The Pakistan Mercantile Exchange (PMEX) is prioritizing the integration of local markets with global trading systems through automation and digitization to enhance the efficiency of Pakistan’s supply value chain. On Tuesday, PMEX CEO Khurram Zafar emphasized the modernization efforts aimed at connecting local markets with international buyers, which he believes will drive exports and encourage the adoption of best practices like commodity grading and standardization.
Zafar stated that PMEX is working to introduce innovative solutions in agriculture and commodity markets to improve price discovery, reduce wastage, and make these markets more efficient. He envisions a future where the currently fragmented commodity markets are seamlessly integrated into a national trading platform. This initiative, he explained, will lower intermediation costs, enhance price discovery, and enable traders to secure financing against their commodities more easily.
He elaborated on the importance of commodity futures, which are derivative contracts allowing traders to hedge against future price risks. PMEX is Pakistan’s only regulated exchange authorized to issue and trade such derivatives. So far in the current fiscal year, the Exchange has facilitated a trading volume of approximately Rs. 3,800 billion.
According to Zafar, PMEX is now focused on linking derivative futures contracts with Pakistan’s local economy by developing efficient markets for spot price discovery of underlying commodities. He stressed the need to digitize agriculture and commodity markets nationwide to facilitate this transition.
PMEX is aggressively pursuing collaborations with stakeholders, including warehouse operators, quality graders, farmers, traders, buyers, banks, insurance companies, and agriculture input suppliers, to create a robust market ecosystem. One of the critical issues PMEX aims to address is the acute shortage of storage infrastructure in Pakistan, which results in significant agricultural output going to waste.
Zafar highlighted the potential benefits of establishing accredited storage facilities where farmers can store their harvest securely and obtain financing from banks against it. Such measures, he noted, would have a transformative impact on Pakistan’s agricultural economy.
He also called on the government to collaborate with PMEX to modernize the market economy. Drawing parallels with Special Economic Zones for industry, Zafar proposed the creation of Special Agriculture Market Zones to attract investments and incentivize participation in the new market ecosystem. These zones, he suggested, would encourage farmers, traders, commission agents, and buyers to utilize the platform effectively.
Acknowledging the role of existing stakeholders, particularly commission agents or Aarhtis, Zafar emphasized that their participation is crucial for bringing liquidity to the revamped markets. The design of the new ecosystem must ensure their integral involvement.
As Pakistan’s first and only demutualized commodity futures exchange licensed by the Securities and Exchange Commission of Pakistan (SECP), PMEX offers a comprehensive suite of services, including trading, clearing, settlement, custody, and back-office functions. Over the years, PMEX has expanded its product offerings to include metals, financials, energy, and agriculture assets.
One of the latest additions is 24K fractional gold contracts, enabling investments in gold with amounts as low as Rs. 300. PMEX ensures the gold’s purity, safe storage, and insurance, while providing investors the flexibility to sell their holdings or request physical delivery if the amount exceeds the minimum delivery size.
Finally, Zafar reiterated PMEX’s commitment to fostering sustainable economic development in Pakistan through market integration and modernization. With international affiliations like memberships in the Association of Futures Markets (AFM) and The World Federation of Exchanges (WFE), PMEX is poised to play a pivotal role as an anchor for Pakistan’s economic progress.