Everyone seems to be talking about stock market, I will start a thread that very few people know which is the "Futures and Derivatives" Market.

Let me expose everyone to a new type of market... however before I begin read the disclaimer.

Disclaimer

1. if you so choose to invest in this market please ensure you have the requisite knowledge and seek proper and necessary advise before proceeding. P

2. I am merely exposing everyone to a new topic for knowledge, any comment and/or solicitation that I make do not represent the views of my company and I do not speak and/or write on behalf of my company.

3. If you so choose to invest in the "Futures and Derivatives" market, please do proceed at your own risk.

4. For the sake of clarity and the clear any doubts, this is not a "MLM, get-rich-quick, referral programs and pyramid schemes."

For everyone's information...

This market carries one of the highest risk in the investment market, taking into account Stocks, Unit Trust, Savings and etc... It can make your instantly rich and of course poor in a matter of minutes, because prices change every 10-30 seconds.

There are 3 main products in the market namely...
FKLI (bechmark KLCI)
FCPO (FPKO) (Palm Oil & Palm Kernel)
KLIBOR (Interest Rates)

Forex?
If your guessing is FOREX part of Futures and Derivatives the answer is Yes.

Forex is not traded in Malaysia due to Bank Negara's control over Forex Market, The Malaysian Ringgit is not traded globally nor recognized. Therefore, each time if you were to buy a foreign currency it is convereted to i.e. RM ---> USD ---> GBP and vice versa.

Comparison of Forex to other Malaysian Future market products put Forex at the highest end of the risk scale, currency flactuate and volatility due not only to economical but world economical factors.

For more Information Visit

Bursa Malaysia General Info and Web Site:
http://www.klse.com.my/website/bm/about_us/

Bursa Malaysia Derivatives Products:
http://www.klse.com.my/website/bm/products...erivatives.html

Bursa Malaysia Derivatives Trading Hours:
http://www.klse.com.my/website/bm/trading/derivatives/

Bursa Malaysia Derivatives Broker's List
http://www.klse.com.my/website/bm/brokers/...of_brokers.html

For everyone's information there is only 14 Futures and Derivatives broker's in Malaysia.

Need more details you can IM me or discuss on this open thread.

This post has been edited by aurora97: Sep 24 2009, 12:52 PM

Return for Futures and Derivatives estimate 30% for the yr 06 and 07. <EDITED

Example
Take FKLI (Bechmark KLCI)
0.5 tick/point = Rm 25
1 tick = Rm 50

If the FKLI were to surge 10 points that would be Rm 500 gain and vice versa.

Not suprisingly if the market were to go against you, you can lose more than you have invested in the market.

It all depends on the volatility of the market.

See a Future broker representative near you for in-dept details.

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Added on January 2, 2008, 2:16 amTrading in Futures and Derivatives...

General Requirement
1. 18yrs old at the date of agreement
2. IC + 3 months Pay Slip/ Be Form/ Form J/ 3 months Bank Statement
3. A Future Broker Representaive
4. Rm 10 Stamping Fee

Account Opened?
1. Initial Margin is Rm 5000 (i.e. deposit)
2. Margin Call is T+1 (instead of being T+3 like securities)
3. All transactions are settled at end day by brokerage
4. Margin call is at 8:45am, payment must be made before 12pm.
5. Instructions/orders/Trades can be placed Online or by Phone.
6. End day you will receive a daily activity statement and end month you will also receive a monthly activity statement

This post has been edited by aurora97: Jan 2 2008, 09:08 AM

Margin call is activated if there is loss at the end day, the following day you will need to top up the balance. If there is gain on realization than your entitled to make a withdrawal.

Yes, lost of 100 points will completely wipe out your Rm 5000 but normally there will be a stop lost requested by the client if it drops 4-5 points depends how much risk you want to take.

3 main products in the market
FKLI
FCPO
KLIBOR

Normal Retail clients i.e. individuals would trade either FKLI and/or FCPO. Only banks (or like we call them institutions) go for KLIBOR.

Future transactions are know per contract basis.

The uniqueness of futures is that you invest in "Contract Months"

FKLI = you can trade up to 3 months in the future (includes current month)

FCPO = you can trade up to 3 years in the future (includes current year i.e. this year 2008 so you can trade up to 2010)

Delighted your interested "Low Yat 82" keep the questions rolling, its still a wilderness out there the Futures Market unlike equity.

Want to know a secret? The Commission rates/brokerage rates are actually lower than Equity market

This post has been edited by aurora97: Jan 2 2008, 09:24 PM

5k is actually determined by the future houses, being one of the best in the industry our company is able to demand a higher requirement. You not only get daily commentaries, research, guides but most importantly experience traders whom have been in the industry since its initiation.

Long = buy
short = sell

there is a lot of technical analysis and charts i.e. trading forex required to fully comprehend the futures market, I am more towards fundamental and my knowledge is leaning towards FCPO.

FKLI do not have spot month only commodities such as FCPO have spot month, FKLI are cash settled at the end of the month if you have not closed all your positions.

FCPO spot month is every 15th day of each month.

Than you come to the question of position limit.

FKLI= max position you can hold in a month is 10K

FCPO =
Spot Month = 500
Non Spot Month = 5000
Total all positions added must not exceed 8K.

Roll Over..
Closing a the current expiring position and opening it in another month at the same price will inccur standard brokerage charges.

So far I have yet to see any retail clients hold any positions that long, normally only institutions does it.

lol you trying to jumble everything together?

FCPO
1. Only FCPO has spot month

2. FCPO spot month is on the 15th of each month, in this spot month period your only allowed to hold 500 contract maximum.

3. This is because spot month means delivery month, tendering will begin after the 20th day of the month. So if have any contract/ position you will end up with 25 tonnes of FCPO.

i.e. 1 contract = Rm 3100 = 25 tonnes = Rm 77500 this is the price you will need to pay during delivery.

4. You can choose to rollover your position before the expiration on the 15th day of each month.

FKLI
1. Cash settle at the end of each month

2. Roll over prior to expiry

I believe retail clients do not rollover their position as they would rely heavily on day trading to take advantage of the low commission, gaining 3-4 point a day and profit taking as soon as there is any spikes.

Retail clients dont hold position because in order to mainatain your position you will be required to constantly top up to maintain a position, unless your absolutely sure that that position will be profitable in the coming months. Otherwise, holding a position will bleed you dry.



This post has been edited by aurora97: Jan 2 2008, 10:35 PM

The concept is the same, but the volatility compared between FKLI and FCPO is worlds apart. Apart from the month difference FCPO is a very volatile product in the market, just last month it was hovering around Rm 2,900 than out of the blue it spiked up to Rm 3,100 thats a 200 point gain (guess how much you won?).

Likewise, FCPO is known to be the biggest killer.

errmm for FCPO the best benchmark is crude oil prices, as consumption spikes in Summer and also December the demand for FCPO spikes i.e. throughout Sept, Nov and Dec we have seen record high prices for FCPO at first breach 2700 to go all the way to 3100.

The hype all about biodiesel as well has caused FCPO prices to surge ahead, so not besides the cooking oil industry fighting for a share of palm oil you have biodiesel coming in.

Many factors fundamental is one market factor you would wanna keep at the tips of ur hand when u trade.

yes we do, we are actually an investment bank's subsidiary..

Our company specializes in FCPO and also FKLI trading.

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Added on January 3, 2008, 9:34 pmlow yat 82

By the way, roll over is also known as a spread trade.

simultaneous buy and sell but in different months is called a spread.

Retailers/individual investors do not use the spread method very frequently because you need to constantly top up to maintain a position.

Retailer/Individual investors normally focus their attention the beginning of the first 2 weeks of the month, whilst Institution will normally appear to be more active at the end of the month because they constantly roll over their position to the next month.

Retailers normally stay clear at the end of the month due to volatility cause by institutions trading in large number of lots causing market to flactuate unpredictably.

This post has been edited by aurora97: Jan 3 2008, 09:34 PM

that is if you buy 50 contracts of FKLI, at end of the month it will be cash settled. If you make a loss you will have to pay a difference and vice versa.


FCPO is abit different.

say Rm 3100 X Rm 25 per tonne per contract = 1 contract = Rm 77500

this is the settlement price (which excludes delivery)

spot on...

Err... the charges is as follows

I won't give the exact commission rate but it is lower than equity ^^, but the exchange and clearing fees are correct.

FKLI
Rm 100 (Rm 95[commission]+ Rm 5[exchange 4+1 clearing]) per side/per way

FCPO
Rm 100 (Rm 97+ Rm 3 [exchange 3+1 clearing]) per side/ per way

Per side/Per way is one transaction

Round Turn is one transaction back anf forth.


btw, i've read a book stated that futures's volume n open interest is actually 1 day lag.. is it true also for malaysia futures market?

can you eleaborate further?

Cause to my knowledge everything is electronically traded and real time, there might be some delay of data transmission but the trading system updates it self every 10-30 seconds.

ah ok your right on that if you say compilation of data, everyday i see that report and i didnt know what you were talking about... lol oops..

I can see volume, open interest, market share, daily trade statistic but all information are for the previous day so delay by 1 day.

I will tip you of to see whether your rate is alright thats the best i can do for u.

FKLI has breach 1500 for Jan 08 ceiling once it goes up, now is a super bull already i think its kind of too late to do anything but still can consider. Normaly acc opening is very fast, if all ur documentation is sufficient and u have deposited the inital margin. Can trade the next day or even immediately.

Oh by the way CPO now at 3200, plantation companies shud be making tonnes by now.

I agree with you on the part plantations sector is leading the charge, but we are looking at the "Overall market" not isolated industries comparison if you refer to the KLSE index its at a 10 year high breaching 1500 barier.

Fyi this is a super bull for the futures industry, since we do not look at stocks but the performance of KLSE as a whole.

Well explained, I get where ur going at.

Take note...

So for clarification sake, its safe for me to say that FCPO and FKLI is currently experience a super bull and not KLSE for the reocrd.

 7_of_2008_Margin__FKLIOKLI_.pdf ( 76.07k ) Number of downloads: 189
 8_of_20087_Margin__FCPO__FPKO_.pdf ( 76.08k ) Number of downloads: 136


I took the liberty to attach the initial margin rates effective from 22nd Jan 08 to 25th Jan 08

He does have a point, on the other hand of course taking big risk also have big returns otherwise we wont be trading into the future. It could be 10K profit as well right?

by the way if the market drops more than 20% it will automatically trigger a circuit breaker meaning that the entire market will be suspended for that particular day.

This post has been edited by aurora97: Jan 22 2008, 06:58 PM

It's no problem actually just produce your 3 mths bank s/m or savings book will suffice. You don't need to park RM 100,000 just to show that you can invest in futures, even with RM 1 we will buy whatever reason you give.

This is a common misunderstanding among many ppl that you need to have the money in the bank to invest in the futures makret, actually we need your savings or bank s/m just to verify your identity i.e. extra precaution.

If I walk in and just open account but never trade in futures thats fine, just leave the account dormant doesn't matter.

But when and you so choose to take a dip into the futures market that you should refer to the initial margin rates that i have posted in PDF format.

example the current inital margin rate is RM 5,000, than you will need to deposit 5K before you can start trading (only when you want to trade)

Ok what i meant was:

1. Say in your bank now you only have Rm 1

2. We require 3 months bank statement

3. So you produce 3 months bank statement

4. We open you account (suprise!)

5. Account opened for futures trading

Say you want to start going active and trade futures:

1. Refer to the initial margin table

2. FKLI initial margin is Rm 5,000

3. Deposit Rm 5K with Futures Broker

4. Start Trading Futures.

Point taken.

Like me I am also here to share my knowledge with everyone but from a future broker's officer point of view, if i am able to I will invite a trader to speak on forum.

Many ppl have a view that the futures market is offlimits to individuals and only to financial institutions but this mentality and concept is wrong.

Further, the other mistaken perception is people tend to lose interest because of the procedure attached in account opening. I want to clarify this point so that ppl who indeed have knowledge in the futures market, know how to proceed without being bogged down by all this worries.

Our company posses one of the toughest conditions on account opening, I can help you navigate through the minefields of red-tape and also abit of tips and tricks on commission rates

Futures is a very unknown and vague territory for many including me, although i do suggest you open an account and make use of the Future Broker Electronic Trading Facility (something like HLEBroking) to monitor the Futures Market. There are no strings attached, certain brokerages offer this service for free.

Spread?

Spread (aka short or long roll-over) normally individuals/institutions will roll their (open) position to the next following month when products (i.e. FKLI) near their expiration month.


Actual Trading Practice

Explanations to why Individuals don't use spread much...
This happens always 3 days to 1 week before expiration, individuals usually will avoid this month because its highly volatile. There is no sufficient individuals aka speculators in the market to have a level playing field against institutionals who can trade upwards of 100 contracts to 1000 contracts. So when they rollover this contract everyone will feel the ripples of their movement.

I have seen individuals used spread but the return takes time and patience and alot of monitoring of forward months, in futures they only want to do it fast and furious in and out without holding any position for too long. Not a matter of maturity on the contrary.

This post has been edited by aurora97: Jan 23 2008, 01:23 PM