Derivatives instruments as a risk management tool

TheStar Sat, Jun 06, 2020 07:50am - 3 years View Original


Bursa Malaysia Derivatives Bhd (BMD) chairman Datuk Muhamad Umar Swift said that market and product awareness needs to be increased to encourage more institutional users to use derivatives instruments as a risk management tool.

WITH the financial market looking uncertain in the near term, analysts see derivatives instruments as useful for investors to manage their risk.

“By hedging with a derivatives contract, market participants can reduce uncertainty on the future price of a commodity, security or financial instrument, ” said CGS-CIMB futures Sdn Bhd head of futures broking David Tan.

He said derivatives contracts are one of the most popular asset classes being used to offset market risk exposure and protect themselves from market volatility.

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