PSX proposes Single Stock Options market, seeks public feedback

October 22, 2026 (MLN): A framework to introduce and govern a Single Stock Options Contracts (SSOC) market has been proposed by the Pakistan Stock Exchange (PSX) through amendments to its Regulations and Schedule of Charges. Market participants and other interested parties can submit written comments by November 05, 2026, according to PSX notice.

Under the proposal, options will be offered on stocks selected from the pool of Deliverable Futures Contract (DFC) eligible stocks, covering both call and put options.

The contracts will be European style, exercisable strictly on the expiration date, and settled through delivery of the underlying security on a T+1 cycle, down from the T+2 cycle in the current regulations, as single stock options are not cash-settled.

Each lot will be one contract, with a contract size of 500 shares or any other quantity specified by PSX, adjusted proportionally for non-standardized contracts.

Contracts will be available for the spot month and the next two calendar months. They will open on the first trading day following the last Friday of the expiring month and expire on the last Friday of the expiry month, or the preceding trading day if it is a non-trading day.

At least three in-the-money, one at-the-money and three out-of-the-money contracts will remain available at all times, with a maximum of five in-the-money, one at-the-money and five out-of-the-money.

Contracts will be listed at a theoretical price calculated through the Black-Scholes model, with a tick size of Rs0.01 per underlying security. Corporate actions will be adjusted through the standard ratio method.

Brokerage commission will be the same as for the Ready and DFC markets, at a minimum of 3 paisa or 0.15%, whichever is higher.

PSX will charge a trading fee of Rs7.00 per Rs100,000 of value traded, along with a regulatory fee of Rs0.88809 and an SECP levy of Rs0.65 per Rs100,000. The same CCPF levy as other derivatives and futures markets will apply to brokers.

Among the regulatory changes, PSX will have discretion to offer contracts of 90-day or any other maturity, with monthly maturity contracts to be offered in the first phase following consultation with market participants.

At-the-money options will no longer be treated as out-of-the-money, and remaining in-the-money contracts will be automatically exercised unless exercised by the option buyer under NCCPL assignment procedures.

Premium will be payable upfront by the buyer on a T+0 basis, so no margin will apply to the buyer. The Board, with SECP approval, will also be empowered to suspend or permanently discontinue the market.

The Daily Option Settlement Price will be determined through the volume-weighted average price of trades in the last few minutes of trading, then the last few hours or the entire day if volume thresholds are not met.

A VWAP-based price must exceed the intrinsic value, failing which the Black-Scholes price will apply. The model will use a risk-free rate of KIBOR plus X% and the underlying’s historical volatility.

Comments can be sent to comments.rad@psx.com.pk or by mail to the Chief Regulatory Officer, Regulatory Affairs Division, Pakistan Stock Exchange Building, Karachi. PSX will publish relevant comments and its responses in a Response Paper after the consultation closes and the SECP approves the amendments.

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