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In line with the best international practices, and to promote liquidity and efficiency in the commodity futures market, the Securities and Exchange Commission of Pakistan (SECP) allows market-making for the Pakistan Mercantile Exchange Limited (PMEX).
Investors trading products at PMEX will always find Buyers & Sellers for liquid contracts at exactly the same prices which are prevailing in international markets at that very moment of time via the Market Making mechanism.
Market-makers play an important role in the financial market by promoting liquidity in the market through buying and selling commodity future contracts in return for a bid/ask spread. It is, therefore, essential to encourage market-makers to provide liquidity in such contracts under a regulated environment benefiting hedgers and investors.
The SECP regulations broadly cover qualification criteria for a market-maker, roles and obligations of the market-makers, market-making agreement (a key document agreed and signed between the market-maker and the exchange), powers, functions and obligations of PMEX and disciplinary actions that may be taken by it.
These regulations promote investors’ confidence in the commodity futures market through enhanced profitability, reduced volatility in prices and efficient execution of orders, it added.