ISLAMABAD: There is a need for the development of the derivatives market, which will enhance access to finance and improve price risk management, according to the annual report issued by the Securities and Exchange Commission of Pakistan (SECP) on Friday.

In his message, SECP’s acting chairman Zafar Abdullah said a strong link needs to be established between the real economy and the capital market to develop the bond market.

“We need to introduce products like equity derivatives, interest rate derivatives, agricultural commodity derivatives and electronic warehouse receipt finance,” he said.

The report also highlighted the need for the introduction of modern financial market tools in the agriculture sector. “The SECP needs to support the growth of agricultural produce companies by engaging with all relevant stakeholders to create a comprehensive and modern policy framework,” it said.

It will allow the development of the entire agriculture value chain, the report said. It is expected that the new measures will aid in growth and documentation of the economy.

“With a contemporary legal framework and a revised structure in place, the SECP has the right platform and momentum to steer Pakistan towards a brighter future,” Mr Abdullah said.

He said the SECP needs to focus on the creation of new departments within the commission to facilitate horizontal growth and meet the needs in terms of technology and manpower capacity-building.

The report highlights that there is a huge potential for the expansion and growth in the insurance sector due to the large untapped market on the life insurance side. In addition, it also points to the economic opportunities brought on by the China-Pakistan Economic Corridor (CPEC) in the non-life insurance sector.

The insurance industry exhibited a modest growth of 14 per cent in gross direct written premium whereas an 18pc growth in total assets was recorded in 2016.

Published in Dawn, December 9th, 2017