History of Futures
Japan
Started in Japan in early 1700s with Rice Futures
Chicago
But it wasn't until the mid-19th century that the true birth of the
modern futures markets and futures contracts began
Chicago Board of Trade (CBOT) was established in 1848
Financial Futures
Financial Futures started in 70s.
Commodity Exchanges Around the World
More than 70 around the world
Even some poorer countries in Africa
All our neighbours have multiple exchanges
The leading exchanges of the world are:
CME,ICE,LME,TOCOM,MCX, Bursa Malaysia, Shanghai Futures Exchange, Dalian
Exchange
Started with Physical Commodities. Financial Futures biggest segment now
Only one model/method of running a commodity futures exchange
Tried and tested method around the world
Over 150 years
What is A Commodity Exchange?
In simple terms a commodity exchange is simply a marketplace where
different commodities are traded
It is highly regulated
Commodities are traded in standardized contracts of different maturities,
called Futures Contract
What is a Commodity Exchange?
Nomenclature
Commodity Exchange
Commodity Futures Exchange
Futures Exchange
Derivatives Exchange
Mercantile Exchange
At a Futures Exchange ‘Trade is in the Contract’
and not ‘Commodity’
SELLER
Standardized PMEX Contract
Specifications
Commodity: Gold
Unit of Trading: 100 grams
Delivery Unit: In lots of 1 kg or
multiples thereof
Price Quotation: Rs. Per 10
grams with 999.9 fineness, ExKarachi
SELLER
SELLER
At a Spot Market ‘Trade is in the Commodity’
SELLER
SELLER
SELLER
Payment
Products Traded Globally
Agriculture Futures
Livestock Futures
Metals Futures
Energy Futures
Weather Futures
Currency Futures
Interest Rate Futures
Equity and Index Futures
Commodity Markets
Commodity markets comprise of two different segments:
Spot Market
Futures Market
Spot Markets
The essence of these markets is ready delivery and acceptance of delivery
of commodities against cash payment.
Futures Markets
Futures Contract is an agreement between two parties entered on the
floor of the Exchange to buy or sell a commodity at a certain time in the
future for a certain price.
Contracts are highly standardized
Quality, quantity, delivery date & delivery mechanism are specified
Performance of contract is guaranteed by the Exchange
Margin is required
Govt. regulates futures market
Requirements of a Futures Contract
There must be a large, active underlying cash market. Existence of an appropriate demand and
supply of the commodity should be there.
Prices would be significantly volatile. This essence of unpredictability will generate a demand for
hedging.
The commodity should be free from substantial control from Govt. regulations (or other bodies)
imposing restrictions on supply, distribution and prices of the commodity.
the requirement for a successful futures contract is "fungibility" or interchangeability of the
product to be delivered
The commodity can be storable either in form of DMAT or in form of physical. Arbitrage would
not be possible without this condition.
The information on the underlying commodity should be easily available to general public.
Interaction of Both Markets
The two markets interact to provide price signals
The links between the two markets provides price stability
The existence of a futures market stabilizes today’s prices
Existence of both acts as a check on the fair-pricing of both markets
Convergence of Both Markets
Types of Futures Contracts
There are two kinds of futures contracts:
Physically Deliverable Futures
Cash Settled Futures
Elements of Futures Exchange?
Exchange is simply a ‘Marketplace’
Exchange has no role in pricing of contracts
Buyers and sellers determine prices
A trade only takes place if a buyers’ bid matches sellers’ offer
In futures markets, one trader's gain is another's loss (Zero Sum Game)
In the stock market, all investors (buyers and sellers) can profit in a rising
market and all can lose in a falling market
Why do we need a Commodity Futures Exchange
A futures exchange provides price signals going out in the futures
In absence of price signals one only lives in the present
Cannot plan for the future
Policymakers are not able to prepare for the future
The two essentials;
Price Discovery
Price Risk Management; Hedging
Key Participants Of Futures Market
Hedgers
Natural Long
Natural Short
Speculators /Investors
Arbitragers
Key Participants of Futures Market ants of Futures
Market
•
Hedgers
– Hedgers are those who make buy or sell in the futures market solely for
the purpose of establishing a known price level--weeks or months in
advance
•
Speculator/Investors
– Speculators take a long or short position to make a profit
– They actually take the opposite position of hedgers and take the risk the
hedgers seek to avoid
– They provide the liquidity to the market and can be termed as facilitator
•
Arbitragers
– They try to make risk free profits by taking opposite positions in two
different markets
Some Terminology
Initial Margin
Maintenance Margin
Margin call
Mark to Market
Regional Landscape
Indian Exchanges, 2012-13
Volume of Trading Value in INR Billions and % Share by Commodity
Metals, 111,227 , 43%
Currency, 87,105 , 34%
Energy, 37,684 , 15%
Agriculture, 21,557 , 8%
Commodities Volume Vs Equity Cash Volume in India
Total volume of Commodity Futures in India In 2012 INR. 181 Trillion
Total volume of Equity Cash Market of India in 2012
BSE INR 6.7 Trillion
NSE INR 28.108 Trillion
Total INR 34.78 Trillion
Commodities Volume is 5 times higher than Equity Cash Market
Source: www.mcxindia.com & SEBI
Pakistan Mercantile Exchange
Our History
Company formed in April 2002
Management appointed in Oct 2003
Became operational in May 2007 with Gold Futures Contract
First physical Gold delivery in Aug 2007
Overtook ISE in terms of volumes in May 2009
NBP became shareholder in Sep 2009
Overtook LSE in Apr 2010 - Second biggest exchange of Pakistan in terms
of traded volumes
Who we are
National-level exchange and the only platform that offers commodity futures
trading in Pakistan
317 members
In-house state of the art web based trading platform.
21 hours market timing which is an unprecedented feature amongst regional
exchanges. Working towards 23.5 hours market.
Segregation of Broker & Client Funds
Accessible Globally / Direct Market Access
State of the art IT infrastructure in place (trading, clearing & settlement,
custody and back office)
Regulatory Frame Work
Primary Legislation
Securities and
Exchange
Ordinance 1969
Rules
Commodity
Exchange &
Futures Contract
Rules 2005
Regulations
PMEX
Regulations
2007
Our Shareholding
National Bank of
Pakistan
33%
Pak Kuwait Inv.
Co. Ltd.
3%
Lahore Stock Exch.
Ltd.
8%
Zarai Taraqiati
Bank Ltd.
3%
Islamabad Stock
Exch. Ltd.
20%
Karachi Stock Exch.
Ltd.
33%
Geographic Breakdown of Active Brokers
City Name
Jan-15
Karachi
80
Lahore
22
Islamabad
12
Others
6
Total
120
PMEX is determined to expand the member network even further for
maximum market penetration
Special focus is on Punjab [smaller cities]
May-07
Jul-07
Sep-07
Nov-07
Jan-08
Mar-08
May-08
Jul-08
Sep-08
Nov-08
Jan-09
Mar-09
May-09
Jul-09
Sep-09
Nov-09
Jan-10
Mar-10
May-10
Jul-10
Sep-10
Nov-10
Jan-11
Mar-11
May-11
Jul-11
Sep-11
Nov-11
Jan-12
Mar-12
May-12
July 12
Sep 12
Nov 12
Jan 13
Mar 13
May 13
Jul 13
Sep 13
Nov 13
Jan 14
Mar 14
May14
Jul 14
Sep-14
Nov 14
Jan 15
Number of UIN's
14,000
UINs [LHS]
Active Traders [LHS]
Active Brokers [RHS]
12,000
10,000
55
50
8,000
45
40
6,000
35
30
4,000
25
20
15
2,000
10
5
-
Number of Active Brokers
Growth – Broker’s vs. UIN’s
80
75
70
65
60
Jan-15
Nov-14
Sep-14
Jul-14
May-14
Mar-14
Jan-14
Nov-13
Sep-13
Jul-13
May-13
Mar-13
Jan-13
Nov-12
Sep-12
Jul-12
May-12
Mar-12
Jan-12
Nov-11
Sep-11
Value Traded [RHS]
Jul 11
May 11
Mar 11
Jan 11
Nov 10
Sep 10
Jul 10
500,000
May 10
Mar 10
Jan 10
Nov-09
Sep-09
Lots traded
600,000
550,000
Contracts Traded [LHS]
450,000
400,000
350,000
300,000
250,000
200,000
150,000
100,000
50,000
220
210
200
190
180
170
160
150
140
130
120
110
100
90
80
70
60
50
40
30
20
10
-
Value Traded in Rupees Billions
Volumes - ‘09 to ‘15
Core Components of PMEX
IT & Systems
• Trading Systems
•
(NEXT, CSR, TAMS, BMS, E-Books)
• Connectivity and networks
• Database & Disaster Recovery
• Application development
• Systems assurance and IT security
Risk and Analytics
• Risk Management
• Settlement Pricing for MTM
• Market Maker BOTs pricing
• Margin Calculations and Exposure Analysis
• Research and Technical Analysis
Operations
 Market Operations
 Clearing and Settlement
 Custodial Services
 Business and Technical Support
 Business System Analysis
Membership, Compliance & Regulatory Affairs
 Surveillance and Monitoring
 Discipline and Enforcement
 Broker Audit
 Legal Matters. Issuance and renewal of
Membership
Research and Product Development
 Comprehensive market research
 Development of new product along with value
addition in listed ones.
Marketing, Business Development & Customer
Support Services
 Sales & Client Servicing
 Trainings & Events
 Customer Support Services
 Brand Building
 Corporate Communication
Product Portfolio
Products
Contracts
Deliverable
Metals
Energy
Agricultural
Financial
Mini Gold Contract (10 grams)
Tola Gold Contract
Milli Tola Gold Contract
Cash Settled
Gold 100 gram Contract
Gold Kilo Contract
Gold 50 & 100 Tola
Gold 1 oz, 10 oz & 100 oz US $ denominated
Silver 500 oz,100 oz &10 oz US $ denominated
-
Crude Oil 10 & Crude oil 100 barrel US $ denominated
IRRI-6 Rice Futures Contract
Weekly IRRI-6 Futures Contract
Palm Olein Futures Contract
Sugar Futures Contract
Wheat Futures Contract
I-Cotton Futures Contract US $ Denominated
-
KIBOR Futures Contract
Brief Contract Specifications
Gold 100 gm and Gold Kilo Contracts
Specification
Contract Size
Price Quotation
Tick Size
Contract Months
Trading Hours
Settlement
Details
100gm , kilo
PKR per 10 gm
Rs.1
1 to 3 months.
Monday: 3 am to 2 am (23 hours)
Tuesday – Friday: 5 am to 2 am (21 hours)
Cash
Gold 50 Tola and Gold 100 Tola Contracts
Specification
Contract Size
Price Quotation
Tick Size
Contract Months
Trading Hours
Settlement
Details
50 Tola , 100 Tola
PKR per tola
Rs.1
1 to 3 months.
Monday: 3 am to 2 am (23 hours)
Tuesday – Friday: 5 am to 2 am (21 hours)
Cash
Brief Contract Specifications
Gold Milli Tola, One Tola Contracts
Specification
Contract Size
Price Quotation
Tick Size
Contract Days
Physical Delivery Unit
Trading Hours
Settlement
Details
Milli Tola, 1Tola
PKR per tola
Rs.1
Monday to Friday weekly Contracts
10 Tola
Monday: 3 am to 2 am (23 hours)
Tuesday – Friday: 5 am to 2 am (21 hours)
Physical deliver in PMEX vault.
Gold 1 Oz, 10 Oz, 100 Oz Contracts
Specification
Contract Size
Price Quotation
Tick Size
Contract Months
Trading Hours
Margins
Settlement
Details
1 Oz, 10 Oz, 100 Oz
USD per Oz up to two decimal places
USD 0.1
1 to 3 months.
Monday: 3 am to 2 am (23 hours)
Tuesday – Friday: 5 am to 2 am (21 hours)
In PKR
Cash settlement in PKR
Brief Contract Specifications
Silver 10 Oz, 100 Oz, 500 Oz Contracts
Specification
Contract Size
Price Quotation
Tick Size
Contract Months
Trading Hours
Margins
Settlement
Details
1 Oz, 100 Oz, 500 Oz
USD per Oz up to 3 decimal places
USD 0.001
1 to 3 months.
Monday: 3 am to 2 am (23 hours)
Tuesday – Friday: 5 am to 2 am (21 hours)
In PKR
Cash settlement in PKR
Crude Oil 10 barrel and 100 Barrel Contracts
Specification
Contract Size
Price Quotation
Tick Size
Contract Months
Trading Hours
Margins
Settlement
Details
10 barrel, 100 barrel
USD per barrel up to two decimal places
USD 0.01
1 to 3 months.
Monday: 3 am to 2 am (23 hours)
Tuesday – Friday: 5 am to 2 am (21 hours)
In PKR
Cash settlement in PKR
Brief Contract Specifications
International Cotton Contract
Specification
Contract Size
Price Quotation
Tick Size
Contract Months
Trading Hours
Margins
Settlement
Details
5000 pounds
US cents per pound up to two decimal places
Cents 0.01
March, May, July, October and December
Monday – Friday: 7 am to 12.20 am
In PKR
Cash settlement in PKR
Wheat Futures Contracts
Specification
Contract Size
Price Quotation
Tick Size
Contract Months
Trading Hours
Margins
Settlement
Details
10 Metric Tons
PKR per 100 Kg
Rs.1
1 to 3 months.
Monday – Friday: 10 am to 6 pm
In PKR
Physical Delivery
Brief Contract Specifications
Rice Futures Contracts
Specification
Contract Size
Price Quotation
Tick Size
Contract Months/ Weeks
Trading Hours
Margins
Settlement
Details
25 Metric Tons
PKR per 100 Kg
Rs.1
1 to 3 months and weekly contract
Monday – Friday: 10 am to 5 pm
In PKR
Physical Delivery
Sugar Futures Contracts
Specification
Contract Size
Price Quotation
Tick Size
Contract Months
Trading Hours
Margins
Settlement
Details
25 Metric Tons
PKR per Kg
Rs.1
1 to 3 months
Monday – Friday: 10 am to 7 pm
In PKR
Physical Delivery
Brief Contract Specifications
Palm Olien Futures Contracts
Specification
Contract Size
Price Quotation
Tick Size
Contract Months
Trading Hours
Margins
Settlement
Details
25 Metric Tons
PKR per maund
Rs.1 per maund
1 to 3 months
Monday – Friday: 10 am to 5 pm
In PKR
Physical Delivery
PMEX Gold Custody Services
•
PMEX provides custody services to all its clients who buy gold from PMEX
and keep their gold inventory in PMEX vaults
•
Gold is kept in the bank lockers of leading commercial banks.
•
The lockers are operated by at least two authorized signatories.
•
The custodians of the keys of lockers are different from the officers who
operate the bank lockers. The keys are kept in a safe- deposit locker kept
in the Exchange.
•
When bank locker needs to be operated, OPS department initiates the
process of obtaining the keys form the custodians of the keys. The keys
then handed over to the bank lockers’ operators with proper entry in the
register.
•
Immediately after the bank locker operations, keys are returned to the
concerned staff.
•
The periodic verification of gold inventory is made by internal and
external auditors.
P/L Calculation for US $ Denominated Contracts
Gold 1 Oz Futures
• Underlying Commodity: 1 Oz Gold
• Price Quotation: USD/ Oz of Gold
• Price determination is Global, no role of local organizations
• A trader buys 1Oz Gold @ 1170
• And Sells @ 1171
• Earns a profit of USD 1
• This profit is converted into PKR, say @ of Rs100/USD
• Profit= Rs.100
• The Buyer’s account with PMEX will be credited by Rs. 100 and
Seller’s debited
• No involvement of physical foreign currency
PMEX Milli Tola Gold (Recent Addition)
Designed for all income groups
Savings product
Extraordinary retail potential
Mobile Banking Clients
Credit Cards Clients
Telecom Clients
PMEX Product in Pipeline
Third Currency Futures
EUR/USD Futures Contract
USD/JPY Futures Contract
GBP/USD Futures Contract
Energy
Brent Crude Oil
Metals
Copper
Agriculture
Weekly & Monthly Palm Oil/Olein Futures Contracts
Mill Specific Sugar Futures Contract
Red Chilies
PMEX Third Currency Futures Contracts
•
Prices are determined in Deep, Liquid, Continuous
International Markets
•
All PMEX participants will be price-followers
•
No requirement for physical currency movement
•
Will provide an avenue for ending private, individual FX
outflows for trading
•
Channel unregulated FX activity to a controlled, regulated
platform
Gold and EUR/USD are essentially similar
•
•
•
•
•
•
•
•
•
•
EUR/USD Futures
Underlying Commodity: Eur/US
Price Quotation: USD/Euro
Price determination is Global, no
role of local organizations
A trader buys 1 Euro @ 1.2181
And Sells @ 1.2292
Earns a profit of USD 0.0111
This profit is converted into PKR, say
@ of Rs100/USD
Profit= Rs.1.11
The Buyer’s account with PMEX will
be credited by Rs. 1.12 and Seller’s
debited
No involvement of physical foreign
currency
•
•
•
•
•
•
•
•
•
•
Gold Oz Futures
Underlying Commodity: 1 Oz Gold
Price Quotation: USD/ Oz of Gold
Price determination is Global, no
role of local organizations
A trader buys 1Oz Gold @ 1170
And Sells @ 1171
Earns a profit of USD 1
This profit is converted into PKR, say
@ of Rs100/USD
Profit= Rs.100
The Buyer’s account with PMEX will
be credited by Rs. 100 and Seller’s
debited
No involvement of physical foreign
currency
PMEX Commodity Murabaha (Approval Awaited)
An Efficient Liquidity Management Tool for the Islamic Finance Industry
PMEX has developed a Murabaha product to facilitate the
Islamic Finance Industry (IFI)
International commodity exchanges such as London Metal
Exchange, Bursa Malaysia & Jakarta Futures Exchange are
also enabling Murabaha transactions and are acting as hubs
for Islamic Banking liquidity management
PMEX regulated platform will serve as an industry standard,
efficient liquidity management solution
We envision that this Murabaha product will eventually serve as an industry benchmark and
the first investment choice for the IFI’s.
Warehousing, Certification & Spot Trading
(Concept)
Unregulated Derivatives Trading in Pakistan
Estimated notional traded value of such grey market is US$ 480 billion*. PMEX
currently represents only 2.69% of the actual potential i.e. US$ 13 billion.
A big part of the traded value is of Currency Future Contracts [unavailable @
PMEX]
Undocumented trades thus loss to exchequer
No legal recourse to market participants
Settlement of this market takes place in US$ leading to:
Pressure on PKR as US$ is purchased from the open market
Outflow of capital from the country via Hawala / Hundi
* Source : Forex Magnates Magazine +
Informal Market Survey
PMEX Risk Management
Pillars of Risk Management @ PMEX
Measure
Purpose
Segregated Account Investor Protection
Method
UIN-based client accounts at Clearinghouse of
PMEX
Orders checked against Margin account before
acceptance
VaR based, dynamically adjusted
Pre-Trade
Verification
Initial Margin
Ensuring Traders have deposited
Margins first
Ensure Ability to Trade
Mark-to-Market
Extract risk from the market
T+0 settlement, twice a day MTM, P/L, Margin
Calls
Clearing Deposit
Protection against Worst-case
Scenario and breach of Initial Margin
Extreme-Value Theory
Position Limits
To allow for balanced market growth
and eliminate concentration risk
Based on market’s demand, need, capacity and
risk
Price Limits
To stop unjustified extreme moves in
prices
To limit the losses incurred by
investors
Based on underlying risk of commodity volatility
Auto Liquidation
20% of initial margin
Risk Management
Gross margining
All open positions are fully margined
Initial Margin – VaR based
Daily Mark-to-Market – Variation Margin
Delivery Margins
Clearing Deposits (Worst case margins)
Price Limits
Auto Liquidation
Segregation of Accounts
All margins are held by the Clearinghouse without any co-mingling of funds
Complete Risk Segregation – Client/Client and Broker/Clients
Default Protection: Segregation of Participant
Risk
Market
Participants
SGF
Clearing
Participants
Broker
Clearing
Participants
Market
Participants
Broker
Client
Prop
Broker
Client
Prop
Client
NCEL © 2010
Prop
Client
PMEX Operations
Market Operations
Currently running 21hours market (05:00 am to 02:00am)
Assignment of commodities to brokers
Definition of Broker positions limits
Pre/Post Trade Risk Management (Margins, Positions, Commodity, Trader /
User Relationship)
Contract level margins and market timings
Client account creation and management
Business Systems access management
Market-Making setup and application monitoring
24 hours customer support
PMEX Clearing House Activities
Trade recording, verification and reporting
Daily Mark to market (twice a day)
Margin call generation
Collateral management
Broker Exposure management
Collection and release of clearing deposit/margins – (Click For Details)
Collection of fees and other charges
Maintain Settlement Calendar
Delivery management (Final settlement Pay-ins and Pay-outs)
SECP Fee computation and reporting
Bank Reconciliations
Market Making Accounts management
Management Reporting
Market Making Activities
To provide liquidity, Market Maker was Introduced in March 2009
Market makers are the market participants who place two way quotes
(bids and offers simultaneously) on the Exchange in a particular
commodity contract.
Market making arrangements in Gold, Crude oil and Silver
Market making software developed in-house and integrated with PMEX
trading systems
Market Surveillance at PMEX
Price monitoring on the exchange is done by:
Monitoring the traded volume at different prices
Monitoring active participants
Monitoring large position holders
Monitoring market prices with respect to international price
movements
Compliance & Legal
Compliance with Exchange policies and procedures
Monitoring and Auditing Brokers
Reporting and Investigating
Enforcement and Discipline
Prevention and Response
Surveillance and Investigation
Handling Investor Complaints
Broker Education on Regulatory Changes
Broker Activation Process
Registration with SECP
Broker’s Bank Accounts & Internet Banking
Payment of Clearing Deposit & USB Key Fee
USB Key Issuance
Broker Training
System and Resource Readiness
Payment of Required Initial Margin
Clearing Bank Account Setup
As part of activation process all brokers are required to open the following
PMEX specific accounts with PMEX designated clearing bank(s):
• House Account (For all proprietary transactions with PMEX)
• Client Group Account (All clients’ money)
PMEX maintains the following specific purpose bank accounts with the same
designated clearing bank(s):
1.
2.
3.
4.
5.
PMEX Clearing Deposit Account;
PMEX Initial Margin Account;
PMEX Fee Account;
PMEX Final Settlement Account;
PMEX Penalties Account
Active PMEX Clearing Banks (MCB, SCB with internet banking facility)
Methods to Access PMEX Business System
For Broker Staff
USB Key (Hardware Cost Rs10,000 and Certificate Renewal Rs 5,000 annually)
For Clients
USB Key (Hardware Cost Rs10,000 and Certificate Renewal Rs 1,000 annually)
Digital Certificate (lost/ renewal Rs 1,000 )
Trader ID / Password (Free)
Trading Website Addresses: ( Save these links in IE favorite list)
https://trade.pmex.com.pk
https://trade.pmex.net.pk/
https://trade.pmex.org.pk/
https://trade2.pmex.com.pk/
https://trade2.pmex.net.pk/
https://trade2.pmex.org.pk/
•
(Web Server 1 Cyber Net)
(Web Server 1 Super Net)
(Web Server 1 Multi Net)
(Web Server 2 Cyber Net)
(Web Server 2 Super Net)
(Web Server 2 Multi Net)
Trading Website Addresses from DR Site (in case of any eventuality):
– https://drtrade.pmex.com.pk
– https://drtrade2.pmex.com.pk
How to Start Trading on PMEX by a Client
Contact an PMEX Registered Broker
Broker Opens Trading Account
Payment of Initial Margin
Ask for training, if using Direct Terminal
Enter Orders, Monitor Position, Pay Margins
Account Creation Process @ PMEX
NCCPL
PMEX send a
request to
NCCP
Acc. opening
form filled &
signed by
client
Client Account
Creation request
Client
Broker
SMS/ e-mail
Account Confirmation/Rejection
NCCP
verified the
request
PMEX System
Process UIN request
& assign Trading ID
under assigned
PMEX Broker (Auto
Generated)
Funds Transfer & Segregated Accounts @ PMEX
Brokers’ & Client’s
Ledgers @ PMEX
Broker House
Account
Client Group
Account
PMEX Account
Broker
House
Account
Client – A
Account
Broker
Client
Group
A/C
Client – C
Account
Client – B
Account
Client – D
Account
Trader Account Setup
Client A Account
Opening Form
PMEX TAMS Interface
Add New Trader
Trader Code = TRD0010010
Trader Name = Client A
CNIC Number = 42101-000000-5
Gold
TRD0010010
1,000
Client A 1,000
10
42101-000000-5
Broker
ABC
Block 8
Commodity Assignment =
Commodity Limit Long =
Short =
Maximum Order Size =
PMEX TAMS Interface
UIN Approval
UIN Entry Status
Trader Code ==TRD0010010
Trader Name ==Client A
CNIC Number:
Number =42101-00000-5
Status:
AddressApproved
=
Save
Client Pre-Trade Risk
Management
Allowable Commodities;
Positions limits;
Margins exceptions;
NCCPL
Max Order Size
Trader suspension;
Trader Information
Synchronize with
Trading System
Clients give cheques or
direct bank deposit receipts
to Broker against initial
margin
PMEX Margin Collection Process
Clearing Bank
Broker’s Initial Margin A/c
Client Monitors Daily Ledgers
Client A
Rs.5,000
Client A
Broker’s Initial
Margin
Client B
Rs.5,000
Client’s Group Initial
Margin
Client B
Brokerage House
PMEX Initial & Variation Margin
A/c
100,000 + 10,000 = Rs.110,000
Segregated Margin Accounts
House Initial Margin Account
Rs.100,000
Rs. 5,000
Rs. 5,000
Broker
PMEX
Rs.100,000
Segregated Clients’ Margins
Clients A Initial Margins Account =
Rs. 5,000
Clients B Initial Margins Account =
Rs. 5,000
Rs.10,000
Rs.10,000
Download Daily
Bank Statement
Client A Ledger
Rs. 5,000
Client B Ledger
PMEX CSR System Interface
Rs. 5,000
Client Group Initial Margin Allocation interface
Unallocated Client Group Margin Balance =
Clients A Initial Margins =
Clients B Initial Margins =
Rs.5,000
Rs.5,000
PMEX CSR System
NIL
House Margin Account
NIL
Unallocated Client Group MarginRs.10,000
Allocated
Client A Ledger
5,000
Client B Ledger
5,000
64
Margin Release Process
Broker’s Margin Accounts
Rs.3,000
Client A
Clearing Bank
Broker’s
Margin
Client sends a
release request
to Broker
PMEX Initial & Variation Margin A/c
House
Rs.100,000
DailyInitial
BrokerMargin
MarginAccount
Release Status
Report
Client
Segregated Margins
Client Name
Release Status
Clients A Initial Margins =
Client A Ledger
Broker
Release
Update
Request
Client
Ledger
Client’s Group
Margin Collection
Brokerage House
(Before Release)
Segregated
Margin
Accounts
Broker PMEX
CSR System
Interface
Download a
Daily Release
Report From
PMEX
Client’s Group
Margin Collection
Accepted
Clients B Initial Margins =
Total CG Release
Rs. 107,000
110,000
PMEX
Amount
Rs. 5,000
Rs.3,000
Rs. 5,000
Rs.3,000
Rs.10,000
C&S Department
transfers approved
release fund
(After Release) Segregated Margin Accounts
PMEX CSR System
House Initial Margin Account
Margin Release Request
Interface
Client Segregated Margins
Clients A Initial Margins =
Clients A Initial Margins =
Clients B Initial Margins =
Submit
Rs.100,000
PMEX CSR System
Rs. 2,000
Client MTM
Session 1
process
Rs. 5,000
Rs.7,000
MTM Means = Mark to Market Process, currently runs twice a day and
withdrawals from clients account are validated in MTM session before
start of New trading session i.e. before 10:00 am
Broker A Margin
Rs. 100,000
Client A Ledger
Rs.2,000
Rs.5,000
Client B Ledger
Rs.5,000
Total Margin with PMEX
Rs.107,000
Rs.110,000
65
PMEX Trading System
PMEX Trading
Platform
PMEX Broker
Assigned
Deal
Trade Capture
Pre-Trade Risk
Management
Position
Update
Mark to
Market
Market
Monitoring
Trader “A”
Systems
Update
Trader “B”
Banking &
Settlement
Risk
Mgmt
PMEX Trading System
PMEX provides following four systems to its brokers for the smooth and
efficient trading at PMEX.
1.
Next Trading Terminal
2.
Trader Account Management System (TAMS)
3.
Clearing, Settlement & Reporting System(CSR)
4.
eBooks
5.
Integration with third party systems (i.e. MT5) through FIX
PMEX provides hands on training to the Brokers and their staff on the Demo
system of the Exchange so that they could use these systems efficiently.
PMEX Business Systems Features
NEXT Web Based Trading Terminal:
Direct market Access to all participants (Broker & Clients )
Secure Login – Digitally singed
Pre- Trade checks
Order types – Limit, market, Stop loss Limit / market
News/Twitter feed connectivity provision
Trader Risk Watch (Net Liquidity, Buying power and Real time
PL)
Type of Orders
Market Order: An order that an investor makes to buy or sell a contract
immediately at the best available current price.
Limit Order: An order placed to buy or sell a contract at a specified price
or better. Limit orders also allow an investor to limit the length of time an
order can be outstanding before being canceled.
Protective Stop Order: An order designed to protect the investor against
losses beyond a set limit by means of a stop-loss order.
Trailing Stop Order: A stop order that can be set at a defined percentage
away from a security's current market price. A trailing stop is designed to
protect gains by enabling a trade to remain open and continue to profit as
long as the price is moving in the right direction, but closing the trade if
the price changes direction by a specified percentage or amount of
dollars.
Good Till Cancel Order: The order remain in the market till it is cancelled
Trader Account Management System - TAMS
Trader Account Management System is used to perform the following
functions:
UIN (Unique Identification
Number) Management




UIN Entry
Unfreeze UIN
Freeze UIN
UIN Information
Trader Management





Assigning specific
commodities
Assigning commodity
limits
Increase in margins
Suspending a trader
Setting Trader Threshold
User Management










Add User
Edit Pending
Edit User
Assign Traders
Activate User
Suspend User
View User Log
Re-Issue USB Key
Pending Re-Issue USB
Requests
Add KATS Id
PMEX Business Systems
Trader Account management System – TAMS
UIN Management
Trader UIN creations
Trader Management
Traders’ Commodity and positions limits assignments
Traders’ contract margin definitions;
Traders’ Rights Management (Active / Suspend trader)
User Management
Manage user accessing PMEX Business Systems
Assignment of traders to Specified traders (clients)
Clearing, Settlement & Reporting System - CSR
Clearing, Settlement, Reporting (CSR) System is used to perform the following functions:
Daily Operations



Funds

Management
(Funds allocation,
Funds
Withdrawal,
Funds Transfer
and Approval,

Securities
Release)
Commission
Management
(Commission
Upload and
Download)
Gold
Management
(Gold
Withdrawal,
Delivery, Receipt)
Setup
Bank Account
Management
(Bank Account
Numbers,
Primary Bank
Accounts)
Key Personnel
Setup
Market Information







Session
Management
(Session Market
Price, Session
History, Spread
Market Price)
Contract Reports
Margins Reports
Commodity
Reports
MGold Market
Prices
MGold Session
Prices
MGold Contracts
Operation Reports










General Ledger
Trader Funds
MiniGold
Receipts Trader
Vault
Transactions
Settlement Call
MGold Trader
Margin
MGold Daily
Settlement
MGold
Withdrawal
Request Status
Key Personnel
Details
Broker Exposure
Client Wise
Trader Balance
Surveillance Report












Trade Details
Position
Summery
Account
Statement
Daily Statement
Client Margin Call
Ticket Trade
Details
MGold Trade
Vault Positions
MGold Positions
Order Details
Account
Statement
History
Daily Statement
History
PMEX Business Systems
Clearing and Reporting System – CSR
Futures commodity setup allow to define futures commodity contract
specifications
Commodity futures contract setup
Contract margins setup of different types (initial margin, delivery margin,
spot margin etc) at Commodity level, Contract level with option to define
separately for buy (long) or Sell (Short)
Contract wise Exchange Trading fees setup
Setup Chart of accounts to open financial ledger
CSR Security Module, Create customize role and assign to authorized users
of the Exchange
Collateral Management Setup includes eligible pledge securities definition
with applicable hair cuts that uses in MTM process
PMEX Business Systems
Clearing and Reporting System – CSR
Exchange can assign clearing limits (exposure limits) according to
member risk appetite
Setup and approve member multiple bank account setup for
settlement of transactions
Exchange can setup, calculate and distribute profit on clients margin
balance
Contract wise Market timings setup for pre-open, open, pre-close,
close; market timings covers trading session falls in two calendar
days that helps to cover trading session of different time zone
Setup Settlement calendar.
eBooks
PMEX eBooks offers a tailored solution that encompasses all the
requirements including accounting at company and branch levels
with additional features such as user role definition and access
control, commodity/client specific commissions, general ledger
and synchronization with PMEX CSR System.
Thank You
www.pmex.com.pk
.