The Pakistan Mercantile Exchange (PMEX) is in the process of launching a collateral management company for the storage, certification and issuing warehouse receipts.
This was stated by Faisal Malik, business head of agricultural products at PMEX, while addressing a seminar jointly organized by the PMEX, Karachi Stock Exchange (KSE) and Institute of Capital Markets (ICM) on the commencement of AGRI Commodities physical deliverable trading here at the KSE Monday.
Malik explained investment opportunities and benefits of agricultural commodities futures trading at the PMEX to brokers and general investors. He said the futures contract at PMEX is an agreement between two parties to buy or sell a commodity at a certain time in the future against an agreed price.
The PMEX official said the futures contracts can be useful when marketing grains because they can be a temporary substitute for an intended transaction in the cash market that would occur at a later date. In the absence of a proper risk-management tool, banks are reluctant to fund farmers. If they do, the interest rates are very high. The trading of Rice (IRRI-6) and wheat has already started on PMEX.
Earlier, Nadeem Naqvi Managing Director KSE, Javed Hassan CEO ICM, Maroof Moulvi of M.M Group of Companies, Majeed Adam Director PMEX and other agriculture related personnel were present on the occasion. Naqvi opened the seminar by welcoming the guests and explained in detail the importance of commodities in developed economies. He welcomed the steps taken by PMEX on introducing AGRI commodities in their portfolio and encouraged the local players to use these hedging products being offered by the country’s capital markets.
Speaking on the occasion, Javed Hasan CEO of ICM said PMEX is the only organization in Pakistan which provides a centralized and regulated system for future trading and is regulated by Securities and Exchange Commission of Pakistan. He welcomed the launch of new contracts at PMEX and maintained that PMEX has a long way to go in the development of commodities trading in Pakistan.
Maroof Moulvi of M. M. Group mentioned that his company has been extensively engaged in the process of market development and believed that their role as a market-maker and liquidity provider would be remembered for long period of time.Sani-e-Mehmood Khan, General Manager KSE, added that the availability of futures markets and hedging facilities reduces the risk perception, and with banks willing to provide easy loan to farmers makes the Exchange based futures commodities trading, an easy bit.
