Home / Knowledge / News / Textiles / SECP responds to cotton futures concerns
SECP responds to cotton futures concerns
04
Jun '11
The Securities and Exchange Commission of Pakistan (SECP) has dismissed the concerns raised by several sections in Pakistan about trading of futures contract in cotton at the Pakistan Mercantile Exchange Limited (PMEX), as unsubstantiated.

The SECP has said that it had granted the approval for futures contract in cotton only after the PMEX had completed a lengthy procedure of consultations with textile mills and cotton traders.

It said that the approval has been granted in accordance with its mandate under the 1969 Securities and Exchange Ordinance and the 1997 Securities and Exchange Commission of Pakistan Act. Under these acts, the SECP is responsible to oversee matters relating to listed securities and this includes derivates like futures contracts in commodities.

“The trading in 'futures contracts' is different from 'spot' or 'forward' trading, which the SECP does not regulate. A futures contract in a commodity is a standardised marketable security based on a certain pre-determined quantity, whereas spot or forward trading involves physical commodity itself with immediate or deferred delivery. Hence, a futures contract may or may not involve physical delivery, but spot or forward trading definitely involves delivery,” the SECP explained.

Responding to the concerns raised by the Karachi Cotton Association (KCA) that the futures contract in cotton will lead to price volatility, the SECP said that the futures contract will utilize the trading price of an international contract only as a reference and it will be settled in local currency, as is presently being done in the case of futures contract in gold and silver that are being traded at the PMEX.

The SECP further clarified that the listing of futures contract in cotton on the PMEX cannot influence the price of the primary cotton contract that is traded on the international exchange. Since both the underlying price and cash settlement price will be of the same international deliverable contract, the cash-settlement procedure is in no way detached from underlying international physical futures trading.

“Futures contract in a range of commodities are being offered by several commodity exchanges in various countries. These contracts are based on international contracts, i.e. similar to the PMEX cotton contract, but are settled in local currency of that countries and these do not involve any physical delivery of the commodity,” the SECP concluded.

Fibre2fashion News Desk - India

Must ReadView All

Textiles | On 29th Apr 2017

Textile sector may have uniform GST rate: Irani

The textile sector could have a uniform Goods and Services Tax (GST)...

Textiles | On 30th Apr 2017

Government revamping tech mission on cotton

Indian Government is working to revamp the technology mission on...

Apparel/Garments | On 30th Apr 2017

Columbia Sportswear records Q1 net sales of $543.8 mn

Columbia Sportswear Company has announced record net sales of $543.8...

Interviews View All

Sanjay Yagnik
Maa Tex Speciality

‘We suggest reducing dosage of sizing chemicals to reduce sludge...

Karan Suratwala
Key Textile Accessories Private Limited

Chinese imports are destroying the supply chain

Anvita Mehra
Confidential Couture

‘It is going to take some time for Indian buyers to get accustomed to...

Mark Paterson
Technical Absorbents Ltd

Mark Paterson, R&D manager of Technical Absorbents Ltd talks about Super...

Mohammad Hassan
Biax Fiberfilm

About one in every 20 patients picks up an infection while hospitalised....

Kai Poehler
Voith Paper GmbH & Co. KG

The glass mat industry is growing by five to eight per cent annually. Kai...

Jay Ramrakhiani
Occasions Elegance Wear

It is believed that by early 19th century, Varanasi weavers had moved away ...

Judy Frater
Somaiya Kala Vidya

Among the many honours showered on Frater, including Fulbright and Ford...

Silvia Venturini Fendi
Fendi s.r.l

"Yes, my confidence and positive attitude are my strengths and should be...

Press Release

Press Release

Letter to Editor

Letter to Editor

RSS Feed

RSS Feed

Submit your press release on


editorial@fibre2fashion.com

Letter To Editor






(Max. 8000 char.)

Search Companies





SEARCH

news category


Related Categories:
April 2017

April 2017

Subscribe today and get the latest update on Textiles, Fashion, Apparel and so on.

SUBSCRIBE


Browse Our Archives

GO


E-News Insight
Subscribe Today and Get the
Latest News Update in Your Mail Box.
Advanced Search



X