KARACHI, July 17: The National Commodity Exchange Limited (NCEL) will launch two new deliverable future contracts in mini gold and palm olien in the middle of the next month.

The exchange has received the regulatory approval from the Securities and Exchange Commission of Pakistan (SECP) for the two contracts, managing director NCEL Assim Jang told Dawn on Thursday.

He said that the exchange will hold road shows for six days in major cities starting from July 28, to educate potential participants about the new contracts.

He said investors, particularly small ones have limited or no avenues for investment in gold and palm olien sectors. Therefore, mini gold will fill a gap where a small investor can invest up to Rs21,000 in gold as a perfect hedge against inflation, which is presently a global phenomenon and not just limited to Pakistan.

A good example of that is gold, which has a 98 per cent correlation with international crude oil prices.

NCEL gold bars would have a serial number and certified and produced by a London Bullion Market Association member (a refinery of high international standing and of high repute), he said.

About palm olien, Assim Jang said Pakistan was the second largest importer of this product. At present, it is a highly volatile commodity and there is currently no hedging facility available in the country. With the listing of a Palm Olien futures contract, the NCEL expects the price of ghee in the local market to stabilise and eventually the consumers will benefit.

About the response of investors in rice and gold he claimed that investors had welcomed the listing of gold and rice contracts at NCEL where investors are fully protected for being in a regulated marketplace. The exchange also provides a guarantee of financial settlement.

He said adoption of commodity futures trading in the country had been slow due to level of investors’ knowledge of futures trading and slow induction of brokers. However, both these issues have been addressed and volumes and open interest are growing at the NCEL.

Comparing NCEL with other commodity exchanges in the world, he said the growth had been slow because the exchange introduced future trading first time in the country and it requires investors’ education on a large scale. In other countries commodity exchanges and future trading normally follows the norms in the equity markets, which has not been in the case of Pakistan, he added.