THE PMEX crude oil contract provides domestic users with a tool to hedge and take exposure against an international benchmark price.

Trading in an international benchmark price domestically removes the need of trading outside the country which involves foreign exchange restrictions.

While individuals can still use foreign route to some extent, corporate entities are prohibited by the State Bank of Pakistan rules to hedge and trade commodity futures including crude oil internationally. In this scenario, the PMEX bridges international commodity futures markets to domestic participants. While the margin payments and profit and loss settlement is in rupees, the underlying exposure is to international commodity prices, often quoted in dollars.

Domestic businesses exposed to the volatile nature of fuel prices can now hedge themselves to a considerable level on the country’s futures exchange.