(Yicai) March 19 -- The first futures contract using Chinese commodity prices as a benchmark for settlement on an exchange of an Association of Southeast Asian Nations member has officially begun trading.

The Bursa Malaysia Dalian Commodity Exchange Soybean Oil Futures, also known as FSOY, began trading on the Bursa Malaysia Derivatives Exchange yesterday, as the settlement price authorization deal signed by the DCE and the BMD last year officially kicked in, the two bourses announced in separate statements yesterday.

FSOY is the same as the soybean oil futures trading on the DCE in terms of underlying assets, with each lot comprising 250,000 tons. FSOY is available for trading between 9.00 a.m. and 6.00 p.m. Malaysia time from Monday to Friday and for after-hours trading between 9.00 p.m. and 11.30 p.m. from Monday to Thursday, the BMD noted.

"We are pleased to be the first exchange outside of China to be granted licence to incorporate DCE's commodity futures settlement prices into our product offering," BMD’s Chairman Datuk Muhamad Umar said. "In addition to our existing futures contracts, market participants can now leverage FSOY as a risk-management tool to hedge against price fluctuations in times of market volatility and evolving complexities of international markets."

"The launch of FSOY is a pragmatic outcome of cooperation that is in line with the Belt and Road initiative and celebrates the 50th anniversary of China-Malaysia diplomatic relations," a spokesperson at the DCE said. "It enriches the tools available for global oils and fats industry chain participants to manage price risks, and strengthens the connections between the two countries' futures markets.

"Moving forward, the DCE will continue to explore ways to enhance communication and deepen cooperation with overseas exchanges, steadily increase its level of opening-up, and serve the stable and healthy development of global commodity trade," the spokesperson added.

China is the world's biggest soybean importer and consumer. The DCE and the BMD are the world's leading refined palm oil and raw palm oil futures markets, respectively.

As the first non-palm oil futures contract of edible oil, FSOY can enrich international markets' choices to hedge oil prices and let international traders know more about Chinese and Malaysian futures markets, the DCE noted.

Editor: Futura Costaglione