The Securities and Exchange Commission of Pakistan (SECP) is moving to modernize agricultural commodity trading by directing the Pakistan Mercantile Exchange (PMEX) to develop a roadmap for launching physically deliverable agricultural futures contracts.
The directive was issued by Dr. Kabir Ahmed Sidhu during a meeting with PMEX’s board and senior management, where discussions focused on improving market access, transparency, and price discovery for farmers across Pakistan.
Under the proposed framework, agricultural futures contracts would be backed by an integrated Electronic Warehouse Receipt (EWR) system, enabling real-time connectivity between warehouses and the exchange. The initiative is expected to create a more efficient trading environment for farmers, traders, processors, and other market participants.
According to the SECP chairman, the system would allow agricultural producers to access transparent market prices while reducing inefficiencies that often affect commodity supply chains.
Physically deliverable futures contracts differ from cash-settled contracts because sellers are required to deliver the underlying commodity upon contract expiry. The model is widely used in developed commodity markets to improve price transparency, facilitate access to financing, and strengthen agricultural trade infrastructure.
During the meeting, PMEX management briefed the chairman on ongoing efforts to expand futures trading in key agricultural commodities and broaden participation in Pakistan’s commodity markets.
Dr. Sidhu emphasized that modernizing commodity market infrastructure remains a priority for the SECP and called for innovative products that can unlock the potential of Pakistan’s agriculture sector.
In a separate visit, the SECP chairman also reviewed operations at the National Clearing Company of Pakistan Limited, where officials provided updates on clearing and settlement systems, risk management frameworks, and future initiatives aimed at strengthening Pakistan’s capital market infrastructure.
The proposed reforms are expected to enhance market efficiency, improve price discovery mechanisms, and provide farmers with greater opportunities to sell their produce through formal and transparent trading platforms.
