CSF returns, interest doesn’t

December 02, 2025 (MLN): The long-forgotten Cash-Settled Futures (CSF) made its way back onto the trading board, a product celebrated across global markets but treated with suspicion at home.

The launch held a sense of déjà vu. Traders glanced at the screen, waited for activity, and then moved on as if nothing new had arrived.

Within two days, barely 130,000 shares changed hands across six scripts, with just 83,000 traded today, an underwhelming debut for a product that once promised modern market reform, clearly showing a lack of interest.

CSF first came to life back in 2007, struggled in silence, and finally disappeared in 2021.

Four years later, it returned with hope of a fresh start, yet the market once again greeted it with indifference.

What cash settlement mean?

A cash-settled contract ends with a simple payment of profit or loss instead of physical delivery of shares. This method helps investors reduce costs and avoid the operational pressure of handling the actual asset.

In many countries, this type of contract supports hedging, arbitrage, and leveraged positions.

On paper, PSX should benefit from the same strength, but several practical hurdles keep investors away.

To enhance liquidity and provide smoother entry and exit for traders, the PSX has signed an agreement with JS Global Capital Ltd. as the official market maker for the CSF market, effective December 1, 2025.

Margins and trading features

The CSF market allows traders to use 50% cash and 50% securities as margin, offering more flexibility compared to the full cash-only requirement previously assumed.

The Value-at-Risk (VaR) margins are around 4–5% lower than those of Deliverable Futures Contracts (DFC) and ready markets.

Unlike DFC, no basic deposit is required for CSF, and trading fees are waived by PSX and NCCPL for the first three months.

Profits are settled 100% on a mark-to-market basis at T+1, providing faster liquidity for investors.

In addition, corporate actions do not break contracts; instead, contract multipliers and prices are adjusted to maintain exposure, avoiding the hassle of rolling positions into new contracts.

These features were implemented after consultation with the Pakistan Stock Brokers Association (PSBA) and market participants, ensuring the product aligns with market needs.

T+30 crisis is still alive

PSX is now shifting from T+5 to T+2 and plans to move to T+1 by February 2026. This shift is a major step toward modern standards.

 However, at the same time, the exchange keeps the T+30 Deliverable Futures Contract open. This contract structure has created market troubles for almost twenty years.

Each rollover week brings uncertainty. Financers often pull funds at sensitive moments.

Markets fall sharply. Many bearish spells start with roll-over panic. When long positions rise, investors worry:
“Will my position shift to the next contract, or will I face forced selling?”

This repeated cycle continues because the T+30 model remains untouched.

CSF could be the solution

The CSF market, supported by flexible margins and an active market maker, could modernize trading and reduce repeated liquidity stress.

However, progress depends on the gradual discontinuation of T+30 settlement, which has troubled Pakistan’s markets for decades.

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