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FTSE and Bursa Malaysia launch indices

Jame DiBiasio
The stock exchange will gradually replace existing indices with the new, modern line-up, including Islamic benchmarks.

Index provider FTSE is to team up with Bursa Malaysia to provide a new series of equity indices for Malaysia, after yesterday signing their latest co-operation agreement. Under the deal, Bursa and FTSE will collaborate to develop and promote a series of domestic indices, customised indices and products for the equities market in Malaysia.

Bursa Malaysia said the new indices - scheduled to go live during the first half of 2006 - will be designed using international standards and will be free-float adjusted. The parties will also collaborate to create an Islamic index series for the Malaysia market and explore the feasibility of a wider co-operation on areas such as the creation and promotion of Islamic or sharia indices; the Islamic series will initially cover just Malaysia but could over time expand to include other relevant markets.

The indices will also be suitable for a range of index-linked investment vehicles, including exchange-traded funds, derivatives and OTC products. Bursa Malaysia's chief executive, Yusli Mohamed Yusoff, says: "The creation of these new indices will result in us having more internationally aligned benchmarks for our market. This enables investors to better assess our market's competitiveness at the global level."

A spokesman for FTSE said it is hoped the new indices will quickly become the benchmark for the Malaysian market and will help attract an increasing number of international investors to the country. Bursa Malaysia officials say the new series will over time replace the existing stock exchange's indices - except for the famous Kuala Lumpur Composite Index.

Full details of the series, including ground rules, constituents and historical performance information, will be announced when the series goes live. The new indices will be managed and calculated by FTSE in accordance with a set of ground rules written by FTSE and approved by Bursa.

The FTSE/Bursa Indices Advisory Committee will convene every six months to undertake a review of the new indices. All net revenue received in relation to the licensing of the new indices and any product or services derived from the indices will be divided between the parties equally, Bursa says.