Bursa Malaysia Derivatives - 5

A Day Without Locals In KLCE

There was a day where all locals stayed away from the cpo futures floor trading:

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This is a page that I got it from the Star Business on Thursaday, September 21, 1999. See what was the total open position? 6,968 contracts as compared to about 180,000 contracts now a day!

What was the volume? 517 lots! What happened to the open outcry floor trading on that day? 

As quoted in the Bernama, the market was dampened by a boycott on Commex when the call by local traders (who trade on their own behalf) for lower fees in the annual subscription was rejected by the Commex board, dealers said. (Commex was the ex-Bursa Malaysia Derivatives that we used to call KLCE before merging. There were names like MME, KLOFFE and MDEX too.)

I think the average daily volume for cpo futures trading was above 1000 lots when I was a floor trader before turning to be a "new and the last" local there, and such a volume was actually more than 50% drop not 35% drop as shown in the paper!

There will be another interesting page about the cpo futures trading floor at that time when all locals stay away from the cpo futures trading pit. It was about the "boycott"! Wait for a next post.

Bursa Malaysia Derivatives - 3

Technology has made a deep impact on futures trading, open out-cry trading on crude palm oil futures trading generated an average much below 2000 contracts a day when I was still a runner in the cpo futures trading pit in KLCE but electronic trading can help generating more than 2000 contracts in just a few seconds in cpo futures trading presently.

I still remember the chaos day that open out-cry cpo futures trading volume hit 5000 contracts when I was a trader in a newly set up futures company called KAF-Refco, we did 3000 contracts that day! Since the trading copy, as mentioned in previous post, had its limitation by not exceeding 20 contracts per copy (under the KLCE rules), just imagine how many copies would have been raised for the 5000 contracts traded that day! We floor traders had to sort out all the trading copies for more than 3 hours after the cpo futures market was closed at 6pm! 

30,000 open positions was basically at the high end in open out-cry trading but electronic trading has the open positions hit 280,000 before coming down to about 180,000 when this post is written.

As we all know that Locals in cpo futures trading are the speculators but also the market makers. In open out-cry trading, they were the pits traders jumping up and down "insanely" in outsiders' eyes who stood at the 5th floor Gallery watching down the big trading floor on all kinds of hand signals and body gestures in a very noisy environment in DayaBumi Complex.

Today, there is no more such a marketplace. Locals sit in cosy rooms finger press on their keyboards to do trades... no longer jumping up and down with hand signals!