In a major development for commodity trading in Pakistan, the State Bank of Pakistan has allowed foreign clients of National Commodity Exchange Limited (NCEL) to trade at the exchange through Special Convertible Rupee Account (SCRA) accounts, sources told Business Recorder on Saturday.
They said that the otherwise gradually increasing commodity contracts are now at fast track at country''s first ever commodity exchange since February this year, as the local and foreign investors are now taking more interest in the commodity trading at NCEL.
"NCEL has received numerous inquiries coming from various foreign clients and companies, who want to participate in trading at NCEL, however they were unable to trade at NCEL withou any account," they added.
Keeping this requirement in view, NCEL had approached SBP to allow its foreign clients to operate through SCRA accounts just as the investors of stock market has been allowed, they said. "The central bank, on the request of NCEL, has allowed foreign investors to operate through SCRA accounts and trade at commodity exchange," they said. NECL is country''s first commodity exchange with a paid up capital of Rs 100 million and over 300 members. SECP had issued license in 2002 and later granted permission for the future trading of gold and rice.
"In the month of May 2008, close to 15,000 gold contracts were traded at NCEL representing a notional value close to Rs 3 billion," an official of NCEL said, adding that volume of gold transactions during the current fiscal have crossed 2.5 tons marks. Since February 2009, NCEL is witnessing some 200 percent increase in trading every month, while deposits and client base has almost doubled since December 2008, he added.
Commodity exchange currently offers physical and paper gold contracts and is the only legal channel through which Pakistani companies and individuals can invest in the gold market which is expected to continue with the bull run. NCEL is the only enabler of gold-based mutual funds and other products to be launched soon by some of the most reputable names in Pakistan.
On domestic side there is a growing interest from jewellers, wholesale bullion traders, private investors, funds and financial institutions that are using the exchange to fulfil their requirements.
It may be mentioned here that NECL started operations on May 11, 2007 with the three-month futures trading in gold and the first delivery was successfully executed in mid-August 2007.