Pakistan : APTMA rebuffs restarting of cotton hedge trading

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APTMA rebuffs restarting of cotton hedge trading

15
Apr '08

With cotton market adamant on remaining volatile, All Pakistan Textile Mills Association (APTMA) and Pakistan Cotton Ginners Association (PCGA) have shown serious concerns over restarting of Futures hedge trading.

Fibre2fashion endeavored to pick up the issue with Mr Akber Sheikh, Chairman APTMA Punjab Zone (which is ex officio Vice Chairman APTMA), who retrospecting the past experience stated, “A number of brokers defaulted causing innumerable losses to investors who were stripped of their hard earned money after which hedge trading was discontinued. Resuming futures trade would only expose investors at large to the vagaries of speculation.”

Mr Sheikh seemed more than confident that from all the stake holders in the cotton chain, to farmers, ginners and spinners would stand in favor of vehemently opposing futures trading in Pakistan.

When question on the strategies to be adopted for avoiding futures hedge trading was asked, Mr Akber explained saying, “The genuine stakeholders should stand firm on their stand to oppose hedge trading.”

Insufficiency of commodity and manipulations are not conducive to the credible operation of futures contract. However, Pakistan has always depended on imports to balance the 20 percent shortage in domestic cotton production and as such the question of hedge trading does not arise at all. Infact, to introduce this mechanism afresh, and at a time when prices for cotton are sky rocketing, would only prove to be major blunder.

To ensure that risks for investors in cotton trading is minimized, Mr Akber Sheikh suggests taking a future position on international exchanges since domestic market stands parallel to the global.

Fibre2fashion News Desk - India

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