The securities regulator has asked Chittagong Stock Exchange (CSE) to ensure infrastructure facilities and capacity, among others, before commencing full-fledged operations at the first commodity exchange in Bangladesh.
Bangladesh Securities and Exchange Commission (BSEC) on Thursday delivered its instructions through a primary consent letter issued to the port-city bourse.
In its letter, the securities regulator has asked the CSE to ensure commodity quality assurance measures and warehouse facility before starting operations at the commodity exchange.
A commodity exchange is a legal entity that determines and enforces rules and procedures for trading standardised commodity contracts and related investment products.
Most of the commodity markets around the world conduct trades of agricultural products and other raw materials such as wheat, barley, sugar, maize, cotton, cocoa, coffee, milk products, pork bellies, oil, and metals.
Asked, Dr. Shaikh Shamsuddin Ahmed, a BSEC commissioner, said it is very tough to commence trading at a commodity exchange due to a lack of experience.
"We are encouraging the CSE to take necessary preparations for commodity exchange. But they will have to prove their capacity before commencing operations at the exchange," said Mr. Ahmed.
He said the securities regulator will have to assess the CSE's capacity before giving final approval to commence operations at the commodity exchange.
As per the BSEC's primary consent letter, the CSE will have to ensure a registered warehouse facility for warehousing, storing and transfer of commodity and setting up of regulatory body for such activities.
Apart from conducting awareness programmes for market participants, the CSE is required to ensure appropriate pricing and control measures to ensure consumers' rights.
Asked, the CSE's managing director (current charge) Md. Ghulam Faruque said they had sought a primary consent letter from the BSEC to take necessary preparations for establishing a commodity exchange.
"Now we will complete necessary preparation for commodity exchange in line with the regulatory instruction," Mr. Faruque said.
He said the CSE will appoint consultant within November this year for the purpose of conducting a feasibility study for commodity exchange.
"A joint team comprising the representatives of the securities regulator and the BSEC will go to India in November to visit commodity exchange along with talking to consultants," said the CSE's managing director.
He said different products such as cotton, tea, gold, rice, potato, onion and jute are under CSE's consideration of trading at the commodity exchange.
"After getting the feasibility study report, the CSE will select a product portfolio through which the trading at the commodity exchange can be started," said Mr. Faruque.
