Bursa Malaysia Bhd.
|Headquarters||Kuala Lumpur, Malaysia|
|Key People||Dato' Yusli bin Mohamed Yusoff, CEO; Tun Mohamed Dzaiddin bin Haji Abdullah, chairman|
|Products||Cash equities, bond futures, equity index futures and options, single-stock futures and palm oil futures|
Bursa Malaysia operates the Kuala Lumpur Stock Exchange (KLSE), and is an integrated electronic exchange offering trading, clearing and settlement of cash equities and derivatives, including Palm Oil Futures. The company demutualized in 2004 and listed on its own main board in 2005. Bursa Malaysia's brokers can now do business directly with U.S. investors following a June 2010 ruling by US regulator the CFTC.
The Bursa Malaysia was ranked as the world's 42nd-largest derivatives exchange by volume in 2010, falling three positions from the year before, according to the annual volume survey published by the Futures Industry Association (FIA). The FIA report, published in March of 2011, notes that the exchange's total volume for 2010 was up by 0.3% from the previous year, reaching over 6.15 million contracts.
History and Ownership
Bursa Malaysia was created in its current form in 1973 when the end of currency interchangeability between Malaysia and Singapore saw the separation of the Stock Exchange of Malaysia and Singapore into the KLSE and the Stock Exchange of Singapore, which later became Singapore Exchange Limited (SGX).
Its origins can be found in the Singapore Stockbrokers' Association, established in 1930, and re-registered as the Malayan Stockbrokers' Association in 1937. The Malayan Stock Exchange was established in 1960, with trading floors in Singapore and Kuala Lumpur linked by telephone.
The Stock Exchange of Malaysia was created in 1964, changing its name to the Stock Exchange of Malaysia and Singapore in 1965 when Singapore seceded from its neighbor, and then to the KLSE in 1973.
Government entities retain 38 percent of the company, with the Capital Markets Development Fund owning 19.3 percent and the Finance Ministry a further 14.5 percent. The exchange said in December 2007 that it was in preliminary talks with the Chicago Mercantile Exchange about an alliance. 
Structure and Regulation
The securities exchange unit lists more than 1,000 companies on its main bourse, the second board for mid-caps and the tech-focused Mesdaq market. The securities business accounted for 56 percent of the group’s S$262.1 million operating revenues in calendar 2006, with derivatives business contributing 12.6 percent.
The company restructured at the start of 2008 into five business areas: Business and Market Development, led by Encik Omar Merican, COO; Regulations, led by Selvarany Rasiah, chief regulatory officer; Market Operations, overseen by Devanesan Evanson, chief of market operations; Corporate Services, led by Puan Nadzirah Abdul Rashidin, CFO; and Technology and Systems, headed by Yew Kim, chief technology officer.
In August of 2009, it was announced that CME Group Inc., the world’s largest futures market at the time, and Bursa Malaysia Bhd. planned a minority share swap to promote trading of palm-oil contracts outside of Southeast Asia. Under the planned revenue-sharing partnership, dollar denominated palm oil futures would be listed on CME Globex, CME’s electronic trading platform. The collaboration would also involve trade-matching services and product licensing.
Equities are traded from 9 a.m. to 12:30 p.m. and 2:30 p.m. to 5 p.m. while hours for the derivatives business are 8.45 a.m. to 12:45 p.m. and 2:30 p.m. to 5:15 p.m.
Futures and options on the Kuala Lumpur Composite Index are the largest part of the derivatives complex, which also includes futures on crude palm oil, crude palm oil kernel, 3,5 and 10-year MGS Futures and three-month KLIBOR futures. Single-stock futures were launched in April 2006 which, like the crude palm oil futures, are Shariah-compliant.
Crude Palm Oil Futures were launched in October 1990, with the crude kernel palm oil contract following in February 2004. A U.S. dollar-denominated palm oil contract is expected to be launched in January of 2008.
Bursa Malaysia appointed Dr. Md Tap bin Salleh as its new non-executive and public interest director effective April 1, 2010. Tap, currently president of the Malaysian Institute of Integrity, replaces Dato' Abdul Latif bin Abdullah, who had served a full six-year term in the position. Bursa Malaysia has 13 members of its board of directors.
|Year||Total Annual Volume*||Percent Change||World Ranking|
|2011||~8,460,000 (est.)||(+) 37.5%||--|
The Bursa Malaysia ranked number 39 in 2009 in the Futures Industry Association's global list of top 53 derivatives exchanges measured by volume, up 0.3% on 2008's volume figure. The FIA list, published in early April 2010, reports that that the ADE's total volume for 2009 rose to 6.14 million from 2008's figure of 6.12 million.
US regulator the Commodity Futures Trading Commission (CFTC) gave Bursa Malaysia's customer protection standards a nod of approval in June 2010 by allowing its registered brokers to solicit US customers without the need to register in the US as futures brokers. Bursa Malaysia, like several other foreign exchanges and regulators, was granted the exemption under the CFTC's Regulation 30.10 that allows some foreign jurisdiction to deal directly with US customers.
Bursa Malaysia Derivatives Chief Executive Officer Chong Kim Seng said the CFTC's decision means Bursa Malaysia's brokers can now offer Malaysian derivatives to American investors and increase their cross-border trading base. The change means Bursa Malaysia brokers no longer have to register with the CFTC as futures commission merchants (FCMs) because, according to the CFTC, "they are subject to comparable customer protection standards in their home jurisdiction".
- ↑ 2010 Annual Volume Survey. Futures Industry.org.
- ↑ Official History. Bursa Malaysia.
- ↑ Press Release. Bursa Malaysia.
- ↑ Press Release. KLSE.
- ↑ CME, Malaysia Plan Share Swap to Boost Palm Oil Trade. Bloomberg.
- ↑ Report. Reuters.
- ↑ Bursa Malaysia Berhad announces appointment of new non-executive and public interest director. Bursa Malaysia.
- ↑ 2009 Annual Volume Survey. FIA magazine.
- ↑ CFTC Issues an Exemption to Bursa Malaysia Derivatives Bhd Permitting U.S. Customers to Deal Directly with Malaysian Brokers. CFTC.
- ↑ Bursa Malaysia Brokers Get CFTC Nod To Trade. Bernama.