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TABLE OF CONTENTSChapter 1 – FCPO What is FCPO? Pg 1

BenefitsofFCPO Pg1

Chapter 2 – Trading FCPO ExamplesofTradingScenarios Pg2–3

Orders–OrderTypes Pg4

Orders–ValidityConditions Pg5

Trading–OrderExecutionConditions Pg6

TradingStrategies Pg7

ApprovedCurrenciesDeposit Pg8

Chapter 3 – FCPO Tender OverviewofTenderProcess Pg9

NoticeofTender Pg10

NegotiableStorageReceipts(NSRs) Pg11

TenderAdviceandDeliveryAllocation Pg12

TenderRestrictionPeriod Pg13

TenderCycle Pg14

TenderCycleExample Pg15–16

Chapter 4 – About Bursa Malaysia CompanyProfile Pg17

WhatWeOffer Pg18

1

WHAT IS FCPO?

BENEFITS OF FCPO

BursaMalaysia’sCrudePalmOilFuturescontract,

orbetterknownasFCPO,hasbeentheglobalprice

benchmarkfortheCrudePalmOilmarketsinceOctober

1980.TheFCPOisadeliverablecontractwhichis

tradedelectronicallyonBursaMalaysia’strading

platform.Withanimpressivetrackrecordof30years,

BursaMalaysia’sFCPOpricehasbecomethereference

pointformarketplayersintheoilsandfatsindustry.

To manage price risk –plantationcompanies,

refineries,exportersandmillerscanusetheFCPO

tomanageriskandhedgeagainsttheriskof

unfavourablemovementsinthepriceofFCPO

inthephysicalmarket.

To speculate –traderscanusetheFCPOtogainleveragedexposuretomovementsinCPOprices.

To gain immediate exposure into the commoditymarket – viaFCPO,globalfundmanagersand

proprietarytradersareabletobepartoftheactive

commoditymarketinstantaneously.

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2

CHAPTER2:TRADINGFCPO

EXAMPLES OFTradingScenariosSCENARIO 1 – Hedging

SCENARIO 2 – Arbitraging

Plantationcompaniesareperpetuallywithstockin

hand,thereforetheirriskexposuretothemarketwould

beenhancedindecliningmarkets.Apalmoilproducer

knowsthatinthreemonths,hiscropwillbereadytobe

harvested.However,heisworriedthatpricesmayfall

bythetimehecansellhisCPO.Hechoosestotradeon

BursaMalaysiaandhedgeshispositionbysellingthe

FCPOcontract.Indoingso,hehaseffectivelylocked-in

hissellingpricethreemonthslater.

Atradinghouserealisesthatthecorrelationpricesof

physicalpalmoilandtheFCPOmarkethasdeviated

fromitsusualspreads,andthattheFCPOistradingata

premiumtothephysicalmarket.ItdecidestosellFCPO

andbuyphysicalCPOtoarbitrage.Thepositionwillbe

liquidatedlateroncethespreadofthepricesbetween

bothmarketsreturnstonormal.

3

EXAMPLES OFTradingScenariosSCENARIO 3 – Trading

AMalaysianrefinerhasreceivedanordertodeliver

10,000metrictonsofprocessedpalmoil.However,

heonlyhasenoughCPOtofulfill80%ofthistransaction

andhasashortfallof2,000metrictons.Heturnstothe

physicalmarkettocoverthisshortfallbutisunableto

findanysellersinabullishmarket.Asthemarketis

anticipatinghigherprices,hepreferstobuyatthe

currentpricetoprotecthisprofitmargin.

HeturnstoBursaMalaysiaandbuys80contractsof

FCPO(80contractsx25metrictonspercontract=2,000

metrictons)attheprevailingprice.Hehasnoweffectively

locked-inhisbuyingpriceandwillwaitforthetender

processtotakeplacetocollectthephysicaldelivery

ofCrudePalmOil.

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4

ORDERSOrderTypesLimit Order

Market Order

Market On Opening Order

Stop Order (Stop Loss and Stop Limit)

Market-To-Limit Order

Alimitorderisanorderwhichstipulatesaprice.Buylimitordersshallbematchedatthestipulatedpriceorlowerandselllimitordersshallbematchedatthestipulatedpriceorhigher.

Amarketorderisanorderthatisenteredwithnopricestipulation.Itwillbematchedatthebestavailableoppositepricetothefullestextentimmediatelyuponitsentry.

OrdercanonlybeenteredinthePre-Openingphase

Tobeexecutedattheauctionprice

StopLoss–becomesmarketorderoncetriggered

StopLimit–becomeslimitorderoncetriggered

Anorderwithnopricestipulation

Abuymarket-to-limitordershallbematchedimmediatelyatthelowestsellprice

Asellmarket-to-limitordershallbematchedimmediatelyatthehighestbuyprice

Thereafter,anyremainingunexecutedquantityoftheordershallbeconvertedintoalimitorderatthematchedprice

5

ORDERSValidityConditionsGood For Day

Good Till Date

Good Till Cancel

Session

Validforthetradingday

Validuntilaspecifieddate

Validuntiltheorderiscancelled

Validforthetradingsession

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6

TRADINGOrderExecutionConditionsFill and Kill

Minimum Quantity

Unmatchedportionoftheordershallbeautomaticallycancelledbythesystem

Aspecifiedminimumquantityoftheordershallbeexecutedimmediatelyuponentryoftheorder,failingwhichthewholequantityoftheordershallbecancelled

7

TRADING STRATEGIESAstrategyisacombinationofanumberofbuyand/orsellorders

ofsimilarordifferentcontractscreatedwithintheframeworkof

asingleorder.

Exchange Defined Strategies (EDS)

User Defined Strategies (UDS)

Strategiespre-definedbytheExchangeandreadilytradable

TheEDSdefinedinthetradingsystemareCalendarSpreadandStrip

CalendarSpreadEDSareforthefirstfournearestcontractmonths

SixCalendarSpreadEDSareavailableatanyonetimeforeachandeveryfuturesproduct

Atradermaydefinehisownstrategyotherthanthosepre-definedbytheExchange

TheUDSwillbebroadcastedtothemarketforinterestedpartiestotrade

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8

APPROVED CURRENCIESDEPOSIT (forInitialMarginonly)

AustralianDollar(AUD)

BritishPound(GBP)

Euro(EUR)

HongKongDollar(HKD)

JapaneseYen(JPY)

MalaysianRinggit(MYR)

Renminbi(RMB)

SingaporeDollar(SGD)

USDollar(USD)

Note:

1.PleasenotethatallcurrencydepositsforInitialMarginaresubjectedtohaircutrates

asdeterminedbyBursaMalaysiaDerivativesClearingfromtimetotime.

2.VariationMarginsaretobepaidinRinggitMalaysia(RM).

9

TenderNotification

e-NegotiableStorageReceipts(e-NSRs)

TenderAdviceandDeliveryAllocation

TenderRestrictionPeriod

TenderCycle:PaymentsandMargins

TenderCycleExample

CHAPTER3:FCPOTENDER

OVERVIEW OFTENDER PROCESSPhysicalDeliveryandTenderProcess

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10

TENDER NOTIFICATIONParticipantswithspotmonthshortpositionsmaysubmitTenderNotificationsforthedeliveryofCPOduringthetenderperiod(1st–20thofspotmonth)

ParticipantsholdingFCPOpositionsafterthe15th

ofthespotmonthcontractareobligatedtomakeoracceptdelivery

AllTenderNotificationsmustbeaccompaniedbye-NegotiableStorageReceipts(e-NSRs)

TenderNotificationsmustbesubmittedtotheClearingHouseby12.00p.m.forsamedayprocessing

11

AsellerwhointendstohaveCPOappraisedfordeliverytothemarketmustdelivertheCPOtoaPortTankInstallationapprovedbytheExchangelocatedatPortKlang,ButterworthandPasirGudang

Eachtendermustbeinunitsof25metrictonnesormultiplesthereof

UponappraisaloftheCPO,thePortTankInstallationOwnershallissueane-NSR,whichwouldstipulatethefollowing:

•NameandLocationofPortTankInstallationOwner

•Dateofappraisal

•Certificationofqualityofoil

•Validitydateofthee-NSR

e-NEGOTIABLE STORAGERECEIPTS (e-NSRs)

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12

TENDER ADVICE ANDDELIVERY ALLOCATION

BasedonthenumberofTendersNotificationreceived,theClearingHousewillallocateTenderAdvicetotherespectiveBuyingClearingParticipantsonaproportionatebasisattheparticipant’slevel(basedonnumberofopenpositions)

TenderAdviceisthenallocatedonarandombasisat client’slevel

TheClearingHousewillbroadcastthedeliveryallocationmessageandtransmitthereportelectronicallyby4.00p.m.

13

RestrictiononclosingoutofpositionforspotmonthcontracttakeseffectonebusinessdaybeforethestartoftheTenderPeriodandlastsuntiltheendoftheTenderPeriod.

Duringtherestrictionperiod,spotmonthopenpositionsmayonlybeclosedoutwithnewtradesfortheday.

Duringthetenderperiod,BuyingParticipantswhointendtocloseouttheirpositionsanddonotwishtoparticipateintheTenderProcessmustperformmanualmatchoutbefore2.30p.m.

TENDER RESTRICTIONPERIOD

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14

TENDER CYCLEPAYMENTSANDMARGINS

DeliverycycleforFCPOtenderistwobusinessdays

BuyingParticipantwillpaythetenderamountandSellingParticipantwillreceivepaymenttwobusinessdaysaftertender

PerformancebondisonlyimposedontheBuyingParticipantduringthedeliverycycle

15

OnTenderDay(atEODprocess)

• TenderfeespostedtobothBuyerand Selleraccounts

• VariationMarginpostedtobothBuyerand Selleraccounts

• PerformancebondonlypostedtoBuyer’saccount

OnTender+1Day(atEODprocess)

•TenderValuepostedtobothBuyerandSeller accounts

•PerformancebondnolongerpostedtoBuyer’s account.Positionsunderthetenderprocesscanstill beviewedasOpenPositionunderDeliverybutnot includedinOpenInterest

TENDER CYCLE EXAMPLE

Note:

1.EOD=EndofDay

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16

OnTender+2Days

•e-NSRwillbereleasedtoBuyeruponreceiptof payment

•PaymentwillbepostedtoSeller

17

CHAPTER4:ABOUTBURSAMALAYSIA

COMPANY PROFILEBursaMalaysiaBerhadisanexchangeholdingunder

Section15oftheCapitalMarketsandServicesAct2007.

Thefullyintegratedexchangeoffersequities,derivatives,

bondsaswellasIslamicservicesandoperatesaninternational

financialexchangeinLabuan.

BURSA MALAYSIA DERIVATIVES BERHAD (BMD) is a

wholly-ownedsubsidiaryofBursaMalaysiaBerhadwhich

provides,operatesandmaintainsafuturesandoptionsexchange.

BursaMalaysiaDerivativesBerhadoperatesthemostliquidand

successfulcrudepalmoilfutures(FCPO)contractintheworld.

Inthelastquarterof2009,BMDenteredintoapartnershipwith

theChicagoMercantileExchange(CME)Groupwhichledtoan

acquisitionofanequityinterestinBursaMalaysiaDerivativesBerhad.

Thepartnershipincludedthelicensingofthesettlementpricesofthe

FCPOtoCMEandthetradingofBMD’sproductofferingsthrough

theCMEGlobex®electronictradingplatform.

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18

WHAT WE OFFEREquity Derivatives

Financial Derivatives

Commodity Derivatives

FuturesontheFTSEBursaMalaysiaKualaLumpurCompositeIndex(FKLI)

OptionsontheFTSEBursaMalaysiaKualaLumpurCompositeIndex(OKLI)

SingleStockFutures(SSF)

3-MonthKualaLumpurInter-BankOfferRate(KLIBOR)Futures(FKB3)

3-YearMalaysianGovernmentSecuritiesFutures(FMG3)

5-YearMalaysianGovernmentSecuritiesFutures(FMG5)

CrudePalmOilFutures(FCPO)

OptionsonCrudePalmOilFutures(OCPO)

CrudePalmKernelOilFutures(FPKO)

USDCrudePalmOilFutures(FUPO)

(as

at 1

3.08

.12)