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SECP license mandatory for NCEL members

KARACHI: Shahid Ghaffar, commissioner securities at the Securities & Exchange Commission of Pakistan (SECP), said Tuesday that members of the National Commodity Exchange Limited (NCEL) will have to obtain brokerage licenses from the SECP.

Inaugurating the training of NCEL members and staff, the commissioner said the SECP would continue to monitor transparent trading in all exchanges of the country including the newly-established NCEL.

Mr Ghaffar said it is the first time a commodity exchange is commencing futures trading and that they have to examine the size and demand of such trading.

“SECP has not given permission to NCEL for cotton trading yet as cotton the exchange has much experience,” he said.

In a meeting with the SECP and the commerce ministry, cotton traders have refused to conduct trading at NCEL’s counters, he added.

SECP’s commissioner formally inaugurated trading, risk management and back office systems trading of members of the NCEL at the exchange’s offices.

“Such kind of training would secure investment of traders and investors. In this training, two officials of SECP are also participating to get NCEL trading experience,” he said and added that NCEL will be country’s first fully electronic exchange, which will provide an easy and equal access to all market participants.

He said rules and regulations governing the exchange are based on international best practices which have evolved over 150 years since the launch of futures trading on the Chicago Board of Trade.

Initially, gold will be traded at the exchange. The exchange will provide a platform to farmers and manufacturers, for managing their price-risk using standardized market based futures contracts in gold, cotton yarn, rice, wheat, sugar cane, to be listed on NCEL.

Speaking on the occasion, Salim Chamdia, chairman, NCEL, said the success of the trading system is critical for functioning of the exchange and therefore they have not resorted to cutting corners in cost and quality to procure the state-of-the-art technology for NCEL.

Mr Chamdia said the establishment of a commodity exchange will document and regularize commodity trading presently being conducted through unregulated markets, spread all over the country.

“In doing so, we pledge our commitment to support regulators in their resolve to streamline practices and establish transparency of trade.” —Staff Report

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