ISLAMABAD: Minister for National Food Security and Research Syed Fakhar Imam on Monday said that cotton hedging could be an alternative source of marketing for giving a level playing field and facilitating a smooth flow of national and international trading in cotton.
He stated this while chairing a meeting on cotton with Pakistan Mercantile Exchange Limited (PMEX), said a press release.
The minister said that hedge trading was a special segment of trade and play role to enhance the trading potential of other agriculture commodities as well.
During the meeting Managing Director, PMEX Ejaz Shah discussed cotton hedging proposal in detail with minister and also informed that hedge trading performs an economic function by providing a cover against the risk of fluctuations in price, by facilitating a smooth flow of national and international trading in cotton.
Hedge trading is a delivery contract that involved delivery of cotton on the dates of maturity, he said, adding 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, he said adding that PMEX) was country's first and only demutualised commodity future exchange, licensed and regulated by the Securities and Exchange Commission of Pakistan (SECP).
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