KUALA LUMPUR, Sept 18 — Bursa Malaysia Bhd has extended its agreement with Chicago Mercantile Exchange Inc (CME) to host Bursa Malaysia Derivatives Bhd’s (BMD) products on CME Globex until September 2025 with the option of successive renewal terms of three years thereafter.
Chief executive officer Datuk Muhamad Umar Swift said Bursa Malaysia would, in turn, acquire the 25 per cent equity interest in BMD currently held by CME Group Strategic Investments LLC (CMEGSI) following the exercise of the Put Option as prescribed under an agreement entered into on Nov 30, 2009.
He said following the acquisition, BMD will become a wholly-owned subsidiary of Bursa Malaysia that will enable the stock exchange operator to streamline its assets and expand its offerings in the derivatives business.
“We look forward to the opportunity to optimise this working relationship and to facilitate the attainment of our goal to develop a robust derivatives exchange and realise the growth potential of the Malaysian derivatives market,” he said in a statement today.
Both CME and CMEGSI are wholly-owned subsidiaries of CME Group Inc.
Muhamad Umar said CME Group and BMD would continue to maintain their strategic relationship which has been successful in expanding BMD’s crude palm oil futures (FCPO) contract internationally.
“Today, BMD operates the most liquid and successful FCPO contract in the world. The extension of the CME Globex services will continue to provide global visibility, accessibility and connectivity to BMD’s products listed on CME Globex,” he said.
He said the acquisition is expected to be completed by early December 2019 and the valuation of the equity interest is based on a pre-agreed formula as prescribed in the Shareholders Agreement.
“The acquisition from CME Group will be funded by the disposal of a portion of the quoted shares (outside Malaysia) owned by Bursa Malaysia,” he said.
He added BMD also entered into a non-binding Strategic Cooperation Agreement (SCA) with CME which would see the establishment of a joint working group to explore opportunities to develop and market new products.
CME Group Managing Director and Head of Asia Pacific Christopher Fix said the company is committed to working with BMD to expand derivatives markets throughout Malaysia and globally.
He said CME Group has moved away from holding equity stakes in other exchanges and instead has worked to develop strategic commercial agreements with these institutions to benefit its mutual clients.
“We look forward to continuing to work with Bursa Malaysia through our extended commercial agreement to expand the reach of these derivatives markets around the world,” he said. — Bernama
