Bangladesh Securities and Exchange Commission has planned to introduce commodity exchange and a clearing corporation after the completion of all the process of demutualisation of Dhaka and Chittagong stock exchanges, BSEC officials said. Commodity exchange is a process for buying and selling commodities for future delivery, while clearing corporation is an organisation associated with an exchange to handle the confirmation, settlement and delivery of transactions, fulfilling the main obligation of ensuring transactions being made in a prompt and efficient manner.
For introducing commodity exchange clearing corporation is mandatory.
Following an amendment to the Securities and Exchange Ordinance, the BSEC was empowered as the sole authority to allow any entity or exchange to introduce commodity exchange service.
The BSEC, however, is yet to allow any organisation to conduct or run commodity exchange service as the regulator is yet to formulate rules and regulations to run the services.
‘Introducing commodity exchange service will be our immediate next target after we complete the demutualisation process successfully as part of our prime agenda to bring transparency in capital market functioning,’ the BSEC official said.
‘Commodity exchange will increase the depth of our capital market as like the other developed markets of the world,’ he said.
But, introducing commodity exchange will require a huge field and paper work as well, the official said.
The pre-study for introducing commodity exchange will include feasibility study, infrastructure requirements and existing infrastructure, rules and regulations of other stock markets, potential investors and investment requirements for the commodity exchange, he said.
The whole process might require at least a year to allow any organisation for such business, the high official said.
If the existing platforms of the bourses are capable to conduct such transactions, they might establish such exchange in association with other potential investors, he said.
Potential investors of the commodity exchange services said investments in infrastructure and warehouse developments for preserving goods would require huge investments.
The BSEC, as part of precondition of getting ‘A’ category membership of International Organisation of Securities Commissions, an association of organisations that regulate the world’s securities and futures markets, included the authority in its ordinance to allow commodity exchange.
Earlier in December last year the BSEC disallowed Bangladesh Jute and Commodity Exchange and Popular Jute Exchange Limited to scrap ‘commodity exchange’ from their names as the regulator was then not prepared to allow them for conducting such services.
While, the Dhaka and Chittagong stock exchanges in August last year signed a memorandum of understanding for setting up a joint clearing corporation for smooth transaction in the stock market and payment for derivative instruments.
-With New Age input
