Individual Assignments 2 Infographic (FIN435)

DERIVATIVES
MARKET
What is Derivatives Market?
Derivatives are financial contracts whose value is linked to the

value of an underlying asset. They are complex financial
instruments that are used for various purposes, including
hedging and getting access to additional assets or markets.
Types of Derivatives
• Futures Contracts
•Options Contracts
• Forward Contracts
• Swap Contracts
Functions
Price Discovery
Transfer Of Risk
Hedging Risk
Derivatives Exchange
Lower Transaction Cost -A market place where different types of
Provide Access To derivatives instruments are traded, i.e.
Unavailable Assets And Bursa Malaysia Derivatives Berhad.
Markets -It is highly regulated.
Higher Leverage -Trading in contracts of different
maturities, called futures or option
contracts.
-Bursa Malaysia Derivatives Bhd offers
a)commodity derivatives
Operation:
b)equity derivatives
1. Organized exchange c)financial derivatives
• Provide an organized market place -Trading in derivatives market involves two
where different segments:
futures contracts can be traded (e.g. a) Spot Market
standardized contracts). b) Futures Market
2. Over-the counter (O-T-C) -Key Participants:
• More complex and a financial i. Hedger
intermediary (bank) finds a ii. Speculator/ Investor
counterparty or serves as the iii. Arbitrageur
counterparty.
ADVANTAGES DISADVANTAGES
Hedging risk exposure

High risk
Underlying asset price

Speculative features
determination
Counter-party risk
Market efficiency
Requires Expertise
Access to unavailable
assets or markets
OFFSHORE
MARKET
Definition
Market for offshore (foreign) business activities, i.e.
#1 banking, investment, etc. An offshore company may be

set up for the purpose of low tax rates
and relaxed regulation and government control. Main
offshore financial centers: Bermuda, Singapore, New
Zealand, Luxembourg and Labuan.
Characteristics
1. Tax benefits
#2 2. Confidentiality
Strategic location to attract various
investments.
Good infrastructure to promote current and
future development.
Offshore Market:
Malaysia
#3 1) Labuan International Business and
Financial Centre (LIBFC).
2) Labuan Financial Services Authority
(LFSA)
3) Offshore Trading and Non-trading
Companies.
4) Offshore Banking and Trust Companies
5) Tax Structure and Incentives
Objective LIBFC
#4 To enhance the attractiveness of Malaysia as an
investment center.
To supplement the onshore financial system centered in
KL.
To strengthen the contribution of financial sector to the
progress of diversified economic growth.
To form part of the national strategy to diversify the
growth opportunities of the nation.
LIBFC:Financial Services LFSA:Objective & Roles

Single regulatory agency to supervise
offshore industry activities and
Banking operation operation.
Insurance and related business Roles
Corporate funding To administer and enforce the
Investment and trust offshore financial services
management legislation.
Investment holding companies To supervise the offshore financial
Professional services and other services industry in terms of
related services operation of business and financial
activities.
To develop national objectives,
policies and priorities in relation to
the business and financial activities.
To focus on the development and
promotion of business and financial
activities.
-Labuan Offshore Companies
Involve in trading or non-trading
business activities.
Offshore Banking Tax Structure & Incentives
Not registered as offshore

Offshore bank is a bank located
companies
outside the country of residence of
Individual resident
the depositors to grab advantages
Non-residents
of tax heaven and great privacy.
Preferential tax treatment under
the Labuan Offshore Business
Offshore Banking Business
Activity Tax Act 1990
Providing credit facilities
(LOBAT):
Receiving deposits
Company carrying offshore
Offshore investment banking
trading activities can choose to
service
pay a tax at the rate of 3% of its
Islamic banking business
net audited profits or a fixed
Building credit business
sum of RM20,000 a year.
Development finance business
Exemptions from Tax
Dividend paid out or received
No withholding tax
Not subject to stamp duty
BY NUR FARHANNA ATIQAH BINTI PAUZI(2021813216)

JBA2422B

Individual Assignments 2 Infographic (FIN435)

Uploaded by

Copyright:

Available Formats

Individual Assignments 2 Infographic (FIN435)

Uploaded by

Document Information

Original Title

Copyright

Available Formats

Share this document

Share or Embed Document

Sharing Options

Did you find this document useful?

Is this content inappropriate?

Copyright:

Available Formats

Individual Assignments 2 Infographic (FIN435)

Uploaded by

Copyright:

Available Formats

DERIVATIVES

What is Derivatives Market?

Derivatives are financial contracts whose value is linked to the

Hedging risk exposure

Underlying asset price

#1 banking, investment, etc. An offshore company may be

LIBFC:Financial Services LFSA:Objective & Roles

Offshore Banking Tax Structure & Incentives

Not registered as offshore

BY NUR FARHANNA ATIQAH BINTI PAUZI(2021813216)

You might also like