Lahore, March 21, 2014 (PPI-OT): Lahore Stock Exchange (LSE) has succeeded to launch the ‘Spot Commodity Trading and Warehousing Management Company Ltd.’ It was a historic moment when after years of dedicated efforts and continuous follow up by Lahore Stock Exchange, the Securities and Exchange Commission of Pakistan finally granted an NOC on the incorporation of this wholly owned subsidiary company of LSE and the Additional Registrar of Companies SECP issued the certificate of incorporation to this much needed company.
While making a statement on this occasion, Mr. Aftab Ahmad Ch., MD/CEO LSE highlighted that the existing infrastructure for spot trading of agricultural and industrial commodities in Pakistan is fraught with numerous issues that inhibit price discovery and results in inefficient trading practices. These issues coupled with recent trends like unexpected commodity hikes and an increased trend among investors to hold commodities as an asset class makes a very compelling business case to develop a country-wide, electronically integrated, transparent structure for spot trading of commodities.
He pointed out that globally, agricultural commodities have started attracting tremendous interest due to their strategic importance with respect to providing livelihoods, food and energy stability. Furthermore, stocks of commodities have clearly emerged as an alternative asset class with limited correlation in volatility to the other asset classes in particular the stock and bond markets.
Mr. Aftab Ahmad Ch. while disclosing the main objectives for the establishment of this company informed that the company will establish an integrated spot commodity trading and collateral management system to deliver customized and secured solutions to enable customers to increase revenues, decrease costs and mitigate risks and leverage business opportunities on national level. The company will offer services such as warehousing standards, quality controls, quality certification, grading of tradable commodities, goods receipt notes, warehousing facilities, warehouse receipts etc.
He informed that in due course, the it will establish and develop a fully electronic matching platform for the spot trading of various commodities such as grains, agricultural, livestock, dairy, mining, minerals or any other produce/products, and provide a state of the art electronic transaction and settlement facility for efficient trading, price discovery and price stabilization purposes. In this manner it will allow farmers, traders, millers, and government to buy and sell commodities at the best possible rates and to develop, maintain and run a nationwide network of storage facilities and logistics channels. The company will provide state of the art, organized and structured delivery based market place providing facilities for risk free purchase and sale of various produces/products across the country.
For trading purposes, the company will allow various classes of trading right entitlements/ memberships/ intermediary permits for their access and participation in the market for purchase and sale of quality and quantity specified produce/products to their clients such as farmers, traders, processors, exporters, importers, arbitrageurs, investors and other retail market participants. Furthermore, it will create efficient spot delivery platform for helping the sellers/producers to sell commodities directly to the end buyers comprising of processors, exporters, consumers, and full spectrum of users etc.
The Company will also establish, maintain and run the commodity warehouses and all associated logistical arrangements for bringing standardization in the field of commodity warehousing in the country.
The Company will be empowered to self-regulate the business and the conduct of the trading right entitlement holders, traders, dealers, participants, agents, warehousing specialists or any person participating in the market or platform for the purchase, sale, warehousing of various products.
The Company will introduce spot commodity based investment products in dematerialized format such as warehousing receipts for trading and investment. It will also prescribe standards for the warehousing management, and the accreditation, licensing and franchising of the commodity warehousing; and provide active risk management and counter party guarantees for all market participants and to channel bank financing against the warehousing receipts of the stored commodities.
Moreover, the company plans to provide education, training, advisory and consulting services and to create employment and skilled knowledge for all in the society.
It may be mentioned that before commencement of business, the Company shall obtain all such permissions or approvals of the relevant ministries or public authorities as may be required under any relevant laws and regulatory framework for the time being in force.
For more information, contact:
Barkat Ali Anjum
Deputy Manager-Media and Public Relations Department
Lahore Stock Exchange (LSE)
Cell: +92 306 4506086
Tel: Direct +92 4236280792, +92 423636 8000 Ext. 5031-5032
Fax: +92 42 3636 8485 – 111 441441