"We believe the five-year Malaysian government security futures will be used to hedge long-dated interest rate commitment, including papers,” commented Encik Abdul Jabbar Abdul Majid, executive chairman of MDEX. “It will also be a transparent benchmark yield for the investing community.”
The contract will have a notional size of MYR100,000 ($26,315), and will be based on a basket of eligible government bonds, each with a minimum size of MYR500 million and 4.5-5.5 years to maturity.
To ensure liquidity, MDEX began a series of incentive schemes last year to attract market makers ahead of the launch. So far, four market makers have been approved, with a fifth application pending approval, the exchange said.