What is FTSE Bursa Malaysia KLCI Futures (FKLI)?
FTSE Bursa Malaysia KLCI Futures (FKLI) is a derivative instrument that allows investors to speculate on the future movements of the FBMKLCI index, which comprises the top 30 companies listed on Bursa Malaysia. By trading FKLI futures, traders can take positions based on their forecasts of whether the FBMKLCI index will rise or fall in the future.
When traders trade FKLI futures, they enter into contracts to buy or sell (long or short) the KLCI index at a predetermined price at a specified future date. For instance, if a trader believes that the KLCI will go up in value, they can go long by buying FKLI futures contracts. On the other hand, if they anticipate a decline in the index, they can go short by selling FKLI futures contracts.
Here are some terminologies of FKLI, explained;
Margin Requirements
A margin requirement of RM4,000 would mean the trader needs to maintain a minimum of RM4,000 in their Webull Derivatives account to open a position.
Note that: The required margin for each Futures product varies and is subject to change over time.
Contract Size
The contract size for FTSE Bursa Malaysia KLCI Futures (FKLI) is RM50 multiplied by the FKLI index points.
Trading Hours:
Monday to Friday (Malaysia time)
- Morning trading session: 8:45 a.m. to 12:45 p.m.
- Afternoon trading session: 2:30 p.m. to 5:15 p.m.
Monday to Thursday (Malaysia time)
- After-hours (T+1) trading session: 9.00 p.m. to 2.30 a.m.
Settlement: Cash Settlement
Cash settlement for FKLI is a process where, instead of physically delivering the underlying asset (in this case, the FBMKLCI index), the gains or losses from the futures contract are settled in cash.
In simpler terms, at the end of the contract, the difference between the contract price at which the trader entered the position and the final settlement value of the FKLI is calculated. Depending on whether the trader made a profit or incurred a loss based on this difference, the amount is either credited to or deducted from their trading account in cash form.
Cash settlement is a convenient and common method in futures trading as it eliminates the need for physical delivery of assets and simplifies the process of closing out positions and realizing profits or losses.
**Considerations for Beginners**
Futures trading, including FKLI, offers advantages such as leverage, hedging opportunities, and liquidity. However, it also carries risks, such as market volatility and margin calls. To navigate these complexities, beginners should seek advice from financial professionals, start with smaller trades to gain experience, and develop a thorough und erstanding of the futures market dynamics.