Cash-Settled Futures (CSF)

What are Cash-Settled Futures (CSF)?

A futures contract is an agreement between two parties to buy (long) or sell (short) the underlying shares on a certain future date at a pre-determined futures price. There are two types of futures:

• Deliverable Futures Contract (DFC)
• Cash-Settled Futures (CSF)

In CSF, at expiry, **only the difference** between the futures price and the final settlement (closing Ready price) is settled in cash. No delivery. No physical handover.

CSF Contract at PSX — Features & Description

• No Physical Delivery Hassle
• Higher Liquidity & Flexibility
• Reduced Settlement Risk
• Lower Costs
• Daily Mark-to-Market (MtM) Settlement
• 100% MtM profit distributed at T+1
• Short-selling allowed with no limits
• Leverage enables magnified exposure

CSF offers the opportunity to maximize exposure and profit using leverage.

CSF Contract Specifications

Contract Multiplier	500 shares (adjustable for corporate actions)
Listing Date	First trading day after last Friday of each month
Listing Price	Theoretical price based on underlying close price, KIBOR, days to maturity, spread
Maturities	Spot month, next two months (30, 60, 90 days)
Lot Size	1 contract
Daily Settlement Price	VWAP in CSF market or theoretical price
Minimum Fluctuation	PKR 0.01
Circuit Breaker	PKR 1 or 10%, whichever is higher
Expiration Date	Last Friday of the month
Final Settlement Price	Underlying’s Ready market closing price
Final Settlement	Cash settlement @ T+1
Symbol Format	ABC-CDEC or ABC-CDECN1 (if adjusted)

CSF Eligible Symbols

82 symbols qualify for CSF. 16 are unique and not available under DFC.

List:

ACPL, AICL, AIRLINK, AKBL, ANL, ATRL, AVN, BAFL, BAHL, BBFL, BFAGRO, BFBIO, BIPL, BNL, BOP, CNERGY, CPHL, CSAP, DGKC, DOL, EFERT, ENGROH, EPCL, EPQL, FABL, FATIMA, FCCL, FCEPL, FCL, FFC, FFL, GAL, GATM, GCIL, GGL, GHNI, GLAXO, GTYR, GWLC, HBL, HCAR, HUBC, IMAGE, KAPCO, KEL, LOADS, MCB, MEBL, MLCF, MTL, MUGHAL, NATF, NBP, NETSOL, NML, OCTOPUS, OGDC, PACE, PAEL, PIBTL, POL, POWER, PPL, PREMA, PRL, PSO, PTC, SAZEW, SEARL, SLGL, SPEL, TBL, TELE, THCCL, TOMCL, TPLP, TREET, TRG, UBL, UNITY, WAVES, ZAL.

PSX reviews & updates this list quarterly.

The Edge of Cash-Settled Futures

• Profit in BOTH bull and bear markets
• Unlimited short-selling
• Daily Mark-to-Market with T+1 profit credit
• Portfolio hedging and risk management
• Leverage effect increases exposure

Corporate Action Adjustment

CSF contracts are adjusted by the Exchange using the **Ratio Methodology** (international standard). This ensures:

• Adjusted price
• Adjusted contract multiplier
• Exposure unchanged (excluding dividend tax)

Example: 50% Dividend

Before Adjustment	After Adjustment
Cum Price: 107.80	Ex Price: 102.93
Multiplier: 500	Adjusted Multiplier: 520
Exposure: 53,900	Exposure: 53,523.6

Chance of Hedging Position Through CSF

Example:

Investor buys 500 shares of ABC @ 80. Price falls to 60 → 25% loss.

To hedge, investor shorts 1 CSF contract at 81 → Gain = (81 - 60) × 500 = 10,500 (26% gain)

Profit Simulation — Long & Short

Long Position

• ABC-CDEC Price = 502
• Contract Multiplier = 500
• Margin = 25%
• Capital Required = 62,750
• If price rises to 550 → Profit = 24,000

Short Position

• ABC-CDEC Price = 502
• Margin = 25%
• If price falls to 450 → Profit = 26,000

FAQs

• Who can trade CSF? Anyone with a trading account.
• Do I need shares to short? No, short-selling is allowed.
• Are CSF holders eligible for dividends? No — contracts are adjusted instead.
• What happens on expiry? Profit/loss is settled at T+1.
• Can CSF be traded intraday? Yes, same-day buy/sell allowed.
• Is it risky? Yes — leverage magnifies losses too.

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