Bursa may tie up with CME

The world's largest and most diverse financial exchange, the Chicago Mercantile Exchange (CME) may buy a 10% stake in Bursa Malaysia. Both exchanges are in talks to form a tie up that will involve the trading of CPO derivatives on CME.

The deal is currently being thrashed out by the relevant parties and is likely to be announced close to Christmas. The price tag for the sale, says a source, is within the RM20 per share range. (The counter closed Friday at RM14.20).

Government agencies or institutions own about 38% interest in Bursa Malaysia. The Minister of Finance Inc and the Employees Provident Fund has own 19% and 3% respectively in the local exchange. Noteworthy and as an analyst points out, Bursa Malaysia has a high foreign shareholding of 40%.

Earlier, CME had a 50-50 joint venture with Singapore Exchange (SGX) to list commodity futures on a Singapore-based platform called Jade. However, in the middle of November this year, the CME group abandoned the project, selling its stake in the venture to the core owner SGX. The partnership has been terminated, which opened the door for talks between CME and Bursa Malaysia.

Other exchange like Dubai International Financial Exchange (DIFX), Dalian Commodity Exchange (DCE) (already tie up with Bursa to trade CPO in Dalian), and Euronext are keen to cooperate with Bursa.