
CME Globex Electronic Trading Platform· Kwong Cheng (CME Group Asia) [email protected]
· Mark Vogel (CME Group EMEA) [email protected]
· Mazlan Yahya (BMD Operations & Risk Management) [email protected]
· Suresh Maniam (BMD Business Development) [email protected]
Strategic Partnership· Phil Millar (CME Group Asia) [email protected]
· David Feltes (CME Group EMEA) [email protected]
· Sree Kumar (BMD Business Development & Marketing) [email protected]
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AC438/0/1010
This brochure has been provided for general information purposes only. The information contained herein does not constitute legal, financial, trading and/or investment advice and neither does it make any recommendation or endorsement regarding the services mentioned herein.
Although care has been taken to ensure the accuracy of the information within this brochure, Bursa Malaysia Berhad and its subsidiaries, including Bursa Malaysia Derivatives (the “Bursa Malaysia Group”) and CMe Group Inc. and its affiliates (collectively, “CMe Group”) do not warrant or represent, expressly or impliedly as to the accuracy or completeness of the information herein. All applicable laws, regulations and rules should be referred to in conjunction with this brochure. Bursa Malaysia Group and CMe Group do not accept any liability for any trading decisions made on the basis of this information. You are advised to seek independent advice prior to trading.
CMe Group and/or its subsidiaries assume no responsibility for any errors or omissions. Additionally, all examples in this brochure are hypothetical situations, used for explanation purposes only, and should not be considered investment advice or the results of actual market experience. All matters pertaining to rules and specifications herein are made subject to and are superseded by official CMe, CBOT and nYMeX rules.
CMe has been authorized by BMD to use Bursa Malaysia Crude Palm Oil Futures Contract settlement Prices (“FCPO settlement Prices”) as the basis for settling CPO contracts traded on CMe and to refer to the FCPO settlement Prices in connection with creating, marketing, listing, trading, clearing and settling CPO contracts.
CPO contracts are not in any way sponsored, endorsed, sold or promoted by BMD and BMD has no obligations or liability in connection with the creation, marketing, trading, clearing, settlement and/or promotion of any such contracts. FCPO settlement Prices are calculated, compiled and published solely by BMD. However, BMD makes no representations and disclaims all express, implied and statutory warranties of any kind, including, but not limited to, representations and warranties as to accuracy, timeliness, completeness, merchantability or fitness for any particular purpose. To the extent permitted by applicable law, BMD shall not be liable (whether in contract, negligence or otherwise) to any person for any error in the FCPO settlement Prices, and BMD shall not be under any obligation to advise any person of any error therein.
BMD shall under no circumstances be liable for any type of damages (including but not limited to, direct, indirect, special, consequential, incidental, or punitive damages whatsoever or any lost profits or lost opportunity), even if BMD has been advised of the possibility of such damages.
CMe Group is a trademark of CMe Group Inc. The Globe logo, CMe and Globex are trademarks of Chicago Mercantile exchange Inc. ClearPort is a trademark of new York Mercantile exchange, Inc. Bursa Malaysia is a trademark of Bursa Malaysia Berhad, used here under license. All other marks are the property of their respective owners.
Copyright © 2010 CMe Group Inc. and Bursa Malaysia Berhad. All rights reserved.
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