FGLD is a small-sized Ringgit Malaysia (“RM”) denominated gold futures contract traded on Bursa Malaysia Derivatives, providing market participants exposure to international gold price movements at a lower entry cost.
The pricing of the FGLD contract in local currency removes the need for Malaysian participants to purchase foreign currency and therefore removing exposure arising from foreign currency fluctuations.
Each FGLD contract is equivalent to 100 grams of gold bullion. The small size has been designed to provide accessibility to all, but also flexibility for those wanting greater exposure. For the retail player wanting smaller exposure, the small size provides affordability. For the industrial user requiring larger exposure, the contract can be traded in multiple lots at a time (e.g. 5 lots, 10 lots etc).
As a cash-settled contract, no delivery of physical gold is required. Instead, the FGLD contract will be settled on expiry using the cash equivalent of the amount of gold purchased (e.g. 100 grams), calculated using the London AM Fix price (in USD) on the final trading day converted into RM.
For example:
On the Final Trading Day, if the London Gold AM Fix price is USD1,300 per troy ounce and the exchange rate is USD1 = RM3.0800:
- Conversion of the gold price from USD to RM will be: 1,300 x 3.0800 = RM4,004 per troy ounce.
- Conversion from troy ounce into grams: RM4,004/31.1034768 = RM 128.731589260786 per gram (1 troy once = 31.1034768 grams)
- Final Settlement Value will be RM128.75 per gram (rounded to the nearest RM0.05),
- Contract Value will be RM128.75 per gram x 100 grams = RM12,875.
The London AM Fix price is the global benchmark for spot gold prices, and the settlement of the FGLD contract in accordance with this price characterizes the FGLD contract as an instrument that tracks the international gold market closely.
The final trading day for each FGLD contract will be the last common business day in London and KL. Please refer to bursa website for the final trading day for each contract month.
