Forex training course in bangladesh
Dear reader, online ads enable us to deliver forex training course in bangladesh journalism you value. Please support us by taking a moment to turn off Adblock on Dawn. Derivatives are complex financial instruments that are used by retail and institutional investors for risk management.
The contracts on exchanges are characterised by standardisation, high regulation, liquidity, no default risk, and low transaction costs. On the other hand, OTC contracts are customised to the needs of the parties involved, are less marketable with high counterparty default risk, and are loosely regulated. 20pc of the notional amount outstanding is traded on exchanges, and the magnitude and scope of OTC transactions is far greater than the exchange-traded transactions. The maturity of the spot markets, investors’ financial literacy, the appropriate regulatory framework, and liquidity are the key determinants of well-functioning derivatives markets. The characteristics of the underlying, such as price transparency and volatility, suitability of cross hedge, a homogenous product with established grades and standards for quality and quantity, and hedging effectiveness, are important in the success of derivatives instruments. While the trading of cash settled and deliverable equity futures on the PSX started in 2001, the PMEX became operational in 2007.
Despite the exceptional performance of the Pakistani stock market in recent years, investors’ interest in exchange-traded derivatives is marginal, resulting in unimpressive turnovers. In fact, Pakistan’s derivative markets rank the lowest in the region in terms of volumes traded. In contrast, the Indian derivatives market, the National Stock Exchange, has become the most active market in the region in recent years. The Chinese derivatives markets have taken a lead in product innovation and have introduced derivatives with non-traditional underlying commodities. Several supply and demand side challenges impede the development of derivatives markets in Pakistan.
On the supply-side, a lack of marketing and awareness about derivatives, a slack in product innovation, inadequate training and education of supply-side market participants, and excessive regulations, have all restrained the growth of derivatives. CFS transactions were abolished in 2009, as these transactions fulfilled investors’ need for leverage-based products. On the demand-side, the challenges are even more complex. The savings rate in Pakistan, as measured by the savings to GDP ratio, has been historically low.
In fact, it is the lowest in the region when compared to China, India, Sri Lanka, and Bangladesh. Besides a low savings rate, the investor base has been stagnant since the inception of the PSX in 1948 and is only one-fourth of the investor base of Bangladesh. These challenges can potentially be explained by a lack of financial literacy amongst investors, limited reach of investment companies, narrow product portfolios, and most importantly, the paucity of investors’ confidence in the Pakistani capital markets. With respect to institutional investors, accounting treatment of derivatives on financial statements may be a limiting factor in their participation in organised derivatives markets. Next-11’ group, an improvement in macro-economic indicators, a decline in discount and deposit rates, and the need for leverage-based products may positively impact the derivatives markets in the country. A few recommendations may help in promoting and developing the nascent Pakistani derivatives markets. First, it is appropriate to understand and address the concerns of the supply-side market participants.
Second, a comparative analysis of regulatory frameworks in neighbouring countries, other emerging markets, and developed markets would help in formulating the regulatory levels that not only safeguard investors’ interest but also promote the derivatives markets. Third, the innovation of Shariah-compliant derivatives contracts may attract investors who view derivatives as purely speculative instruments. Fourth, appropriate measures to promote the marketability of derivatives, as well as cash liquidity of the supply-side market participants, should be considered. While the former can be achieved by low transaction costs, price discovery, high volumes, and enhancement of the market’s resilience to negative shocks, the latter can be achieved by keeping the margin requirements at a level that do not increase the opportunity cost for retail and institutional investors. Fifth, financial literacy and confidence building among investors, regulated marketing campaigns in simple language, and increasing the reach of investment companies through online platforms, satellite offices, and already established banking networks may motivate retails investors to opt for investments in derivatives. Lastly, encouraging investors’ participation in derivatives markets through mutual funds and voluntary pension schemes within the realm of respective investment policies would also deepen the derivatives markets. Given that the excessive and unregulated use of derivatives is blamed for the financial crisis in 2008, the PSX, PMEX, and SECP have been extremely cautious in developing regulatory frameworks pertinent to the use of derivatives, which in a way has hampered their acceptance and growth in Pakistan.
While significant progress has been made to develop derivatives markets in Pakistan, the desired results are yet to be achieved with respect to increased volumes, values, and product innovation. As you say the investor base is stagnant and unless you increase this base with good financial knowledge then derivatives trading will not grow. Whatever happened to the G20 agenda in 2009 of an OTC Derivative Markets Reform with goals such as over-the-counter derivatives trades through electronic trading platforms or trading venues? The PML-N made bold claims in its 2013 manifesto. How many of those promises did it keep? This labour force works under immense pressure. The dishes are a symbol of shared work, of living a life together that reflects mutual respect rather than fear.
It is inexcusable the way political parties came together to defend the controversial change in poll laws. The PTI’s disgruntled lot tends to mess with the party’s chances. The Authority’ on Price Action Trading. In 2016, Nial won the Million Dollar Trader Competition. How long does it take to become profitable?
What does a trader need to do to become profitable? What does a trader need to DO to become profitable? This is a far more important and practical question to ask than the question in the title of this article. HOW to become a profitable trader. If you don’t know how to trade the market properly, you of course will never make money trading it. Therefore, what you need to do to become profitable is first learn how to trade properly. What does it take to become a profitable trader?