ISLAMABAD: As part of its mandate to develop and strengthen the commodities’ market, the Securities and Exchange Commission of Pakistan (SECP) has granted approval to Pakistan Mercantile Exchange Limited (PMEX) for introducing futures contract in wheat.
In an announcement on Monday, SECP said the approval was granted following extensive consultations between the exchange and all stakeholders. “It adds to the existing agriculture futures contract portfolio of rice, palm olein and sugar involving physical delivery.”
SECP said the new delivery-based futures contract would meet hedging requirements of all market participants including farmers, millers, food manufacturers and processors, retailers, wholesalers, corporate buyers and consumers. It will benefit the wheat industry, the agricultural sector and the capital market.
The trading of futures contract will allow more efficient price discovery by providing a regular platform for stakeholders’ participation in the process. The contract is also expected to assist the policymakers by giving demand, supply and price signals which will be helpful in making policy decisions for the wheat industry.
According to the SECP, contract months will be made available for trading depending on market needs with contract size of 10 tons. To facilitate settlement of the contract, the delivery can be made either at exchange-designated warehouses or the buyer and seller can mutually settle their trade outside the exchange.
With another commodity-based contract available for trading, the SECP said the market was expected to contribute more positively to broadening the investor base and overall economic growth of the country. The enrichment of commodities portfolio will also assist in bringing the mercantile exchange on a par with other commodities exchanges internationally.
Published in The Express Tribune, October 25th, 2011.
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