Malaysian bourse, MCX to cross-list products

The Multi Commodity Exchange of India Ltd (MCX) and the Bursa Malaysia Derivatives Berhad (BMD) have signed a memorandum of understanding (MoU) to work together for developing the commodities market and cross-listing of products.

Initially, the pact will be for three years, and can be renewed for a further period depending upon mutual understanding.

To begin with, the MCX will launch CPO crude palm oil, which will help Indian traders hedge their risk in Indian currency. MCX will display all CPO crude palm oil prices in Indian currency and set margins depending upon volume and price movement.

Jignesh Shah, MD and CEO of MCX, said, "Bursa is an important partner for us, and this partnership will open a new era in business relations in commodities. Both the exchanges will prosper with this MoU as BMD notices huge volume on crude palm oil from India. BMD generates about Rs 8,000 crore business from India."

Expansion in other commodities and cross-listing will depend upon the success of the CPO crude palm oil, about which Shah exuded confidence.

"We are confident of starting futures on other commodities on our platform very soon. We would jointly explore other areas of activity," Shah said.

BMD is a palm oil trade major in the world and, hence, this deal, Shah added.

MCX and BMD, major exchanges for crude palm oil trading, have decided to work closely for developing and expanding their markets.

The exchanges will develop areas of cooperation, cross-list products, identify new business opportunities with the goal of assisting and benefiting the underlying producers, end-users and investors of these products, and ensure the application of international best practices for price risk management and exchange operations.