Cotton Hedging can be alternative source of marketing for giving a level playing field:Syed Fakhar Imam


Islamabad:Cotton Hedging can be alternative source of marketing for giving a level playing field.This was said by Federal Minister for National Food Security and Research,Syed Fakhar Imam while chairing a meeting on cotton with Pakistan Mercantile Exchange Limited (PMEX).Federal Minister added that Hedge trading is a special segment of trade.Managing Director,PMEX,Ejaz Shah discussed a proposal with Federal Minister about cotton hedging.He briefed that hedge trading performs an economic function by providing a cover against the risk of fluctuations in price, thereby facilitating a smooth flow of national and international trading in cotton.Hedge trading is a delivery contract that involves delivery of cotton on the dates of maturity. The mechanism of hedge market was introduced in Karachi Cotton Association in 1934 to balance future supply and demand and also to deal with sudden and periodic fluctuations in prices. The cotton hedge trading was later on given a legal cover and was managed under the Cotton Act 1957 and until 1975-76. Pakistan Mercantile Exchange Limited (PMEX) is the country’s first and only demutualized commodity futures exchange, licensed and regulated by the Securities and Exchange Commission of Pakistan (SECP) right now. It has the license for trading of various commodities including foreign cotton but license has not been granted to any entity yet for operating domestic cotton futures market.


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