** Future Margin Decreased Effective 29 Jan 2009 **

The future margin is going to decrease starting from 29 Jan 2009 onwards. Below is the margin total:

Upcoming Event

Hi all,

   CIMB is conducting a seminar covering market outlook, online trading, Exchange Traded Fund (ETF) and Future Trading. For those who interested, you may find more information below:

Date	7 February 2009 (Saturday)
Venue	Securities Commission No.3, Persiaran Bukit Kiara Bukit Kiara 50490 Kuala Lumpur   Click here to view map
Time	8:00am – 1:45pm
Admission	Free (pre-registration is a pre-requisite)

Registration

Please email CIMB itrade_events@cimb.com  or contact CIMB call center at 03-2084 9890

Programme Detail

Click here to view programme.

FKLI FAQ-2

1. How much do I need to start trading in FKLI contracts? The initial margin to trade is RM5,800 per contract (** updated on 22 Jan 2009) and is subject to margin calls everytime it falls below RM5,800 for any positions still open. The margin payment is a performance bond or good faith deposit to ensure performance of the contract (i.e. cash settlement of the contract) when the contract matures. (The initial margin amount is subject to change from time to time).  2. What about the marked-to-market process? On a daily basis, you will have to settle in cash, the daily profit or losses of your positions according to the daily change in valuation of your position at the daily closing prices of the futures. Any excess margin can be withdrawn by submitting withdrawal request form by 2:30pm on any business day and the cheque can be collected on the next business day. This is known as daily marked-to-market valuation. The cash difference that you receive or pay is called variation settlement. Any margin call must be topped-up by T+2 otherwise force-selling will occur.  3. How much transaction fees do I have to pay per contract? Brokerage fee : RM 50.00 Trading fee : RM 9.00 Clearing fee : RM1.00 (Total cost for one contract done is RM 60.00)  4. Once I have bought (or sold) a futures contract, must I wait for the maturity of the contract before I can realise my profit or losses? No. You may close out (liquidate) your position at any time by entering into an opposite transaction. For example, if you had bought (long) one contract, you only need to sell (short) one similar contract to liquidate your position. If you allow the contract to lapse into maturity without liquidating your position beforehand, the contract will then be marked to market a final time according to the Final Settlement Value as declared by the exchange.  5. What are the trading hours? Malaysia 8:45am to 12:45pm and 2:30pm to 5:15pm from Monday to Friday.  6. Trading Examples Example 1: Bullish Strategy A trader or a long hedger expecting rising stock prices could buy a futures contract on the KLSE CI. If the market price does turn up, the buyer will gain from the daily increase in the price of the KLSE Composite Index Futures contract ("FKLI"). In Example One, a bullish move is reflected in an increase of 8.5 points, from 1020.0 to 1028.5. When the long FKLI position is closed out on July 5th, the bullish position has a profit of RM850 (8.5 x RM100). Conversely, a decline of 8.5 would have resulted in a loss of RM850. Please note that all examples omit any commissions, brokerage fees or transaction costs. In this case, the trader would have earned a profit for his assumption of risk. The long hedger who bought rising stock index futures in advance of anticipated stock purchases could apply the gain in the futures position towards actual stock purchases, thus reducing their cost.    Example 2: Bearish Strategy Bear markets also offer profit opportunities. A trader or a short hedger anticipating lower stock prices could sell a FKLI contract short. A possible selling strategy if shown in Example Two. Here, the FKLI declined from 1020.0 to 1010.0. That decline of 10.0 points resulted in a RM 1,000 profit. In this case, the trader who sold short would have generated a profit. The short hedger who sold stock index futures to protect a stock portfolio could have achieved some protection for his portfolio in the subsequent market decline.

** Future Margin Increased Effective 22 Jan 2009 **

The future margin is going to increase starting from 22 Jan 2009 onwards. Below is the margin total:

FKLI FAQ

Below are some frequently asked questions and answer I managed to find from the web:

1.	What is the KLCI Futures contract?
A:	The KLCI Futures contract is a stock index futures contract that is based on the Kuala Lumpur Composite Index (KLCI). The contract code specified by the Bursa  Malaysia Derivatives Berhad ("the exchange") is "FKLI".
2.	What is a Stock Index Futures contract?
A:	A stock index futures contract is an agreement between two parties to buy or sell a basket of stocks that make up an index (eg. Kuala Lumpur Composite Index KLCI) at a specific time in the future for a specific price determined today. Since delivery of a basket of stocks is often a cumbersome exercise, stock index futures are cash settled instead.
3.	Is there only one FKLI contract traded?
A:	No. At any one time, there are always four contracts traded with different maturity dates. These contracts are known as the spot month contract, the next month contract, and the next two calendar quarterly month contracts. For example, in August 2000, the four contracts available for trading are the August spot month contract, the September next month contract and the December and March quarterly month contracts.
4.	How do I start trading the FKLI contract?
A:	To trade the FKLI contract, you will first need to open a client account with a licensed Futures Broker. You will need to complete an Account Opening Form, sign a Client Agreement, Risk Disclosure Statement and a questionnaire. You are also required to submit a copy of your NRIC.
5.	What is contract value?
A:	The contract value of a FKLI contract is the price of the futures multiplied by RM50. For example, if the price of the August futures contract is 815, the contract value is RM40,750 (815.0 x RM 50).
6.	How much do I need to start trading in FKLI contracts?
A:	To trade in FKLI contracts, you do not have to pay the full amount of your contract value. You only need to pay the initial margin amount, which is normally 5% to 15% of the contract value. The margin payment is a performance bond or good faith deposit to ensure performance of the contract (ie. cash settlement of the contract) when the contract matures. (The initial margin amount is set by the Bursa Malaysian Derivatives Clearing Berhad and may vary from time to time. Furthermore, brokers may require clients to pay a higher amount of deposit according to each client's risk assessment. On a daily basis, the daily profit or loss of your position will be reflected according to the daily change in value of your position, compared against the daily settlement price of the futures. This is known as daily marked-to-market valuation. The cash difference that you receive or pay is called a variation margin.
7.	Once I have bought (or sold) a futures contract, must I wait for the maturity of the contract before I can realise my profits or losses?
A:	No. You may close out (liquidate) your position at any time by entering into an opposite transaction. For example, if you had bought (long) one contract you only need to sell (short) one similar contract to lapse into maturity without liquidating your position beforehand, the contract will then be marked-to-market a final time according to the Final Settlement Value as declared by the Exchange.
8.	What is short selling?
A:	Short selling means selling an asset or instrument that you do not already own. One has to cover a short position by subsequently buying back the asset or instrument. Typically, an investor looks to selling at a higher price and then buying back at a lower price to liquidate his short position, thereby gaining a profit from a bearish market.
9.	Is short selling allowed in Futures?
A:	Yes, short selling is allowed in futures trading by virtue of the Futures Industry Act (FIA) 1993. In fact, one of the strongest appeals of trading futures is that you are able to profit from both bullish and bearish market conditions ~ short selling futures is a natural activity whereas short selling in the stock market is often encumbered with restrictions.

Why is FKLI2U begin?

Hi visitor,

    I'm new learner in FKLI (KLCI Future) market. I believe they are a lot of people out there also a learner like me who wish to know more about FKLI. This blog is a space for people who are interested in FKLI, whether a newbie or expert to share any information about FKLI. Hope it can benefits all visitors and anyone who has anything about FKLI to share may email me fkli2u@gmail.com

   Thanks.

Johnny.