Bursa Malaysia relaunches FGLD, eyes 250 contracts daily in 2023

KUALA LUMPUR, Sept 19 (Bernama) -- Bursa Malaysia Derivatives hopes its newly enhanced gold futures (FGLD) contract will increase the market’s attractiveness as it eyes 62,000 lots to be traded in 2023 with an average of 250 contracts daily.

Chief executive officer Datuk Muhamad Umar Swift said the cash-settled contract is now quoted in US dollar with settlement in ringgit based on a fixed multiplier of 40, from which the final settlement value, as well as profit and loss, are derived. 

“As a result, domestic investors’ exposure to the currency risk between US dollar and ringgit would be reduced. Malaysia is a commodity market and that is the strength, renowned particularly in ASEAN, so this a contract that will be attractive to retail and institutional investors,” he told a press conference after the relaunch of the FGLD contract here today.

Earlier in his speech, Swift said given the recent surge of global interest in gold, the introduction of the enhanced FGLD contract is timely as it provides domestic investors with an alternative trading avenue.

“In challenging times, it is critical for market participants to keep abreast of the latest hedging strategy to mitigate against fluctuating commodity prices. 

“With the availability of the enhanced gold futures contract, investors now have an alternative trading instrument for managing and diversifying their portfolios,” he said.

For the remaining months of this year, acting director Mohd Saleem Kader Bakas said Bursa Malaysia expects 9,000 lots of FGLD contracts to be traded from October-December with an average of 125 contracts daily.

The FGLD contract has been enhanced to provide investors with immediate exposure to international gold price movements, with greater trading opportunities amid gold market volatility.

The final settlement value of this enhanced FGLD no longer requires any foreign exchange rate adjustment given that the contract's fixed multiplier already serves as the rate to compute the ringgit contract value.  The enhanced FGLD contract's final settlement price is determined by the London AM Fix Price, which is the internationally recognised gold benchmark price.

-- BERNAMA