KENANGA ANNUAL REPORT 2017

SEGMENTAL REVIEW: LISTED DERIVATIVES During the year under review, KIBB acquired the remaining stake in Kenanga Deutsche Futures from Deutsche Asia Pacific Holdings (DAPH), changing the joint venture into a wholly-owned subsidiary of KIBB, now named Kenanga Futures Sdn Bhd (KF). KF’s performance was adversely affected by the sluggish market conditions and lower client activities. It recorded a loss before tax of RM1.06 million in 2017 compared to PBT of RM2.61 million in 2016. During the year, KF completed the replacement of its Order Management System (OMS) for KDF TradeActive™, its online trading platform. The new OMS has brought about numerous benefits to KF’s operations as it enhances user-friendliness, facilitates mobile trading as well as, risk oversight and is scalable so as to cater to both in-bound and out-bound business expansion. 2017 also marked KF’s inaugural participation as an exhibitor at the Futures Industry Association’s Futures and Options Expo 2017 in Chicago, USA. The expo – a hub for the global-listed derivatives and cleared swaps community – witnessed the attendance of more than five thousand (5,000) industry experts from over forty (40) countries. In 2017, KF was also recognised as the Champion for Best Trading Participant Equity and Financial Derivatives, First (1 st ) Runner Up for Best Overall Derivatives Trading Participant and Second (2 nd ) Runner Up for Best Institutional Derivatives Trading Participant by Bursa Malaysia. Outlook The challenging market conditions faced by KF are expected to persist in 2018. However, on-going geo-political tensions in the global landscape and recovery in commodity prices may attract interest back into the market. In Malaysia, market participants will look forward to the much anticipated fourteenth (14 th ) General Election while in the U.S., expectations of further U.S. interest rate hikes and balance sheet normalisation plans will be factors to watch in 2018. To reduce its reliance on foreign institutional clients, KF will step up efforts to increase its domestic client base. In 2018, KF will be expanding its product offerings by providing access for its clients to access the U.S. CME Group markets. At the same time, KF will profile KDF TradeActive™ more aggressively as it allows clients to trade on both markets in one (1) single platform on both desktop and mobile devices on-the-go. group managing director’s overview Kenanga Investment Bank Berhad 18