PSX to Launch Cash-Settled Futures to Boost Market Liquidity

The Pakistan Stock Exchange (PSX) plans to introduce cash-settled futures and options, with testing set for March 2025, reported Bloomberg. According to CEO Farrukh H Sabzwari, this initiative aims to enhance derivatives trading by reducing the capital required for traders and improving market liquidity. Currently, PSX offers deliverable futures, where positions must be settled through the delivery or acceptance of shares. Cash-settled futures are expected to address liquidity issues that arise near contract expiry. Pakistan’s stock market has surged 170% over the last 18 months, driven by economic stabilization and IMF support. With interest rate cuts expected, Sabzwari hopes to increase retail participation and boost IPO activity in the market. The PSX CEO sees this economic stability and the introduction of new products as an opportunity to increase retail participation, which currently stands at under 1 percent of the population. It bears mentioning that Pakistan’s stock market has undergone a logic-defying historic rally since last year, with the benchmark KSE-100 Index surging by 170 percent in the last 18 months alone. On Thursday, the main bourse rallied past the 114,000 milestone after its third-highest gain since December 5, 2024.