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Published on September 21, 2007

However, such cross-listing remains little more than a twinkle in the eyes of traders and producers.

"The soonest we could see cross-listing would be next year," said Afet president Napaporn Kurupasutachai. The Thai exchange is expected then to make a cross-listing for ribbed smoked sheet rubber No 3 with Bursa Malaysia's Futures Crude Palm Oil (FCPO).

Napaporn said that for the initial stage of collaboration, Afet would send a team to study the entire process of palm-oil trading in Kuala Lumpur.

The agreement will also allow Bursa Malaysia to help Afet develop and improve its portfolio of futures and commodities products. The Malaysian bourse now has an average of 15,000 futures contracts traded daily.

"To be frank, our end of the deal will be to create a benchmark for our [FCPO] prices," said Raghbir Bhart, head of Bursa Malaysia's Global Markets Department. The aim will be to boost the Malaysian bourse's global stature in palm-oil commodity trading. It has also struck a similar deal with the Jakarta Futures Exchange.

Bhart earlier told Malaysia's Bernama News Agency that the US-dollar based FCPO was set up mainly to attract foreign investors. In March, Bursa Malaysia announced it would delist its less-popular palm-kernel futures contract.

Malaysia's Plantation and Commodities Industries Minister Peter Chin said the country's exports of palm oil and related products this year have reached 17.9 billion ringgit (Bt178 billion), up 26.95 per cent from 14.1 billion ringgit earned in the same period last year.

In exchange for its presence in Thailand, the Malaysian bourse, which has 27 years of futures trading experience, will pass on its know-how to Afet, including its more advanced settlement-price system, Bhart said.

Napaporn said Afet's main objective was to study the possibility of trading palm oil in Thailand to accommodate the growing renewable-energy market, which included palm-oil-based ethanol.

This has been something of a rough year for Afet, with a drastic fall in the volume of contracts, from an average of 600 a day last year to only 350.

In July, it tried to redress a liquidity problem, particularly in ribbed smoked rubber trading, by extending the length of contract terms from six months to nine, increasing the number of positions an investor is permitted to hold from 300 contracts to 5,000 and raising the number of hedges from 100 to 500.

Napaporn believes it requires only clearer policies from the government to smooth out the ailing exchange's problems.

"Whether or not we merge with the TFEX [Thailand Futures Exchange] is insignificant," Napaporn said. "True, it may help economically, but if government policies remain murky, then it does not matter."

Ki Nan Tsui

 The Nation