(MENAFN - Arab News) The Bahrain Financial Exchange (BFX), the first multi-asset exchange in the Middle East and North Africa (MENA) region, has announced the completion of three months of successful trading. The BFX achieved a major milestone of total trading turnover surpassing the 250 million mark, with the total volume increasing to 6,461 contracts.
As on Feb. 24, the total single-side trading turnover on the BFX Futures was 250.70 million with a total volume of 6,461 contracts (single side) traded since the launch of the BFX Futures on the Nov. 23, 2011. During this period, the largest traded BFX Futures contract in terms of volume was the BFX Euro Dollar Futures (3,026 contracts with a turnover of 99 million). In terms of the trading turnover, the BFX Gold Futures was the highest (2,702 contracts with a turnover of 146.48 million). The volume on the BFX Natural Gas Futures was 733 contracts with a trading turnover of 5.20 million. The highest daily trading turnover till date was 8.12 million and the highest daily volume was 196 contracts (both on Feb. 22).
Arshad Khan, managing director and chief executive officer of the BFX and the BFX Clearing and Depository Corporation (BCDC), said: "We are pleased with the trading turnover for the first quarter. We see the results as a confirmation to the Exchange's sound approach in attracting investors in the region to trade in our markets. Our immediate plan is to broaden our trading portfolio by launching new products that include the BFX Dow Jones SAFE India Index Futures. In Parallel, we are focusing on increasing the membership base of the Exchange which will further widen the investor base of our market."
The BFX launched its conventional segment with the commencement of Futures trading on gold, natural gas and the euro - US dollar currency pair on Nov. 23, 2011. Since the launch date, the weekly trading turnover has increased to over 35.03 million (for the week ended Feb. 24, 2012) from 8.27 million (for the week ended Dec. 2, 2011) - an increase of 323.58 percent. The weekly trading volume also increased from 231 contracts to over 901 contracts during the same period - an increase of over 290 percent.
The BFX markets provide hedgers and cash market participants - including Jewelers, manufacturers, fabricators, service providers, traders, importers, exporters, etc. - an opportunity to mitigate risk against volatile asset prices. The uncertainty in the euro zone economies, expectations of higher demand for bullion as a hedge against inflation and the increasing global cash liquidity increased the asset price volatility.
The BFX Futures provide an ideal electronic trading platform for market participants to enter and exit hedge positions. Gold prices increased to over 1787 per troy ounce on Feb. 23, 2012 from a low of 1523 per troy ounce (Dec. 2, 2011). The EURUSD currency has also become volatile due to the credit crisis in the euro zone region. The spot EURUSD increased from 1.2624 on the Jan. 13, 2012 to over 1.3487 on Feb. 24, 2012. Global Natural Gas Futures prices decreased to a ten-year low of 2.231 per million British thermal units (mmBtu) on Jan. 23, 2012 before rebounding to over 2.844 per mmBtu on Jan. 30th, 2012, and subsequently decreasing to 2.550 per mmBtu on Feb. 24, 2012. The Middle East has the world's largest reserves of Natural Gas estimated at 75.80 trillion cubic meters (40 percent of the global reserves). The global Natural Gas production and consumption is also growing at an increasing pace.
While all these factors have increased the asset price volatility, the BFX Futures provide hedgers with the tool to mitigate the price risk, thereby protecting and possibly increasing their operating profit margins. Investors can also diversify their portfolio with alternate asset classes such as commodities and currencies.