Bursa Malaysia Readies New Clearinghouse For 1Q Launch

Bursa Malaysia Bhd (1818.KU) is preparing to launch a new trade-clearing facility for its derivatives markets that will enable the Kuala Lumpur exchange to offer a broader range of contracts, according to a senior executive.

The firm anticipates the new clearinghouse, built on technology supplied by Korea Exchange, to start operations in the first quarter, said Sree Kumar, general manager of business development for Bursa Malaysia.

Bringing the new facility online will enable Bursa Malaysia to offer options on crude palm oil, its most heavily traded commodity market, as well as options on the country's main stock index and new futures contracts denominated in foreign currencies.

Malaysia produces nearly half the world's supply of palm oil and is ranked second in gloal production behind Indonesia. Bursa Malaysia has vied with exchanges in Indonesia and China to capture futures-trading business linked to the oil that is a key ingredient in cosmetics, biodiesel and baked goods.

Bursa Malaysia has the backing of CME Group Inc. (CME), the world's largest futures exchange group by volume, via a 2009 deal that saw CME take a 25% stake in Bursa Malaysia's derivatives unit. CME in mid-2010 connected Bursa Malaysia's markets to the Chicago firm's Globex electronic trading platform, providing for near-24-hour trade.

The broader distribution via CME's Globex helped to lift Bursa Malaysia's futures volume in 2011 about 38% over 2010 levels, Kumar said in an interview on the sidelines of a Commodity Markets Council event. An average 35,000 contracts changed hands per day last year.

"It's widened our products' distribution to the world at large," Kumar said.

-By Jacob Bunge, Dow Jones Newswires; 312 750 4117; jacob.bunge@dowjones.com

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