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PMEX: THE NEW INVESTMENT FRONTIER
PAKISTAN MERCANTILE EXCHANGE ANNOUNCES 671 % GROWTH YEAR
ON YEAR
TRADING VOLUME AT COMMODITY EXCHANGE UP BY 677PERCENT
HYPERLINK
The functioning of the exchange is regulated by the SECP; while other relevant
legislations pertaining to the PMEX include Commodity Exchange and Futures
Contract Rules 2005 as well as internal regulations.At present, the exchange has 313
members and 120 registered brokers, of whom 42 are currently active.
Since this is a demutualised exchange, membership is open for all applicants.
PMEX offers two kinds of memberships: Universal and Commodity Specific.
Universal membership costs Rs 2.5 million, while the member must also exhibit net
worth of at least Rs 20 million.Universal members can offer all listed products of the
exchange to their clients.
Commodity-specific membership costs Rs 750,000; while a net capital balance of Rs
10 million is required.
The number of active brokers increased by 30, during FY11 as investors interest
has heightened in the wake of surging global prices of commodities.The commodity
boom has also attracted many new investors to the exchange, because of which its
trading volumes have surged in recent months.
In April 2011, PMEX observed record monthly volume of Rs 68 billion, surpassing
the combined volume of the three stock exchanges which tallied Rs 66 billion, during
the same month.
Operating hours at PMEX have recently been increased by 21 hours per day in view
of fast-changing realities of international commodity futures markets facilitating
greater participation of local investors.As a consequence, traded volumes at PMEX
increased by a whopping 671 percent, to Rs 490 billion in FY11 compared to Rs 63
billion in the previous year, while the number of investors at the exchange also grew
by about 245 percent over the same period.What can be traded? At present, multiple
futures contracts are available for gold, silver, crude oil, palm olien, rice and sugar
and KIBOR rates.
Those contracts which are based on international market prices of commodities such
as crude oil are cash-settled while physical delivery is offered on gold contracts and
efforts are underway to offer the same kind of contracts for locally produced
commodities such as rice and sugar.Efforts are currently underway to introduce
futures contracts for cotton and maize.
Over the next five years, PMEX intends to increase its focus on agro-products while
also increasing its reach in agricultural zones of the country.
Under this plan, four offices will be opened during FY12, while approvals will be
sought from the regulator for more offices in the future.The exchange is also
Online bank transfer facilities are catered for the collection of margins, to ensure
quick receipt of funds.In addition to these margins, brokers also have to maintain
minimum deposits with the exchange which can be used to settle any defaults by their
clients.
This deposit, which serves as a second line of defence against default is also
monitored daily and adjusted according to changes in the magnitude of price
fluctuations.
Separate position limits are also enforced at both client and broker levels.The
exchange also monitors the activity of each investor using client IDs so even if one
client operates accounts through multiple brokers, his cumulative positions are
monitored in totality by the exchange.Source: PMEXAll information and data used
are from reliable source(s) and subjected to extensive research after diligent and
reasonable efforts to determine the soundness of the source(s).
====================================
Shareholder
No of
shares (mn) share (%)
====================================
NBP
9
47.4
KSE
3.64
19.2
LSE
2.27
11.9
ISE
2.27
11.9
PKIC
0.91
4.8
ZTBL
0.91
4.8
Total
19
100
====================================
Source:
PMEXAll information and data used are from reliable source(s) and subjected to
extensive research after diligent and reasonable efforts to determine the soundness of
the source(s).
This analysis is not for the benefit of or discredit to any person, scrip or tradable
instrument.
The content(s) of this analysis shall not be construed as an advice or recommendation
to trade.
No relationship of client will be created between Business Recorder and user of this
information.