KARACHI, Oct 23 (Focus Pakistan) — Pakistan’s stock exchange wants investors to trade options on individual shares, and has put draft rules out for comment nine years after it first floated the idea.
Comments are due by Nov. 5, Pakistan Stock Exchange (PSX) said in notice PSX/N-1294 on Oct. 22. The Securities and Exchange Commission of Pakistan (SECP) has the final say on any rule change.
Investors could use the contracts to protect a holding or to bet on a stock’s direction without putting up the full price of the shares. Most trading on the Karachi bourse today happens in the ready market or in futures.
Under the draft, PSX would pick eligible stocks from companies that already qualify for deliverable futures contracts. Call and put options would both trade, in lots of 500 shares unless the exchange sets a different size.
The contracts would follow the European model, so holders could exercise them only on expiry. Exercised contracts would settle in shares, not cash, one working day later. Buyers would hand over the full premium when they trade.
With a call, the holder locks in a price at which he can buy the stock. A put gives the right to sell. The buyer’s maximum loss equals the premium paid. The seller of an uncovered call faces open-ended losses if the share price climbs.
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The draft marks the latest step in a long-running effort. SECP approved rules for cash-settled index options at the then Karachi Stock Exchange in 2016. At the time, the regulator said it would assess single-stock contracts once index options launched.
In 2017, PSX said it planned to introduce single-stock options in the second half of that year. The exchange chose instead to deepen trading in single-stock futures first.
PSX notified a full rulebook for single-stock options in September 2021 with SECP’s prior approval. It set a 500-share contract multiplier and European-style exercise.
In November 2025, the exchange held a consultation session on the product with the National Clearing Company of Pakistan (NCCPL) and the Pakistan Securities Brokers Association.
PSX has not announced a launch date.
The proposal comes as the benchmark KSE-100 index trades near 166,000 points. The index lost 453.63 points, or 0.27%, on Oct. 19 to finish at 165,966.09.
For a fund sitting on a big block of bank or fertiliser shares, a put option offers a way to limit the damage from a sell-off while keeping the stock. Retail traders could also get access, though eligibility rules and safeguards would apply.
Liquidity will decide whether any of this works. Someone has to keep quoting prices through the day. NCCPL would have to collect margin from option writers. And if too few traders turn up, investors trying to get out of a position could take a heavy hit.
Physical settlement also raises the capital bar. An investor who exercises a call must pay for the shares within a day. One who exercises a put must deliver them.
Once the comment period closes, PSX will review the feedback and obtain internal approvals. It will then submit the final proposal to SECP, in line with the exchange’s rule-making process.
