What is difference between PSX and PMEX?

What is PSX?

Pakistan Stock Exchange Limited is responsible to provide a securities market system in the country. It engages in conducting, regulating, as well as controlling the trade. The business of buying, selling or dealing in shares, government papers, participation term certificates, stocks, bonds, modaraba certificates, debentures stock, loans, and foreign exchange bearer certificates and documents come all under PAX.

The company’s trading products include deliverable futures stock index futures contracts, cash-settled futures, equities, exchange-traded funds, and real estate investment trust and government debt securities and corporate debt. Pakistan stock exchange provides investor services. These services include trading, Internet routed trading facility, market data feeds order driven system, easy access through display-only terminals, and gateway trading as well as fully automated trading, and settlement system. Furthermore, the company also offers exchange-traded indices. Keep in consideration, the company was uncially known as Karachi Stock Exchange Limited.

How PSX work?

Companies that are listed on the PSX are categorized into two groups. The Regular or Ready mark includes the list of companies. however, small or medium-sized businesses is where companies capitalized at $150,000 and $1.2 million are traded. These enterprises are tailored for high-net-worth individual investors.

An effective and convenient way for investors to invest in PSX stocks is through exchange-traded funds that have exposure to Pakistan. It targets the Pakistani economy by investing in the largest companies trading on the PSX. Many ETFs are specializing in emerging markets with various types of exposure to PSX securities.

How to Trade on the PSX?

Pakistani citizens living overseas can trade on the PSX by Roshan digital account along with one of the banks designated for this purpose. The process is all-digital as well as can be conducted online. A Roshan digital account offer a non-resident Pakistani for transferring the funds and pay bills, and when paired with an account in a PSX member brokerage like Abbasi and Company, to invest in securities traded on the PSX.

Furthermore, foreign investors can open SCRA also referred as Special Convertible Rupees Account that allow the foreign investors transfer funds for securities purchases from the account. However, PSX member brokers such as Abbasi and Company can set up SCRAs for foreign investors. Pakistan stock exchange marks an online list of banks that help with this task.

What is PMEX?

PMEX stands for Pakistan Mercantile Exchange Limited (PMEX). It’s the first futures commodity market in Pakistan to provide a centralized as well as regulated platform for commodity Futures trading. PMEX is further regulated by Securities and Exchange Commission of Pakistan.

How PMEX works?

PMEX offers products catering to the needs of all kind of market participants. Investors investing in commodities, traders working with the aim of earning profit are significantly based on their market strategy to mitigate their risk, by using a commodity futures market.

Key Features of PMEX

• Segregation of Client Accounts

There’s a great need to know that PMEX is one of the world’s first exchanges that implement a system of segregated reporting of individual accounts at the exchange level. It’s an essential feature because it results in more investor protection, better risk management, as well as more broker operations.

• Pre-Trade Checks

Being an electronic exchange, PMEX is capable to take advantage of recent advances in technology while building its systems. It has the great ability to perform pre-trade checks before orders are accepted. Most of the developed exchanges still don’t have this functionality. They rely on reliance on clearing brokers. However, having a pre-trade check is a sufficient margin with the exchange is an essential functionality.

• Direct Market Access

PMEX is a pioneer that provides a direct market access to the participants. This service is only accessible to large clients by other exchanges. However, using an innovative technology to the fullest, PMEX offers direct trading terminals to the participants free of cost.

• Membership

An important aspect of being a demutualized exchange is, membership is separate from trading rights on exchange. Keep in consideration that membership of the exchange does not entitle to share in the ownership of the exchange. In this, way, an important separation of ownership and trading is preserved.

Two types of memberships are available at PMEX:

• Universal Membership
• Commodity Specific Membership

Universal membership allows the Company to be able for offering a trading facility in available commodity contracts.

However, Commodity is an emerging market with a huge potential for making financial gains. Abbasi and Company deals on commodities listed on the PMEX like crude oil, gold trading, silver, palm oil, wheat, sugar as well as rice.

Trading, Clearing, and Settlement

For brokers, many of the future exchanges have separate trading. This separation is more efficient in terms of operational efficiency. Being a new exchange, PMEX operates a unified membership model. According to this model, PMEX brokers are responsible for their trades.

Hence, under the regulatory relationship between, as written in PMEX Regulations, a broker is the primary obligor for exchanging for all his and customer trades.

FAQs

What is the minimum investment for opening an account?

You can easily open an account with PKR 25,000/-. The amount will be available for trading after the deduction of annual charges.

Can I transfer the funds to the brokerage firm?

No, un order to safeguard the interest of the investors, PMEX offers a unique Direct Fund Mode (DFM). It allows the customers to deposit their margins directly with the Exchange, without the involvement of broker(s).

What are the commission rates?

You can easily check the commission structure in detail

Is there any research provided by Abbasi and Company?

Yes, you’ll get access to our email newsletter and research reports for any query.