Page 58 - CMP3

Diagram 6
STRENGTHENING THE ECOSYSTEM FOR RISK INTERMEDIATION
Diversify participants and partnership
• Facilitate foreign participation • Facilitate partnerships
Diversify product range and markets as well as strengthen infrastructure
• Facilitate diversity in marketplace and product • Facilitate efficient infrastructure
• Facilitate OTC trading and clearing efficiency
Augment hedging know-how of businesses and investors
• Facilitate new intermediation models with capabilities to hedge across markets
• Facilitate digital services for ease of hedging
Develop industry talent and educate investors
• Develop talent through close co-operation with industry participants • Empower investors through ongoing awareness and education
campaigns
Source: SC.
B. DIVERSIFY SUITE OF PRODUCTS IN EXCHANGE-TRADED DERIVATIVES
Efforts to attract a broader range of market participants will need to be accompanied by greater diversification of derivatives product offerings onshore. This includes the need to broaden the suite of commodity derivatives products, such as agriculture-based products and currency hedging products, to become a trading destination for global commodity traders.
In addition, the SC sees opportunities to further expand the range of exchange-traded financial and equity derivatives, including cross-listed index futures and new interest rate futures, to complement the OTC market. Although most corporate hedging activities on currency and interest rates are predominantly conducted through banks in the OTC market today, exchange-traded derivatives can provide lower-cost alternatives and lower counterparty credit risk for corporates. In the future, as domestic corporates and investment institutions strengthen their risk management capabilities, more may tap into exchange-traded financial and equity derivatives to better manage risks.
Retail participation within the derivatives market is only a fraction of the pool of retail investors in the equity market. This is due to derivatives trading being more complex and would typically require investors to have a certain degree of knowledge and sophistication. Notwithstanding this, both foreign and local retail participation, excluding the Locals, make up between 20% and 30%4 of the trading volume of the
Source: Bursa Malaysia, 2020.
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56 SECURITIES COMMISSION MALAYSIA