PSX launches new futures eligibility criteria

KARACHI: The Pakistan Stock Exchange (PSX) has introduced a new futures eligibility criteria and communicated the launch of the 90-day maturity deliverable futures contracts (DFC) with effect from DFC August 2021, which would start from July 26, 2021.

As per the new criteria, there would be no segregation of A and B categorisation and the stocks would be selected based on such quantitative factors that measure real liquidity. Exchange Traded Funds (ETF) would also be eligible if certain conditions are met, it added.

However, such companies that have obtained stay order from the court against any inquiry/investigation initiated by the commission would not be eligible. All eligible companies and ETFs would be eligible for trade on deliverable futures and cash settled futures markets.

On the launch of the 90-day DFC regime and new futures eligibility criteria, Farrukh H Khan, managing director of the PSX, said: “[The] launch of the international standard 90-day DFC is a positive development for the stock exchange and for all the stakeholders of the capital market. [The] 90-day DFC shall open each month such that the market shall have three different maturities (current month expiry, next month expiry and the last month expiry) at the start of each contract month.”

“In addition, it will also eliminate the need for a mandatory one-week roll-over period, as investors can roll-over their existing position any time before the expiry, depending upon the liquidity; hence, alleviating the roll-over week pressure to some extent. The new selection parameters are dynamic and can adopt to any market situation. More companies are now eligible to trade on the futures counter.”

Khan also said: “Based on the recent notified list, 84 companies and one ETF are futures eligible. We appreciate the cooperation extended to us by the SECP [Securities and Exchange Commission of Pakistan], in this regard; whereby, it approved the 90-day DFC regime and new futures eligibility criteria. This is expected to increase volumes and liquidity, and; hence, improve the depth of the market.”

The Pakistan Stock Exchange is continuously striving to introduce better and enhanced products for its stakeholders and the market participants. It aspires to increase its product offerings and introduce more innovative products in the future. With the launch of the 90-day DFC and the new futures eligibility criteria, the PSX futures contract offerings are now in line with the international market offerings.

This move is part of the efforts of the PSX to enhance liquidity in the futures market, with more options available for the investors in terms of securities and contracts of multiple expiries.

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