An equity index refers to a portfolio of equities or shares that represents a segment of the equity or share market. Meanwhile, equity Index futures are futures contracts on equity indices. Currently, there are two (2) equity index futures traded on Bursa Malaysia Derivatives namely FTSE Bursa Malaysia KLCI Futures (FKLI) and Mini FTSE Bursa Malaysia Mid 70 Index Futures (FM70).

FKLI is a Ringgit Malaysia (“MYR”) denominated FTSE Bursa Malaysia Kuala Lumpur Composite Index (FBM KLCI) Futures Contract traded on Bursa Malaysia Derivatives providing market participants exposure to the underlying FBM KLCI constituents. On the other, the FM70 is a Ringgit Malaysia (“MYR”) denominated Mini FTSE Bursa Malaysia Mid 70 Index Futures contract traded on Bursa Malaysia Derivatives providing market participants exposure to the underlying FTSE Bursa Malaysia Mid 70 Index (FBM Mid 70) constituents. Both FKLI and FM70 are used by institutional and retail investors in their respective trading portfolios.

The size of each FBM KLCI (FLKI) and FBM Mid 70 (FM70) contract is RM50 and RM4 respectively. Like any other futures contract, both the contracts have contract specification which lists down the set of terms and conditions of how the product will be traded like the contract size, minimum price fluctuation, daily price limits and trading hours. The details of the contract specifications can be obtained from Bursa Malaysia website.

Traders will need to be equipped with the correct trading strategies. The decision to buy or sell the futures is dependent on market conditions whether bullish or bearish. In a bullish market/uptrend, traders can long the position whereas in a bearish market/downtrend, traders can short the position. To become a successful futures traders, traders need to have a comprehensive trading plan. There are four elements that make up a trading plan – trading methods, trading tools, trading strategies and “yourself”. This element refers to how much traders know their level of trading capability such as having sufficient capital and time allocation for trading. 

Trading in Equity Index Futures Contract (FKLI and FM70) - Recorded Webinar

Speaker: Choong Ty'ng Ty'ng

Webinar Date: 13/9/2022

Source: SIDC

Click here link to open resource.

Trading in Equity Index Futures Contract (FKLI and FM70) - Recorded Webinar

Speaker: Choong Ty'ng Ty'ng

Webinar Date: 17/8/2021

Source: SIDC

Click here link to open resource.