Derivatives in Pakistan: Commodity and Precious Metal Investing in PMEX

Exposure to commodity could be achieved by buying stocks of commodity producing companies however study suggests that this method is poor bet for commodity exposure. Direct exposure to commodity is done either through cash settled futures, or deliverable future.  In Pakistan commodity investing is done electronically through Pakistan Mercantile Exchange PMEX (formerly National Commodity Exchange (NCEL). Metals and Commodities that are traded on the online Pakistan Mercantile Exchange are:

Gold

Silver

Crude Oil
 
Palm Oil
 
Rice
  
Pakistan Mercantile Exchange is the first technology driven, web-based, demutualized commodity exchange in Pakistan. The Exchange acts as a central counterparty to both buyers and sellers through a novation process and provide clearing & settlement on a T+0 basis using on-line bank transfer mechanism.

Here is how you can participate in Pakistan Mercantile Exchange. Open an account with a registered commodity and futures broker with PMEX. Make sure that the broker is also the member of the PMEX as well as registered with SECP. You will need to fill up an account opening form and sign it. Along with the account opening form you need to supply your identity proofs either by submitting copy of CNIC or Passports, and a copy of income tax return, and your bank account information and two witnesses with their CNIC.

For income tax return, you may visit Federal Board of Revenue Website here for further information on income taxes, NTN certificate and E-filing. This could be a major disadvantage to PMEX to make it mandatory to provide income tax return for account opening at PMEX. As investors are reluctant to go through the tax collection system and they prefer indirect taxes.

Some Securities firms that deal with metal and commodities on differed payment basis, albeit with margin requirements are listed below:

IGI Finex Securities
http://www.igisecurities.com.pk/

KASB Securities
http://www.kasb.com/securities/Default.aspx

JS Global Capital Limited
http://www.js.com/default.asp

Elixir Securities Pakistan (Private) Limited
http://www.elixirsec.com

Darson Securities (Pvt.) Limited
http://www.darson.com.pk

Falcon Commodities (Private) Limited
http://www.falcon.net.pk/

Fortune Securities Limited
http://www.fortunesecurities.com/index.html

ADAM Securities Pvt Ltd
http://www.adamsecurities.com.pk/

BMA Capital Management Limited
http://www.bmacapital.com/

Invest Capital Market Limited
http://www.investcapital.com/value.htm

Crosby Markets Private Limited
http://www.crosby.com.pk/index.htm
 
Fox extended resources also visit International commodity and future exchange:
 
Tokyo Commodity Exchange
http://www.tocom.or.jp/
 
Australian Securities Exchange
http://www.asx.com.au/

Shanghai Gold Exchange
http://www.sge.sh/publish/sgeen/index.htm

Osaka Mercantile Exchange
http://www.osamex.com/

London Metal Exchange
http://www.lme.com/

Dubai Multi Commodity Centre
http://www.dmcc.ae/

Chicago mercantile Exchange (CME group)
http://www.cmegroup.com/