Latest news with #PakistanMercantileExchange
Business Recorder
5 days ago
- Business
- Business Recorder
Case for sugar trading on Pakistan Mercantile Exchange
Sugar — a seemingly simple kitchen staple — holds a complex and powerful position within Pakistan's economy. With an annual production and consumption hovering around 7 million tonnes, sugar is not only an essential household item, but also a strategic commodity impacting national food security, industry dynamics, and government policy. Yet, for a commodity so central to the country's socio-economic fabric, the mechanisms that govern its trade remain largely opaque, informal, and inefficient. At present, sugar trading in Pakistan is carried out through a sprawling network of intermediaries and informal 'exchanges'– marketplaces operating without licenses or regulatory oversight. Transactions are executed on platforms as rudimentary as WhatsApp, where truckloads (typically 12-tonne lots) are bought and sold on speculative pricing. Prices fluctuate based on these informal notations, and deals are struck without transparency, accountability, or the protections offered by centralised clearing systems. This market structure not only limits fair price discovery, but also exposes traders to defaults, arbitrary tax liabilities, and legal risks. Utilising a formal commodities exchange — such as the Pakistan Mercantile Exchange (PMEX) — for sugar and similar agricultural products is not just a recommendation; it is a necessity. Let's begin with the fundamentals. A regulated commodities exchange introduces three critical elements to any market: transparency, trust, and efficiency. In the case of sugar, a formal exchange ensures that both buyers and sellers are properly onboarded after KYC (Know Your Customer), AML (Anti-Money Laundering), and CFT (Countering the Financing of Terrorism) checks. This brings the shadow economy into the formal sector, discouraging tax evasion and fostering accountability across the trading ecosystem. More importantly, it transforms price discovery from a speculative, rumour-driven process influenced by a handful of traders into a transparent, data-informed mechanism that has participation from tens of thousands of investors and traders from across the country. On regulated exchanges, prices are determined through structured futures contracts, in which both parties deposit a small margin (usually between 5-10%) and commit to either buying or selling sugar at a future date. As delivery date approaches, these margins escalate every day to discourage pure speculators ensuring that real buyers, sellers and hedgers remain in the market to curb speculative impact on sugar prices. This enables a more accurate projection of market trends, allowing producers, consumers, and even policymakers to make informed decisions about production planning, procurement, and inventory management. The role of speculation, often misunderstood, is also critical in this context. A regulated environment doesn't eliminate speculation – it restrains it through various levers like daily circuit breakers, escalating margins close to delivery dates, broader investor participation, etc. Speculators bring liquidity to markets and contribute to robust price discovery. Whether they're informed by satellite data on crop yields, insights from sugar mills, or international price trends, these traders inject diverse perspectives into the pricing mechanism. When speculation is allowed in a structured and monitored space, it becomes a strength – not a risk. To understand the urgency of reform, one must consider the current challenges. Informal sugar dealers are often subjected to massive tax claims from the Federal Board of Revenue (FBR) in the absence of reliable trading history and profit and loss accounts. A trader may turn over billions of rupees, but face net losses due to volatile market swings – and yet receive tax bills calculated purely on their trade volume. This drives many away from transparency and toward further informality. A regulated exchange solves this mismatch by recording and validating every trade, offering clarity on net positions, margins, and actual profit or loss. Then there's the matter of volatility and fairness. In informal setups, there is no central counterparty to guarantee performance. If a party fails to honour a deal – say, they can't deliver the sugar they sold or pay for the sugar they bought – there is no protection for the counterparty. A licensed exchange like PMEX acts as the central counterparty, ensuring that all trades are honoured through active risk management systems and daily margining processes. It's a safeguard for all players, large or small, and incentivises broad investor participation in commodity markets. Of course, the goal is not merely to digitise the existing system but to modernise it. Pakistan's commodity trading infrastructure is archaic – in some cases, unchanged for over a century. Prices vary between local 'mandis' and even across 'thadas' within the same 'mandis', with buyers and sellers often disconnected from broader market trends. This disjointed structure penalises both ends – farmers and consumers – as middlemen extract disproportionate margins. By integrating sugar, and eventually wheat, rice, and maize into a centralised, transparent exchange, we pave the way for inclusive, modern agricultural markets. It's not just about making sugar trading efficient. It's about rewriting the country's agricultural policy playbook. Transparent futures price signals help farmers decide which crops to plant. Government agencies can monitor supply-demand dynamics in real time. And consumers benefit from more stable, predictable pricing – especially during sensitive periods like Ramazan. In conclusion, the case for regulated sugar trading is as much about economic reform as it is about governance, equity, and national resilience. By shifting from fragmented, informal systems to structured, licensed platforms, Pakistan can unlock a more productive, transparent, and inclusive future for its commodity markets. Sugar may be the starting point – but the implications reach far beyond the sweetener itself. Copyright Business Recorder, 2025
Business Recorder
22-05-2025
- Business
- Business Recorder
PMEX set to launch Deliverable Sugar Futures
KARACHI: Pakistan Mercantile Exchange (PMEX), is preparing to launch Deliverable Sugar Futures after Securities as Exchange Commission of Pakistan (SECP) has recently approved the contract. PMEX termed this move a landmark step towards improving transparency and efficiency in Pakistan's sugar trade. As one of Pakistan's largest agro-based sectors, the sugar industry has long faced challenges including unregulated pricing, excessive speculation, hoarding, and supply chain inefficiencies. With the commencement of trading in Deliverable Sugar Futures at PMEX, the industry will gain access to a regulated, national platform that enables transparent price discovery, streamlined trading, effective risk management, and enhanced market documentation. Ahead of the launch, PMEX conducted a road show in multiple cities including Sargodha and Lahore, the largest sugar trading hubs in Pakistan, bringing together sugar millers, brokers, traders, dealers, and large sugar buyers. These sessions offered the participants detailed orientation to the new contract specifications, live trading demonstrations, overview of the account opening process and training on how to conduct mock trading on PMEX before the contract launch. Abdul Rehman Warraich, SECP Commissioner, and Muhammad Ajmal Bhatti, Secretary of the Price Control & Commodities Management Department, Government of Punjab, addressed the participants and commended the initiative, assuring the full support of the regulator and the provincial government respectively. PMEX CEO Khurram Zafar has also highlighted the transformative potential of the initiative: 'Sugar is one of Pakistan's most traded commodities, yet it lacks structure and transparency. With Sugar Futures, PMEX is turning the tide-ushering in transparency, price stability, and a future where fair trade leads the way,' said PMEX CEO Khurram Zafar. Copyright Business Recorder, 2025
Business Recorder
21-05-2025
- Business
- Business Recorder
PMEX set to launch first-ever deliverable contract in agriculture products
Pakistan Mercantile Exchange (PMEX) - the country's only one electronic platform to trade futures commodities - announced on Wednesday to officially launch its first-ever 'deliverable' contract in agriculture products i.e. sugar over the next two weeks. The exchange will offer buyers and sellers to discover the sweetener price, improve supply chain management, and discourage hoarding and speculations of the commodity in the country. 'PMEX is aimed at formally launching Deliverable Sugar Futures in 10 to 15 days,' PMEX Chief Business Officer (CBO) Zaki Ur Rehman said while talking to Business Recorder. This would be a 30-day deliverable futures contract of 12 metric ton each, he said. The Securities and Exchange Commission of Pakistan (SECP) recently approved the launch of the contract (deliverable sugar futures). The futures exchange (PMEX) considered it as a landmark step towards improving transparency and efficiency in Pakistan's sugar trade. Increase in sugar price: millers, distributors asked to stop overcharging The exchange is onboarding buyers and sellers these days, as there are around 80 sugar mills nationwide. The potential buyers could be anyone including confectionery and soft drink makers in the corporate sector. Rehman said this would was the PMEX's first ever deliverable futures contract in agriculture products. Earlier in 2023, PMEX offered trade in rice and maize along with an option to take delivery of the grain as well. 'However, such trade and delivery option were offered in association with EWR [Electronic Warehouse Receipts] operators in the country like Naymat Collateral Company Management,' he said. A press statement from the PMEX said sugar remained a major product in the agriculture sector. 'Unfortunately, it faced longstanding challenges including unregulated pricing, excessive speculation, hoarding, and supply chain inefficiencies. With the commencement of trading in Deliverable Sugar Futures at PMEX, the industry will gain access to a regulated, national platform that enables transparent price discovery, streamlined trading, effective risk management, and enhanced market documentation,' it read. The presser said, PMEX conducted roadshows in multiple cities including Sargodha and Lahore, the largest sugar trading hubs in Pakistan, bringing together sugar millers, brokers, traders, dealers, and large sugar buyers. $500mn earned through export of surplus sugar, says PM Shehbaz The sessions offered the participants detailed orientation to the new contract specifications, live trading demonstrations, overview of the account opening process and training on how to conduct mock trading on the PMEX before the contract launch, according to the statement. Speaking on the occasion, PMEX CEO Khurram Zafar there was a lack of structure and transparency despite sugar being one of the country's most traded commodities. 'With Sugar Futures, PMEX is turning the tide—ushering in transparency, price stability, and a future where fair trade leads the way,' he said.
Business Recorder
13-05-2025
- Business
- Business Recorder
Clearing facility: ‘PME shall continue to operate till 30th June'
ISLAMABAD: The Securities and Exchange Commission of Pakistan (SECP) has notified that Pakistan Mercantile Exchange (PME) shall continue to operate a clearing facility for futures contracts based on commodities/financial instruments, as a clearing house. This is subject to the condition that Mercantile Exchange shall work as a clearing house from the date of expiry of the time period provided in its earlier notification till June 30, 2025, it added. In this regard, the SECP has issued an SRO 888(I)/2025 here on Monday. According to the notification, in exercise of the powers conferred by section 40B of the Securities and Exchange Commission of Pakistan Act, (XLII of 1997) read with section 22 of the Futures Market Act, 2016 (XIV of 2016), the SECP, in continuation of its earlier notification vide SRO 1259 (I)/2017, dated December 14, 2017, has notified that Pakistan Mercantile Exchange shall continue to operate a clearing facility in respect of futures contracts based on commodities or financial instruments, as a clearing house from the date of expiry of the time period provided in its earlier notification till 30th June, 2025, it added. Copyright Business Recorder, 2025
Business Recorder
25-04-2025
- Business
- Business Recorder
Jam, SPIMEX's VP seek new frameworks for goods trading
ISLAMABAD: Federal Minister for Commerce, Jam Kamal Khan, held a high-level meeting with Dmitriy Chernyshev, vice president of the Saint Petersburg International Mercantile Exchange (SPIMEX) and discussed ways and means to enhance bilateral trade mechanisms through institutional exchange platforms and exploring new frameworks for goods trading between the two countries. During the meeting, Minister Khan reaffirmed Pakistan's commitment to fostering trade ties with Russia, highlighting the progress made despite global economic challenges. He noted that the bilateral trade volume reached approximately $963 million in FY 2023–24, with Pakistan's exports to Russia at $83 million and imports at $880 million, citing banking hurdles as the main impediments. Chernyshev introduced SPIMEX as Russia's leading commodity exchange, facilitating large-scale trade in refined petroleum, gas, fertilizers, and timber. He emphasised SPIMEX's mission to ensure transparent pricing and efficient commodity trade, and elaborated on its role in forming a club of international commodity exchanges—a cooperative initiative. The two sides discussed activating the MoU signed between SPIMEX and Pakistan Mercantile Exchange (PMEX) to facilitate technical cooperation, information exchange, and digital integration of trading platforms. Minister Khan expressed strong support for continuing knowledge sharing between the two exchanges and encouraged practical steps to operationalise commodity trade using standardised, interchangeable goods such as oil, wheat, fertilisers from Russia, and rice, cotton, fruits, and vegetables from Pakistan. The SPIMEX delegation's visit, spanning April 21–25, also includes engagements with key Pakistani stakeholders in trade, banking, and logistics sectors, aiming to build sustainable, long-term economic cooperation amid shifting global trade dynamics. Copyright Business Recorder, 2025
