Pakistan Agriculture News

Pakistan in talks with China, Iran for cross-listing of commodities

KARACHI: Pakistan Mercantile Exchange (PMEX) – the first and only trading platform for commodities including agricultural products and precious metals – has initiated dialogue with China and Iran for cross-listing of commodities in a bid to expand scope of the exchange, a top official disclosed.

Under the arrangement, Chinese and Iranian commodities will be bought and sold through PMEX while Pakistan’s commodities could be traded at Chinese and Iranian exchanges.

In an interview with The Express Tribune, PMEX Managing Director Ejaz Ali Shah voiced hope that the cross-listing of commodities would encourage investors to trade in Pakistan’s products that had high demand in the global market.

The new global trading platform is expected to start running in the next one year. Initially, Pakistan’s rice and cotton may be listed in China and Iran and later other agricultural products will be added.

Shah insisted that the agricultural industry would greatly benefit from the global platform as Pakistan would be able to sell its products to regional countries in a short span of time. “This way, Pakistan will tap a bigger market and its barren lands will come under plantations,” he said.

Iran has expressed interest in getting its petroleum products listed on PMEX whereas Pakistan’s basmati rice may be sold through the Iranian exchange. China, on the other hand, is a big importer of food products and it can also purchase Pakistan’s commodities through the cross-listing programme.

Shah emphasised that the selection of commodities for cross-listing would be done through mutual consultation.

“We will give priority to those Pakistani products that have a significant demand in Chinese and Iranian markets whereas PMEX will encourage listing of those commodities that are cheap alternatives of products which Pakistan imports,” he said.

The greatest benefit of the cross-listing was savings in foreign exchange because Pakistan’s traders would be able to import goods in regional currencies, he revealed.

More than 28,000 accounts had been opened at PMEX, but inactive accounts were later blocked. At present, 8,000 active accounts are registered with the exchange.

Apart from this, 105 brokers are associated with the exchange, but only 65 are active. The number of brokers is expected to increase after the cross-listing of commodities.

Shah pointed out that the interest of traders and businessmen was increasing in PMEX following the introduction of new products.

“The next two years are very important for the exchange; its offices have been opened in Lahore and Islamabad as well in an attempt to facilitate the traders,” he said.

PMEX’s turnover, which was valued at Rs5 billion per day last year, has now increased to an average of Rs6 billion.

Shah said many agricultural goods could be traded through PMEX, but to achieve that new warehouse construction and capital investment in logistics were necessary.

Owing to a lack of goods storages and a poor logistics mechanism, Pakistan suffers heavy losses every year.

“Government and banks need to collectively pay attention to bringing improvement in warehousing facilities in the country. The government has the required land whereas banks can provide vital financing,” he suggested.

He also disclosed that preparations for commodity trading according to Islamic principles had been completed. Now, investors will be able to trade in crude oil in line with Shariah principles.