Futures Market Act, 2016

What it is

The Futures Market Act, 2016 separated the regulation of futures trading from the general securities law and gave it a statute of its own. It provides the licensing framework for futures exchanges, futures clearing houses, futures brokers and futures advisers, all licensed and supervised by the Securities and Exchange Commission of Pakistan. Trading in futures contracts outside a licensed exchange is prohibited except as the Act or the SECP permits, and the Act carries its own market-abuse and offence provisions for manipulation and false trading in futures [the applicable sections and penalty levels TO BE VERIFIED BY REVIEWING LAWYER]. Together with the Securities Act, 2015, it completed the replacement of the Securities and Exchange Ordinance, 1969 [the repeal mechanics TO BE VERIFIED BY REVIEWING LAWYER].

In practice, the licensed market is the Pakistan Mercantile Exchange, which lists commodity and financial futures — gold and other metals, currency pairs and index products among them — cleared through its clearing arrangements. The operative detail sits in subordinate instruments made under the Act, principally the Futures Exchanges (Licensing and Operations) Regulations, 2017 and the Futures Brokers (Licensing and Operations) Regulations, 2018, as amended, together with the exchange's own rulebook.

What changed

The Act is a young statute and its text has seen little movement; whether any amending Act has altered it should be confirmed against the current statute book [TO BE VERIFIED BY REVIEWING LAWYER]. The activity has been regulatory and enforcement-led. The SECP has repeatedly and publicly warned against unlicensed online platforms offering forex, commodity and derivative trading to Pakistani retail investors, and has pursued enforcement against such operations — this is the Act's most active frontier. Product scope has also widened at the exchange level as PMEX has added contracts. One question to watch as of mid-2026 is the boundary with the new virtual-assets regime introduced in 2025: derivative products referencing digital assets sit at the seam between the two frameworks, and the allocation of regulatory responsibility should be checked before any such product is offered [TO BE VERIFIED BY REVIEWING LAWYER].

Who is affected

The Act governs the Pakistan Mercantile Exchange and every licensed futures broker and adviser, together with their sponsors, directors and compliance officers. It reaches corporates that hedge commodity or currency exposure through exchange-traded contracts, and retail investors trading through PMEX brokers. It also reaches — through its prohibitions — anyone marketing futures, forex or contract-for-difference trading to persons in Pakistan without a licence, including offshore platforms soliciting Pakistani customers, whose local agents and promoters carry personal exposure.

What to do

Before offering any product that allows a customer to take a leveraged or deferred position on a price, test it against the Act's definition of a futures contract; if it falls within the definition, an unlicensed offering is an offence, not a compliance gap. Businesses intending to broker or advise on futures should obtain the relevant SECP licence and maintain the capital, segregation and conduct requirements of the 2018 broker regulations. Corporates hedging through PMEX should document the commercial rationale and confirm the broker's licence status, which the SECP publishes. Investors solicited by online trading platforms should verify the platform against the SECP's licensed list and its public warnings before placing funds, and anyone approached by the SECP in connection with an unlicensed platform should take advice before responding.