MCX signs pact with Malaysia's commex

MUMBAI: Bursa Malaysia Berhad has entered into a licensing agreement with Multi Commodity Exchange of India (MCX) to grant the latter an exclusive and non-transferable licence to use Bursa Malaysia’s derivatives palm oil price in India. The initiative is the result of an MoU signed between the two exchanges on March 30, ’06.

The licensing agreement permits MCX to use Bursa Malaysia’s derivatives palm oil price as the basis for settling its palm oil derivatives contracts and as the reference in connection with the creation, marketing, trading, clearing and settlement of such contracts on MCX.

“This is a significant step for both the exchange and our palm oil derivatives market. First, it spells the further expansion of Bursa Malaysia’s regional alliances. Secondly, it solidifies our position as the benchmark of global derivatives palm oil pricing,” said Yusli Mohamed Yusoff, CEO of Bursa Malaysia Berhad.

“The agreement with Bursa Malaysia Berhad will provide a benchmark price reference for risk management to the palm oil sector of India, allowing Indian palm oil producers, users and investors access to globally aligned prices and trading practises within their home country, in local currency, local time and with safeguard of counter-party risk,” said Jignesh Shah, MD and CEO, MCX.

Bursa Malaysia operates the world’s largest derivative exchange dealing in palm oil contracts. The crude palm oil futures contract launched in October 1980 is one of the most actively traded derivatives contracts offered by Bursa Malaysia, representing almost 50% of its derivatives business.

According to MCX, such alliances benefit domestic users to obtain global efficiencies at local cost and in local timing.