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Asian Markets:Asian Markets:
Strategy for InternationalisationStrategy for Internationalisation
Presented byMohd Ridzal Sheriff
Head, Group Business Development
10 August 2005
Bursa Malaysia Berhad and its Group of Companies (the Company) reserve all proprietary rights to the contents of this Presentation. No part of thisPresentation may be used or reproduced in any form without the Companys prior written permission. This Presentation is provided for information purposes
only. Neither the Company nor the Presenter make any warranty, express or implied, nor assume any legal liability or responsibility for the accuracy,
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y Incorporation of Malaysian DerivativesIncorporation of Malaysian Derivatives
ExchangesExchanges
y Rationalisation of Malaysian DerivativesRationalisation of Malaysian Derivatives
Market InstitutionsMarket Institutions
yBursa Malaysia: Transformation ProcessBursa Malaysia: Transformation Process
y Bursa Malaysia: A Single ExchangeBursa Malaysia: A Single Exchange
y Market StatisticsMarket Statistics
y Malaysian Government PoliciesMalaysian Government Policiesy Recent Developments in MalaysiaRecent Developments in Malaysia
y Key Developments by Bursa MalaysiaKey Developments by Bursa Malaysia
ContentsContentsContentsContents
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y 19801980
Establishment of the Kuala LumpurEstablishment of the Kuala LumpurCommodity Exchange (KLCE) with CPOCommodity Exchange (KLCE) with CPO
FuturesFutures
y 19951995
The Kuala Lumpur Options and FinancialThe Kuala Lumpur Options and Financial
Futures Exchange (KLOFFE) was establishedFutures Exchange (KLOFFE) was established
and KLSE CI Futures contract was launchedand KLSE CI Futures contract was launched
y 19961996Malaysia Monetary Exchange (MME) wasMalaysia Monetary Exchange (MME) was
established and the 3 Month KLIBOR Futuresestablished and the 3 Month KLIBOR Futures
was launchedwas launched
Incorporation of Malaysian Derivatives ExchangesIncorporation of Malaysian Derivatives ExchangesIncorporation of Malaysian Derivatives ExchangesIncorporation of Malaysian Derivatives Exchanges
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y June 2002June 2002
Approval of the transfer of MDCH from MDEXApproval of the transfer of MDCH from MDEXto Securities Clearing Automated Networkto Securities Clearing Automated Network
Services (SCANS), a wholly owned subsidiaryServices (SCANS), a wholly owned subsidiary
of the Kuala Lumpur Stock Exchangeof the Kuala Lumpur Stock Exchange
y August 2002August 2002
The sale of MDCH to SCANS was completedThe sale of MDCH to SCANS was completed
Rationalisation of Malaysian Derivatives MarketRationalisation of Malaysian Derivatives Market
Institutions (2)Institutions (2)
Rationalisation of Malaysian Derivatives MarketRationalisation of Malaysian Derivatives Market
Institutions (2)Institutions (2)
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Company limited byguarantee
Operating stock exchange
(64 Member Companies)
Company limited by shares
Exchange holding company
Completed:
5 January 2004
Company limited by shares
Derivatives exchange
Business Rules
100%
DemutualisationDemutualisation
Previous StructurePrevious Structure
Previous StructurePrevious StructurePresent StructurePresent Structure
Present StructurePresent Structure
ListingListing
Listed:
18 March 2005
Bursa MalaysiaBursa MalaysiaDerivativesDerivatives
Bursa MalaysiaBursa MalaysiaDerivativesDerivatives
Bursa Malaysia: Transformation ProcessBursa Malaysia: Transformation ProcessBursa Malaysia: Transformation ProcessBursa Malaysia: Transformation Process
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BURSA MALAYSIA BERHADBURSA MALAYSIA BERHAD
Equities MarketEquities Market
Main BoardSecond Board
q Companies
with track
record
Main BoardSecond Board
q Companies
with track
record
MESDAQMarket
q Growth &
Technology
Companies
MESDAQMarket
q Growth &
Technology
Companies
Bursa Malaysia Securities BhdBursa Malaysia Securities Bhd
Derivatives MarketDerivatives Market
Bursa Malaysia Derivatives BhdBursa Malaysia Derivatives Bhd
Offshore MarketOffshore Market
Labuan International
Financial Exchange (LFX)
Labuan International
Financial Exchange (LFX)
Clearing & DepositoryClearing & Depository
Citibank, Deutsche BankCitibank, Deutsche Bank
Integrated Clearing HouseIntegrated Clearing House
Bursa Malaysia
SecuritiesClearing
Bursa Malaysia
SecuritiesClearing
Bursa Malaysia
DerivativesClearing
Bursa Malaysia
DerivativesClearing
Common DepositoryCommon Depository
Bursa Malaysia DepositoryBursa Malaysia Depository
Bursa Malaysia: A Single ExchangeBursa Malaysia: A Single ExchangeBursa Malaysia: A Single ExchangeBursa Malaysia: A Single Exchange
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Derivatives Products Listed on BursaDerivatives Products Listed on BursaDerivatives Products Listed on BursaDerivatives Products Listed on Bursa
y Bursa offers equity, financial and commodityBursa offers equity, financial and commodity
derivatives for trading:derivatives for trading:
Crude Palm Oil Futures (FCPO)Crude Palm Oil Futures (FCPO)
Crude Palm Kernel Oil Futures (FPKO)Crude Palm Kernel Oil Futures (FPKO)
Kuala Lumpur Composite Index Futures (FKLI)Kuala Lumpur Composite Index Futures (FKLI)
Kuala Lumpur Composite Index Options (OKLI)Kuala Lumpur Composite Index Options (OKLI)
3-Month Kuala Lumpur Interbank Offered Rate3-Month Kuala Lumpur Interbank Offered Rate
Interest Rate Futures (FKB3)Interest Rate Futures (FKB3)
Three-Year Malaysian Government SecuritiesThree-Year Malaysian Government Securities
Futures (FMG3)Futures (FMG3)
Five-Year Malaysian Government SecuritiesFive-Year Malaysian Government Securities
Futures (FMG5)Futures (FMG5)
Ten-Year Malaysian Government SecuritiesTen-Year Malaysian Government Securities
Futures (FMGA)Futures (FMGA)
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Annual Turnover & OI : 1995 2005 (May)Annual Turnover & OI : 1995 2005 (May)Annual Turnover & OI : 1995 2005 (May)Annual Turnover & OI : 1995 2005 (May)
0
500,000
1,000,000
1,500,000
2,000,000
2,500,000
3,000,000
1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005
Year
Turnover
0
10,000
20,000
30,000
40,000
50,000
60,000
70,000
80,000
90,000
O
pen
position
Volume OP
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Breakdown of Turnover (Jan July 2005)Breakdown of Turnover (Jan July 2005)Breakdown of Turnover (Jan July 2005)Breakdown of Turnover (Jan July 2005)
FKLI
52.98%
FMG5
0.88%
FCPO
41.75%
FKB34.16%
FMG3
0.23%
FKLI FMG5 FCPO FKB3 FMG3
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0
20
40
60
80
100
120
140
160
180
200
J a n
- 9 6
J u n
- 9 6
N o v
- 9 6
A p r -
9 7
S e p
- 9 7
F e
b - 9
8
J u
l - 9 8
D e c
- 9 8
M a y
- 9 9
O c
t - 9 9
M a r -
0 0
A u g
- 0 0
J a n
- 0 1
J u n
- 0 1
N o v
- 0 1
A p r -
0 2
S e p
- 0 2
F e
b - 0
3
J u
l - 0 3
D e c
- 0 3
M a y
- 0 4
O c
t - 0 4
M a r -
0 5
Volume
(0
00)
0
4
8
12
16
20
24
28
32
36
40
OpenP
osition
(000
)
Volume Open Position
Note: Migration to Electronic Trading on 29 December 2001
FCPO Volume & OIFCPO Volume & OIFCPO Volume & OIFCPO Volume & OI
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Record Monthly Volume : 177,319 contracts (October 2003)
Record Daily Volume : 14,508 contracts (21 October 2003)
Record Daily Open Interest : 37,887 contracts (27 September 2004)
Breakdown of FCPO Market ParticipationBreakdown of FCPO Market Participation(Jan July 2005)(Jan July 2005)
Breakdown of FCPO Market ParticipationBreakdown of FCPO Market Participation(Jan July 2005)(Jan July 2005)
33002
43441
4440
34180
5701560
0 10,000 20,000 30,000 40,000 50,000 60,000
No. of contracts
Foreign Institution
Local Institution
Foreign Retail
Local Retail
Locals
Proprietary
Participant
(
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FKLI Volume & OIFKLI Volume & OIFKLI Volume & OIFKLI Volume & OI
Figure 1. KLCI Futu
010,00020,00030,00040,00050,00060,000
70,00080,00090,000
100,000110,000120,000130,000140,000
Dec-95
May
-96
Oc
t-96
Ma
r-97
Aug-97
Jan-98
Jun-98
Nov
-98
Ap
r-99
Sep-99
Feb-00
Ju
l-00
Dec-00
May
-01
Oc
t-01
Ma
r-02
Aug-02
Jan-03
Jun-03
Nov
-03
Ap
r-04
Sep-04
Feb-05
Vo
lume
0
2,000
4,000
6,000
8,000
10,000
12,000
14,000
16,000
18,000
20,000
Open
Position
Volume Open Position
Note: FKLI was downsized on 19 September 2003
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Record Monthly Volume
Record Daily Volume
Record Daily Open Interest
Breakdown of FKLI Market ParticipationBreakdown of FKLI Market Participation(Jan July 2005)(Jan July 2005)
Breakdown of FKLI Market ParticipationBreakdown of FKLI Market Participation(Jan July 2005)(Jan July 2005)
: 136,870 contracts (May 2004)
: 16,169 contracts (26 July 2005)
: 33,243 contracts (26 June 1998)
73779
8283
1099
2823
9439037974
112
0 20,000 40,000 60,000 80,000 100,000
No. of contracts
Foreign Institution
Local Institution
Local Corporation
Foreign Retail
Local Retail
Locals
Proprietary
Participants
(
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Malaysian Government PoliciesMalaysian Government PoliciesMalaysian Government PoliciesMalaysian Government Policies
y Overall aim to push forward and enhanceOverall aim to push forward and enhance
Malaysias competitive standing regionally andMalaysias competitive standing regionally andinternationallyinternationally
y Move towards becoming a supportive andMove towards becoming a supportive and
effective enabler of business, by putting in placeeffective enabler of business, by putting in place
conducive conditions and creating opportunitiesconducive conditions and creating opportunities
for the private sector to thrivefor the private sector to thrive
Reform of government-linked companies (GLCs) withReform of government-linked companies (GLCs) with
the aim to make them more performance-driven,the aim to make them more performance-driven,
efficiently-managed, commercially-focused andefficiently-managed, commercially-focused and
customer-orientedcustomer-oriented
Develop a strong and vibrant domestic capital marketDevelop a strong and vibrant domestic capital market
as a key enabler in securing healthy longtermas a key enabler in securing healthy longterm
economic growth of the countryeconomic growth of the country
Move forward with deregulation and liberalisationMove forward with deregulation and liberalisation
Transforming the services sectorTransforming the services sector
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Liberalisation of the Capital MarketLiberalisation of the Capital MarketLiberalisation of the Capital MarketLiberalisation of the Capital Market
y The following measures were announced byThe following measures were announced by
the Malaysian Government in Septemberthe Malaysian Government in September2004, and incorporated in the 2005 Budget:2004, and incorporated in the 2005 Budget:
100% foreign ownership in futures100% foreign ownership in futures
broking industrybroking industry
Issuance of up to 5 new licences toIssuance of up to 5 new licences to
foreign stockbrokersforeign stockbrokers
Issuance of up to 5 new licences toIssuance of up to 5 new licences to
foreign fund managersforeign fund managers
No restrictions on the number of foreignNo restrictions on the number of foreign
dealer representativesdealer representatives
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De-peg of the RinggitDe-peg of the RinggitDe-peg of the RinggitDe-peg of the Ringgit
y BNM announced on 21 July 2005 that theBNM announced on 21 July 2005 that the
exchange rate of the Ringgit will be allowedexchange rate of the Ringgit will be allowedto operate in a managed float, with its valueto operate in a managed float, with its value
being determined by economic fundamentals.being determined by economic fundamentals.
y BNM will monitor the exchange rate against aBNM will monitor the exchange rate against a
currency basket to ensure that the exchangecurrency basket to ensure that the exchangerate remains close to its fair value.rate remains close to its fair value.
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Key Developments by Bursa MalaysiaKey Developments by Bursa MalaysiaKey Developments by Bursa MalaysiaKey Developments by Bursa Malaysia
Introduction of more productsSingle Stock Futures (SSF)
Ensuring market integrity Size of Clearing fund increased on 1 April 2005
Lodging of shares as margin collateral (wef January 2005)
50 stocks accepted as collateral by Clearing House.
Regulatory Review Amendment to Business Rules - allow opening of omnibus a/c
Education, Marketing & PromotionsInvestor roadshows and conferences i.e. Invest Malaysia 2005,Palm & Lauric Oils Conference & Exhibition
Common Trading PlatformImplementation of new derivatives trading system by Q3 2005
Open API and facilitates Direct Market Access
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Q & AQ & A
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Derivatives MarketingDerivatives Marketing
Bursa Malaysia BhdBursa Malaysia Bhd
1010thth Floor, Exchange SquareFloor, Exchange Square
Bukit KewanganBukit Kewangan
www.bursamalaysia.comwww.bursamalaysia.com
[email protected]@bursamalaysia.com
+ 603 2034 7188+ 603 2034 7188