First electronic warehouse receipt trades at PMEX

KARACHI: An electronic warehouse receipt (EWR) of yellow maize was traded at Pakistan Mercantile Exchange (PMEX), country’s only multi-commodity futures exchange, for a first on Friday, a statement said.

The electronic trade will help the agriculture sector to be documented and modernised electronically.

According to details, under the guidance of the Securities and Exchange Commission (SECP), the government has completed the initiative from the formation of a collateral management company, accreditation of warehouses, issuance of the EWR, financing against EWR, and the trading of EWR at PMEX. The introduction of EWRs in the country offers three options to the farmers; safekeeping of commodities to avoid distress selling and post-harvest losses, using EWR as collateral for borrowing from financial institutions, and trading of EWRs at the PMEX platform to efficiently sell the produce at a fair price.

The EWR mechanism aims to improve performance of the agricultural sector by stimulating economic growth both in the agricultural sector and in the construction sector by creating an incentive for the private sector to construct new warehouses.

It is expected to increase capacity of the country to store agricultural produce without wastage, alleviating poverty, and reducing shortages of agricultural produce.

Speaking on the occasion, Ejaz Ali Shah, managing director of PMEX, “We are delighted on the commencement of EWR trading at our platform. This would not have been possible without the visionary leadership of SECP, which has worked relentlessly over the years to materialise this initiative into a reality.”

The EWR trading would help uplift the lives of smallholder farmers, and create a vibrant and unified national market for agricultural commodities, he added. “We are confident that creating a pan-Pakistan market for agricultural commodities will help revitalize Pakistan's agricultural sector.” According to Shah, PMEX plans to integrate the EWR trading platform with the Global Commodity Trading Platform (GCTP), a wholly owned subsidiary of PMEX, offering an e-commerce platform for the trading of agri and non-agri commodities.