ISLAMABAD
Chief Executive Officer of Pakistan Mercantile Exchange (PMEX), Khurram Zafar on Tuesday prioritized for integrating the local market with the global competitive market through automation and digitization in the local supply value chain. Khurram Zafar, CEO of PMEX, told media in an exclusive interview that modernization is necessary to connect our markets with global markets and improve our export potential.
It will compel the use of best practices like commodity grading and standardization, which international buyers rely upon. Zafar said that PMEX wants to introduce innovation in the agriculture and commodity markets to make them more efficient, improve price discovery and reduce wastage.
“We are envisioning a future where currently fragmented commodity markets seamlessly integrate into a national trading platform that brings down the cost of intermediation, enhances price discovery, and allows traders to easily obtain financing against their commodities,” CEO, PMEX said that Commodity futures are derivative contracts in which the trader agrees to buy or sell a specific quantity of a physical commodity at a specified price on a particular date in the future to hedge the adverse price risk in the future.
Derivatives are investment contracts that derive their value from the price of another asset, typically called the underlying asset, and currently PMEX is the only regulated Exchange in Pakistan that can issue and trade these derivatives, he said, adding that the Exchange registered a trading volume of around Rs 3,800 billion already in the current Fiscal Year.
He said that Pakistan Mercantile Exchange is now focused on linking these derivative futures contract with the local economy of Pakistan by facilitating the development of efficient markets for spot price discovery of the underlying commodities.
He said that there is a need to digitize the agriculture and commodity markets across the country, and PMEX is aggressively working to collaborate with partners that will constitute this future ecosystem including warehouse operators, quality graders, farmers, traders, buyers, banks, insurance companies and agriculture inputs suppliers.
The CEO, PMEX said that currently there is an acute dearth of storage infrastructure in the country which results in a large percentage of our agricultural output to go to waste. The new market ecosystem will encourage small and large investors to build accredited storage facilities where farmers can safely store their harvest and obtain financing from banks against it. This will have a huge positive impact on our agricultural economy.
Zafar said that the government needs to collaborate with PMEX to modernize the market economy in Pakistan so that the country’s economy can move forward. Just like Special Economic Zones for industry, the government needs to notify Special Agriculture Markets Zones to encourage investment in the new markets ecosystem and create incentives for farmers, traders, commission agents and buyers to trade on this platform.
