Chicago-based CME (NASDAQ:CME), one of the world’s paramount exchange operators, has partnered with Bursa Malaysia Derivatives and Thomson Reuters to extend its suite of agricultural products by adding four new palm contracts, according to a CME statement.
The new contracts broaden CME Group's offerings within the palm derivatives complex, and will be available for trading on CME Globex, for submission for clearing through CME ClearPort, and should begin trading on July 11, 2016, pending all relevant regulatory review periods. Together with the Crude Palm Oil Futures contract (FCPO), the four products will provide necessary hedging and Risk Management tools for the global commodity industry.
The holding company for CBOT, NYMEX, and COMEX exchanges launched its suite of crude palm oil swaps and palm olein swaps back in 2013. Since then, more than 170,000 contracts have been cleared, with record month-end closing open interest of 17,120 in May 2016 across both products.
According to the CME announcement, the four new contracts will include the USD Malaysian Crude Palm Oil Calendar futures (CPO), the USD Malaysian Palm Olein Calendar futures (OPF), the USD Malaysian Crude Palm Oil Average Price option (POO), and the Bursa Malaysia Crude Palm Oil-Gasoil Spread futures (POG).
Reference Venues
Concerning the reference prices, the Malaysian Palm Olein Calendar futures contract will be based on prices from the Thomson Reuters daily palm reference price for the palm oil complex, while the new Malaysian Crude Palm Oil Calendar futures contract will reference Bursa Malaysia Derivatives' Crude Palm Oil futures contract prices.
The new average price option contract will be cash-settled to the average daily settlement price of CPO futures, while the Bursa Malaysia Crude Palm Oil-Gasoil Spread futures contract will reflect the settlements of the CPO futures and the ICE Gasoil Calendar futures.
Commenting in the press release, Nelson Low, Executive Director of Agricultural Products at CME Group, said: "Our customers have shown increased awareness of, and interest in using cleared futures on top of their traditional OTC positions in managing their risks, and these four new contracts will provide them the flexibility and efficiency to manage exposure to price Volatility in the global palm oil market."
"The use of BMD's Crude Palm Oil futures contract (FCPO) in CME Group's new palm products recognises and reinforces FCPO's position as the global price benchmark," said K Sree Kumar, the Acting Chief Executive Officer of Bursa Malaysia Derivatives Berhad.
