What is Bursa Malaysia Derivatives Local Participant?

Recently, Bursa Malaysia launched its Derivatives Local Participants Recruitment Drive to have more derivatives traders, so that a more vibrant and dynamic derivatives market can be seen in Malaysia. Anyway, what is it actually? I guess many of us, either yourself or investors or traders, also doesn't know the exact answer...

Again, it's time for Finance Malaysia to do Bursa Malaysia a favor to educate the public. A Local Participant (Locals) is a professional derivatives trader who trades for his/her own account. In essence, a self-employed trader. With the recent easing of entry requirements, those who aspire to be a Local Participant are not required to pass the licensing examination, show the relevant academic qualification and industry experience.

What is the benefits of being a Locals?

Locals have grown alongside the Exchange over the years, both in terms of numbers and trading participation in derivatives products. As a proprietary trader, they have unlimited trading potential. They trade as a business and have the option of working flexi-hours from anywhere. Locals also enjoy exchange fee rebates and tax abatement on their income such as below:

• A Local Participant will enjoy exchange fee and clearing fee incentives if he trades 1,000 contracts per month or more. 
• A Local Participant will receive a 50% tax abatement on income derived from derivatives trading.

What are the differences between the current and previous admission requirements of a Local Participant?

Effective 3 January 2012, the following  admission requirements of a Local Participants have been removed :- 

1. Have passed an examination approved  by BMDB or have  been granted an  exemption in respect thereof; 
2. Possess such qualification as approved by BMDB; and 
3. Possess sufficient and relevant trading experience.

In substitution of the above admission requirements, an applicant needs to attend a two-day familiarization programme conducted by BMDB.   

What are the products offered by BMDB for Local Participants?

BMDB offers a range of derivatives products for Local Participants, which include the two (2) key products, namely, Crude Palm Oil Futures ("FCPO") and FTSE Bursa Malaysia KLCI Futures ("FKLI").

Click here to download the "Local Participants Application Form"

Source: www.bursamalaysia.com

BNM Further Liberalisation on Forex (Jan 2012)

As part of continuous efforts by Bank Negara Malaysia to enhance competitiveness in the economy and to develop the domestic financial markets, Bank Negara Malaysia wishes to announce the following liberalisation measures, with effect from 31 January 2012:

1. To further spur the domestic foreign exchange market through greater product innovation, licensed onshore banks are permitted to trade foreign currency against another foreign currency with a resident.
2. To further deepen the domestic interest rate derivatives market, a licensed onshore bank is allowed to offer ringgit-denominated interest rate derivatives to a non-bank non-resident.
3. Towards enhancing the asset liability management of residents, flexibility is permitted for a resident to convert their existing ringgit or foreign currency debt obligation into a debt obligation of another foreign currency.

The above measures which are in line with the broad thrust of the Financial Sector Blueprint will contribute towards increasing the liquidity, depth and participation of wider range of players in the domestic financial markets.

Frequently Asked Questions:

1. Can a resident buy and sell foreign currency against another foreign currency for any purpose?
• Yes. With this liberalisation, a resident is allowed to buy and sell foreign currency against another foreign currency for any purpose including for trading. However, such transactions shall only be undertaken with a licensed onshore bank.
2. Does the liberalisation include trading of foreign currency against ringgit?
• No. The liberalisation is only for transactions involving foreign currency against another foreign currency for any purpose.
3. What are the prevailing rules on investment in foreign currency assets?

4. Who are the licensed onshore banks?
• licensed commercial banks in Malaysia;
• licensed Islamic banks in Malaysia; and
• licensed investment banks in Malaysia.
5. What are the prevailing rules on foreign currency credit facilities obtained by a resident?

For further information and enquiries on the measures, members of the public may contact Bank Negara Malaysia via Toll free line : 1 300 88 5465 (BNMTELELINK)

Source: BNM website