PMEX pitches bigger role in organising commodity markets

ISLAMABAD: Pakistan Mercantile Exchange is seeking to expand its role beyond futures trading and position itself as a platform that can help streamline fragmented commodity markets, improve pricing transparency and support broader economic activity, according to PMEX Chief Executive Officer Khurram Zafar.

In an interview, Zafar said the country’s only regulated commodity futures exchange could contribute to modernising agricultural and other commodity supply chains at a time when Pakistan is looking for more efficient market structures and wider investment avenues for a young population showing growing interest in financial markets.

PMEX reported total trading volume of Rs9.77 trillion in FY2025-26, with average daily turnover of Rs32 billion and monthly turnover of Rs977 billion. The exchange also recorded its highest-ever single-day trading value of Rs177 billion on October 17, 2025, while monthly turnover exceeded Rs1.8 trillion in October, marking a record for the platform. Total accounts opened reached 67,585 during the period. Gold was the most actively traded product, followed by currencies through contracts of trade, silver, indices and platinum.

Zafar said the exchange’s larger value lies in helping markets function more efficiently rather than serving only as a venue for investors to buy and sell contracts.

"The exchange's growing footprint comes at a time when Pakistan is searching for ways to modernise agricultural and other commodity supply chains, improve market transparency, and expand investment opportunities for a young population increasingly drawn to financial markets"

He added that organised commodity exchanges can improve price discovery and reduce uncertainty for market participants.

"Commodity exchanges are not merely trading venues. Their real value lies in an indirect role of helping organise markets, improving price discovery and reducing uncertainty for all stakeholders"

Agriculture and storage reform

Zafar pointed to the wheat sector as a key example of market inefficiencies. Pakistan’s wheat market remains fragmented despite wheat being the country’s main food crop. Farmers often sell soon after harvest, when prices are weaker, because they lack affordable financing and adequate storage, leaving them with a smaller share of the final market value.

Industry estimates put annual losses from leakage, spoilage and pest-related damage during wheat storage at around Rs20 billion. Governments also face financing costs of about Rs120 billion a year in recent years to maintain procurement operations and strategic reserves. The current system often leaves growers facing low returns at harvest while consumers later encounter higher flour prices as wheat prices rise.

Zafar said PMEX is working with provincial authorities to expand certified warehousing that could underpin a modern warehouse receipt system. Under that model, farmers would place wheat and other commodities in accredited storage facilities and receive electronic warehouse receipts that could be used as collateral to obtain bank financing.

"The system would allow growers to access working capital without being forced into distress sales immediately after harvest"

He said such a framework would let farmers hold produce until market conditions improve instead of selling under immediate financial pressure. It could also reduce reliance on informal lenders and middlemen who often tie financing to the sale of crops at pre-agreed rates.

A warehouse receipt system could also support traders, storage operators, processors and food manufacturers. Flour mills, for instance, could access standardised and certified wheat stocks year-round instead of depending on scattered procurement channels. Investors could also add liquidity through exchange-traded contracts, a structure used by major global commodity exchanges to complement physical trade and help manage price volatility.

Regulation and retail demand

Zafar said the broader economic impact of a stronger commodity exchange system could be considerable, as much of Pakistan’s commodity trade still takes place in informal settings without standardisation, transparent pricing or reliable risk management tools. He said a more developed exchange ecosystem could help create organised market structures in which pricing signals guide production, inventories are better managed and financing is easier to access.

"The broader economic implications could be significant"

The exchange’s expansion is also taking place alongside rising interest in financial markets among Pakistanis. PMEX operates through around 60 to 70 active brokers, while foreign online trading platforms have rapidly attracted retail investors through aggressive digital marketing aimed at mobile phone users, particularly among younger Pakistanis.

Zafar said PMEX faces much stricter compliance obligations because it operates under regulation by institutions including the Securities and Exchange Commission of Pakistan, the State Bank of Pakistan and other authorities. He said those requirements raise costs but also provide safeguards for investors and help preserve market integrity. By contrast, unregulated platforms often function outside Pakistan’s oversight framework while drawing thousands of investors.

Zafar said the popularity of those platforms reflects strong appetite for investment products among younger Pakistanis, and he argued that policymakers should work toward a level playing field that allows innovation within a regulated environment. The government has already begun efforts to place some foreign trading and digital asset platforms, including Binance, under regulatory oversight.

Experts believe a broader regulatory framework could help direct household savings into productive sectors while lowering the risks linked to unregulated investment activity. For PMEX, the stated aim goes beyond increasing the number of traders, with the exchange seeking to connect producers, consumers, investors and financial institutions through a more structured commodity market system.

PMEX believes that with stronger warehousing infrastructure, updated financing tools and greater public awareness, it can become a more important part of Pakistan’s economic framework by helping farmers improve returns, industries secure reliable supplies, investors diversify portfolios and policymakers build more resilient commodity markets.