IFMP Commodity Brokers Certification (CBC), Pakistan key terms

A firm or individual registered with the regulator to buy and sell commodity futures contracts on behalf of clients, earning brokerage and handling client margins and orders.

The licensed electronic commodity futures exchange in Pakistan where brokers execute trades in gold, silver, crude oil, rice and other approved contracts under regulatory oversight.

The statutory regulator that licenses commodity brokers, approves exchange rules and conducts inspections to protect investors in Pakistan's commodity markets.

A standardized, exchange-traded agreement to buy or sell a specified quantity of a commodity at a set price on a future date, settled through a clearing house.

An agreement for immediate delivery and payment of a commodity, as opposed to a deferred futures position; on PMEX spot-month contracts settle within a short defined period.

The exchange-defined terms of a futures contract, including commodity grade, lot size, quotation unit, tick size, delivery months and last trading day.

The fixed quantity of a commodity represented by one futures contract, such as a set number of grams of gold or barrels of crude oil, used to calculate contract value.

The minimum permitted price movement for a futures contract, set by the exchange; profit and loss are calculated as the number of ticks moved times tick value.

The minimum collateral a client must deposit before opening a futures position, set by the exchange or broker as a percentage of contract value.

The minimum equity level a client must keep in the trading account after opening a position; falling below it triggers a margin call or forced liquidation.

A demand by the broker for additional funds or collateral when account equity drops below the required maintenance level, usually to be met within a stated deadline.

The daily revaluation of open positions at the settlement price, with gains credited and losses debited to the account so that obligations stay current.

Funds paid or received daily to cover losses or gains arising from mark-to-market movements on open futures positions, separate from initial margin.

The central counterparty that guarantees performance of every trade, nets obligations between members and manages the default fund and margin collection.

The legal process by which the clearing house becomes buyer to every seller and seller to every buyer, replacing the original counterparties and removing counterparty credit risk.

The risk that the other side of a trade fails to pay or deliver as agreed; in exchange-traded futures this is largely absorbed by the clearing house.

A futures contract that has been bought or sold but not yet offset by an opposite trade or settled by delivery, and which remains exposed to market movement.

A transaction that closes an existing futures position by taking the opposite side in the same contract, avoiding physical delivery.

The total number of outstanding futures contracts that have not been closed or delivered, used as a measure of market participation and liquidity.

The official daily price determined by the exchange, typically from the closing range, used to mark positions to market and calculate margin obligations.

A formal communication from a seller declaring intention to deliver the physical commodity against an open short futures position, processed under exchange delivery rules.

The difference between the local cash price of a commodity and the futures price for the relevant delivery month, reflecting transport, storage and quality factors.

A market condition where futures prices for later delivery months are higher than nearby prices, usually reflecting storage and financing costs.

A market condition where nearby futures prices exceed later delivery prices, often signalling tight current supply or strong immediate demand.

Taking an offsetting futures position to reduce price risk in a physical commodity exposure, such as a rice miller selling futures against inventory.

Trading futures to profit from anticipated price changes rather than to offset a physical exposure, thereby providing liquidity to hedgers.

The mandatory process of identifying a client, verifying identity and address, and assessing suitability before opening a trading account and during the relationship.

The framework of laws, procedures and monitoring a broker applies to detect, report and prevent the use of trading accounts to launder illicit funds.

A confidential report filed with the financial monitoring unit when a broker detects activity that may indicate money laundering or terrorist financing.

The documented onboarding process covering account agreement, risk disclosure, KYC verification, suitability assessment and margin funding before the first trade.

A document the client must read and sign acknowledging that futures trading involves leverage, possible loss exceeding deposits and forced liquidation risk.

The fee a broker charges per trade or per contract, disclosed in the tariff and deducted from the client's account; it must not be confused with margin.

Client funds held by the broker and segregated from the broker's own money, used solely to meet margin requirements and settlement obligations of that client.

The broker's closure of client positions without further consent when margin shortfalls are not met, to limit losses and protect the broker and clearing house.

The risk that a position cannot be closed quickly at a fair price because of thin trading volume or a wide bid-ask spread in that contract.

An instruction to buy or sell immediately at the best available price, offering speed of execution but no control over the final price.

An instruction to buy at or below a specified price, or sell at or above it, giving price control but no guarantee that the order will execute.

An order that becomes a market order once a specified trigger price is reached, commonly used to limit losses on an open position.

The designated person at a broker responsible for monitoring adherence to SECP and exchange rules, handling client complaints and reporting breaches to management and the regulator.