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Malaysia Studying Regional Rubber Contract to Challenge Tokyo

March 6 (Bloomberg) -- Malaysia is studying a rubber futures contract to compete with Tokyo as a benchmark, the head of the country’s derivatives exchange said.

Bursa Malaysia Derivatives Bhd., part-owned by CME Group Inc. and a unit of Bursa Malaysia Bhd., is talking to producers and traders in Southeast Asia to assess the feasibility, Chief Executive Officer Chong Kim Seng said in an interview today.

“Among the producing areas, there is currently no good benchmark yet,” Chong said at the Palm and Lauric Oils Conference and Exhibition in Kuala Lumpur today. “Over 75 percent of rubber comes out of Southeast Asia. This is something that seems to be lacking.”

Malaysia wants to broaden its range of financial products after establishing itself as the largest center for palm oil trading and Islamic finance. The Tokyo Commodity Exchange is home to the most popular benchmark for rubber futures. Contracts are also traded in Shanghai and Singapore.

A Malaysian rubber contract would probably also trade on the CME’s Globex electronic platform, said Chong. The bourse is looking at a futures contract for refined, bleached and deodorized palm olein, he said, without providing a timeframe.

Options trading on crude palm oil futures started on July 16, becoming the first Asian exchange-traded agricultural options contract, the exchange said at the time.

To contact the reporter on this story: Ranjeetha Pakiam in Kuala Lumpur at rpakiam@bloomberg.net

To contact the editor responsible for this story: James Poole in Singapore at jpoole4@bloomberg.net

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