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1 Investor Guide Your Local Gateway to Global Markets 2 Contents Introduction .

1 Investor Guide Your Local Gateway to Global Markets 2 Contents Introduction ................................................................................................................................................... 3 Contracts/ Products ....................................................................................................................................... 4 PMEX Milli Tola Gold ................................................................................................................................. 5 Red Chilli Weekly Futures Contracts .......................................................................................................... 6 Milli Ounce Gold Futures Contract............................................................................................................. 5 Products in Pipeline ................................................................................................................................... 7 Market Timings ............................................................................................................................................. 9 Regulatory Framework .................................................................................................................................. 9 Regulator ................................................................................................................................................... 9 Trading Systems at PMEX ............................................................................................................................ 10 NEXT Trading Terminal .......................................................................................................................... 10 Trader Account Management System (TAMS) ......................................................................................... 10 Clearing, Settlement, Reporting (CSR) System ........................................................................................ 11 eBooks ..................................................................................................................................................... 11 PMEX Brokers .............................................................................................................................................. 12 How to open an account with the broker ................................................................................................. 12 Risk Management ........................................................................................................................................ 12 Research ...................................................................................................................................................... 13 Training ....................................................................................................................................................... 13 Steps of Trading at PMEX ............................................................................................................................ 13 12 Cardinal Mistakes of Commodity Trading ............................................................................................... 14 Glossary ....................................................................................................................................................... 19 Annexure A .................................................................................................................................................. 21 3 Introduction Pakistan Mercantile Exchange Limited (PMEX) is Pakistan’s first and only multi-commodity futures exchange, which is licensed and regulated by the Securities and Exchange Commission of Pakistan (SECP). It is the largest exchange of the country in terms of members and the second largest in terms of value traded after Pakistan Stock Exchange (PSE). Its shareholders include National Bank of Pakistan, Karachi/Lahore/Islamabad Stock Exchanges, Pak Kuwait Investment Co, and Zarai Taraqiati Bank. The Exchange offers a diverse range of domestic and international commodities and financial futures. With a sophisticated infrastructure and state-of-the-art technology, PMEX provides a complete suite of services i.e. trading, clearing & settlement, custody as well as back office, all under one roof. The Exchange has a member base of 329 and the average daily trading volume is normally in the range of PKR 3 to 5 billion. PMEX’s international affiliations include Association of Futures Markets (AFM) and Futures Industry Association (FIA). 4 Contracts/ Products PMEX offers products that cater to the needs of all types of market participants such as investors who invest in commodities for long term, traders who work with the aim of earning profit based on their market strategy and hedgers who trade to mitigate their risk, using commodity futures market. There are 2 kinds of contracts offered at PMEX. 1. Deliverable Contract: This is a contract which is settled through giving/taking the actual delivery of the underlying commodity on final settlement after the expiry day. However the investor/trader has the right to square off their open positions at any time before expiry and booked their profit/losses in term of cash 2. Cash Settled Contract: There is no obligation of giving/taking deliveries of underlying commodities after the expiry of contracts. The profit/loss transferred into the respective traders accounts on final settlement day if their positions remained open on expiry. However the investor/trader has the right to square off their open positions at any time before expiry and booked their profit/losses in term of cash. The commodities being offered for trade at PMEX can be clubbed into four main categories: precious metals [Gold & Silver], agricultural [Wheat, Rice, Palm Oil, Cotton & Sugar], energy [Crude Oil] and financial futures [KIBOR]. Within each commodity, the Exchange provides different contracts in terms of currency denomination, contract size and tenor. Though the Exchange offers various commodities for investment/trading, bulk of the trade comes from gold, silver and crude oil. Products Contracts Deliverable Cash Settled Metals Mini Gold Contract Tola Gold Contract Milli Tola Gold Contract Gold 100 gram Contract Gold Kilo Contract Gold 50 & 100 Tola Gold 1 oz, 10 oz & 100 oz US $ denominated Silver 500 oz,100 oz &10 oz Us $ denominated Milli Ounce Gold Contracts in USD, EUR , GBP and JPY Energy - Crude Oil (10 & 100 barrel) US $ denominated Agricultural IRRI-6 Rice Futures Contract Weekly IRRI-6 Futures Contract Palm Olein Futures Contract Sugar Wheat Red Chilli Weekly Futures Contracts I-Cotton US $ Denominated Financial - KIBOR Futures Contract The price trend of the above commodities for the FY 2014-15 is affixed with this document as Annexure A. 5 PMEX Milli Tola Gold In December 2013, PMEX launched ‘Milli Tola Gold’, a product aimed at all income strata with special emphasis on low income groups and savers, who are seeking a convenient, secure and trusted way to buy, sell and accumulate gold as savings. Milli Tola, as the name suggests, represents 1/1000th part of a Tola which can be bought in multiple of approx. Rs 50. Following are the salient features of the product:  Start from little: Buy Gold with an amount as low as approx. Rs50  Incentive: Free of cost custody/Free Insurance  Security: Gold is kept in secure vaults  Convenience: Hassle free buying and selling of gold from anywhere with a single click  Liquid: Easily en-cashable within 24 hours  Physical delivery: If required, you may withdraw gold from PMEX  Monitoring: SMS Alerts of all transactions are sent by PMEX  Purity: Authentic 24karat (99.90%) Gold  Transparency: Price is fair and efficient Milli Ounce Gold Futures Contract PMEX is in a continuous pursuit to add new products to broaden its product suite in order to cater to the needs of a diversified group of investors. Previously, Exchange has listed various gold contracts in different denomination and size. However, keeping in view the demand of the market participants, the Exchange has come up with “Milli Ounce Gold” futures contract, which has been duly approved by Securities and Exchange Commission of Pakistan (SECP). The Exchange has listed the following four futures contracts under Milli Ounce Gold and made them available for trading from June 17, 2015: 1. PMEX USD Gold 2. PMEX Euro Gold 3. PMEX GBP Gold 4. PMEX JPY Gold The Exchange has also introduced a special trading functionality named “Composite Order Trading System” (COTS) to trade Milli Ounce contracts. Using this new functionality a trader may take two positions simultaneously in milli ounce contracts with a single click. In other words, if a trader wants to take simultaneously long position in the PMEX USD Gold and short position in the PMEX EUR Gold, he will place a single order through COTS. The long gold in the first trade and the short gold in the second trade will ‘cancel’ each other, leaving the trader with an open EUR-USD position only. Talking on the auspicious occasion of launching of these contracts, Mr. Ejaz Ali Shah, Managing Director of PMEX said, “Over the years PMEX has been trying to augment its product portfolio to cater to the needs of a wider range of investors. Addition of Milli Ounce futures contracts will not only diversify product portfolio of PMEX but will also offers opportunity to its brokers to attract new clientele and enhance their income”. 6 Red Chilli Weekly Futures Contracts Red Chilli is a potent ingredient in various cuisines around the world. It is produced seasonally but consumed throughout the year. Pakistan continues to remain among the top five producers in the world. The varieties grown in Pakistan are of high quality and superior to other varieties grown in the region. In Pakistan, Sindh is the largest producer of red chilli with annual production at 85,000 tons which amounts to 85% of the country’s produce. The production pf red chilli is concentrated in the small town of Kunri, also known as the ‘Chilli Capital of Asia”, located in Umarkot, a district of Sindh province. Other cultivation hubs in Sindh are Mirpur Khas, Sanghar, Badin, Tando Muhammad Khan, Khairpur, Shikarpur, and Ghotki. Historically in Pakistan, Red Chilli production and its prices have remained highly volatile due to the lack of dependable storage facilities and credible trading platforms. Often growers are forced to sell their produce at lower price where the middle men would remain the key beneficiary, taking away a major chunk of the sellers’ margins. Keeping in view the prevailing circumstances, PMEX along with Pakistan Agriculture Coalition (PAC), Agility Pakistan (Pvt.) Limited and SGS Pakistan (Pvt.) Limited envisioned to bring the red chilli trade on the Exchange. In this regard, the SECP has approved the listing of Red Chilli Weekly Futures Contract at PMEX. It is the first spice to be traded at the Exchange’s sophisticated infrastructure and state-of-the-art technology based trading platform. The following three Red Chilli Weekly Futures Contracts have been listed at the Exchange: 1. PMEX Red Chilli Weekly (Grade A+) Futures Contract 2. PMEX Red Chilli Weekly (Grade A) Futures Contract 3. PMEX Red Chilli Weekly (Grade B) Futures Contract The salient features of aforementioned futures contracts include compulsory delivery, quality certification and availability of multiple grades of red chilies for trading. PMEX USD GOLD PMEX Euro Gold PMEX GBP Gold PMEX JPY Gold Trading Day Trading Hours Unit of Trading Trading System Tick size $ 0.1 per troy ounce EUR 0.0001 per troy ounce GBP 0.0001 per troy ounce JPY 0.01 per troy ounce Milli Ounce Futures Contracts Specifications Monday to Friday 05:00 am to 02:00 am PST PMEX ETS Milli (0.001)Troy Ounces Price Quotation US Dollar per troy ounce, upto two decimal places Euro per troy ounce, upto four decimal places British Pound per troy ounce, upto four decimal uploads/Finance/ investor-guide-your-local-gateway-to-global-markets 1 .pdf