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1. DEVELOPMENT OF DERIVATIVES
MARKET IN MALAYSIA
Prepared by:
ANITH SYAZWANI BINTI ABDUL RAHIM
NOORFAZILAH BINTI MUHAMAD JAHARI
NURUL NADIAH BINTI ZAINUN
ROSSAFINAS BINTI ABDUL HANIFF
SITI AMIRAH SOLEHAH BINTI OMAR

2. OVERVIEW
• Bursa Malaysia Derivatives Berhad (BMD), formerly known as
Malaysia Derivatives Exchange Berhad (MDEX)
• 75% owned subsidiary of Bursa Malaysia Berhad which
provides, operates and maintains a futures and options exchange
• BMD operates the most liquid and successful crude palm oil futures
(FCPO) contract in the world.
• BMD operates under the supervision of the Securities Commission
and is governed by the Capital Market and Services Act 2007
• BMD also falls under the jurisdiction of the Ministry of Finance of
Malaysia
• Offer investors the security of trading on a regulated Exchange with
infrastructure and regulations comparable to that of established
markets worldwide

3. REGULATORY STRUCTURE

4. TRADING PRODUCTS
• Futures
– First known futures market took place in Japan with the formation of Kojima
Rice Futures in the 18th Century
– 1980’s all futures exchange trades in the USA
– Mid 1980’s futures exchange been separated into regions
• Options
– Introduced in the US Capital Markets in the early 18th century
– April 1973, more organized options trading was been introduced at the
Chicago Board of options
• Swap
– In 1977, first long structured swap “Morgan Guarantee” and “Banque Paribas”
swapped the export contract for the Caracus Metro (FRF against USD)
– First interest rate swap contract between “Citibank” and ‘Continental
Illinionis”
• Warrants

5. 1980’s
• Malaysia joined the derivative market trading
community with the launched of Crude Palm
Oil Futures at KLCE in October 1980
• Other national agro-based commodities
(rubber, tin, palm kernel and cocoa) be trades

6. 1990’s
• May 1990, warrants also be known as TSR’s were first be introduced
in Malaysia by Rashid Hussein
• KLCE was named as the first South – East Asian multi commodities
futures trading, 91
• Malaysia becoming the first nation outside Japan traded the local
based index with the trading of Futures KLCI at KLOFFE, Dec 95
• 3 - months KLIBOR was launched at Malaysia Monetary Exchange
(MME), May 96
• BMDM has introduced serial months as maturity months to KLIBOR
since Sept 97 due to currency crisis
• KLCE and MME was merged due to financial crisis to formed
COMMEX, Dec 98
• KLOFFE entered to an agreement with KLSE to be under KLSE
management, Jan 99

7. 2000’s
• KLOFFE joins the elite financial centers by trading KLCI options on Oct 2000
• KLOFFE and COMMEX was merged to form a single derivative market
known as MDEX, May 01
• MDEX launched it first bond futures derivative instrument known as FMG5
contracts, March 02
• Pre – launched of long awaited stock options in March 2003 but it was
postponed due to the crisis in Iraq and slowdown of the global economy
• Swap contract begin to register drastically increased from USD 5 billion in
2001 to USD 47 billion in 2004
• KLSE has been demutualization with BMSB, 05
• MDEX known as BMDB and MDCH as BMDC, 05
• Malaysian companies issues a “call warrant” reflecting of repackaging a
warrant and to be listed and traded in BMDB
• BMD partnering with CME group in order to be listed on CME Globex, Sept
09

8. CONCLUSION
• BMDB is a multi-derivatives exchange,
covering future, option, swap and warrant in
term of commodity and financial
• The instruments are covered as the thrust of
the book in terms of concepts and
applications