(Yicai) Nov. 3 -- The Dalian Commodity Exchange and the Bursa Malaysia Derivatives Berhad, the Malaysian derivatives market, have signed a soybean oil futures settlement price licensing agreement.

The DCE authorized the BMD to use the soybean oil futures delivery settlement prices for its BMD-DCE Soybean Oil Futures Contract, which is expected to launch in 2024, according to the agreement signed yesterday. The contract’s underlying is the same as that of the DCE’s soybean oil futures contract, which will use the DCE soybean oil futures delivery settlement price as the basis for cash settlement at expiration.

This is the first time that an Asian exchange is authorized to directly use Chinese commodity futures delivery settlement prices for new product development, as well as the first time a Malaysian futures market uses overseas commodity futures prices as the reference for cash settlement.

The cooperation is expected to strengthen market interconnectivity, better serve the international oil industry and bilateral trade, and contribute to the success of the Belt and Road Initiative, according to the DCE.

Through this collaboration, the BMD is delighted to provide investors with easy access to a broader range of futures trading options and offer effective solutions for industry participants to manage cross-market risks, the BMD said.

The first cooperation between the DCE and the BDM dates back to 2006, when the DCE signed an agreement with the latter’s parent firm Bursa Malaysia and jointly held the China International Oils and Oilseeds Conference.

Soybean oil futures were listed in the DCE in 2006, becoming the first oil futures listed in the future market, and it was introduced to overseas traders as specified domestic products last year.

Soybean oil crushing by oils and oilseeds companies participating in the DCE accounts for over 90 percent of the national total. The daily average trading volume of soybean oil futures has reached 858,000 lots, and the daily average has an open interest of 907,000 lots in the first 10 months.

Editor: Futura Costaglione