The Bangladesh Securities and Exchange Commission on Tuesday formed three separate committees with the task of preparing framework for establishing a clearing corporation, a derivative market and a commodity market. A BSEC news release said the committees would submit reports considering different issues related to formation of clearing corporation, derivative and commodity markets.
A commission meeting presided over by BSEC chairman M Khairul Hossain made the decision on the formation of the committees.
A BSEC high official said that after the successful completion of the demutualisation of the stock exchanges, amendments to the BSEC ordinance and to some other securities-related rules, formation of a clearing corporation, derivative and commodity markets has become a priority task for the stock market regulator.
‘When BSEC officials visited prime minister Sheikh Hasina last month, she also asked the commission to focus on the issues,’ he said.
He said, ‘For the expansion of the capital market we have to move forward to introduce derivative and commodity markets. To introduce the markets we need to have an independent clearing corporation.’
Formation of the committees is the first step of the commission to implement the targets, he said.
The derivatives market is the financial market for derivatives, financial instruments like futures contracts or options, which are derived from other forms of assets, while the commodity market is a market that trades in primary rather than manufactured products.
Soft commodities are agricultural products such as wheat, coffee, cocoa and sugar. Hard commodities are mined, such as gold, rubber and oil.
A clearing corporation, also known as clearing firm or clearing house, plays a key role in ensuring executed trades are settled within a specified period of time in an efficient manner.
The committee formed to establish a clearing corporation is headed by BSEC executive director Saifur Rahman. BSEC executive director
Mahbubul Alam and director Prodip Kumar Basak are the other members of the committee, a BSEC news release said.
BSEC executive director Farhad Ahmed leads the committee formed to establish a derivative market. BSEC directors Mohammad Rezaul Karim and Farhana Faruqui are the other members of the committee.
BSEC executive director Mahbubul Alam is the head of the committee on the commodity market. Directors Mohammad Jahangir Alam and Mansur Rahman are the members.
The timeline to submit reports by the committees will be mentioned on the office orders to be issued later, BSEC executive director Saifur Rahman said.
A BSEC commissioner earlier had told New Age said that the commission would finalise the procedures for forming a clearing corporation, derivative and commodity markets within next one year.
The BSEC as part of a precondition of getting ‘A’ category membership of the International Organisation of Securities Commissions, an association of organisations that regulate the world’s securities and futures markets, has been bestowed by the parliament with the authority of allowing 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.
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
