Bangladesh to get Commodity Exchange market

Bangladesh, for the first time ever, is getting a Commodity Exchange market – where different products are traded like shares. The Bangladesh Securities and Exchange Commission on Thursday gave primary approval to the Chittagong Stock Exchange (CSE) for establishing this exchange, in response to an application previously submitted by the CSE in this regard.

A key difference between two types of exchanges is that a commodity exchange is an exchange where commodities are traded, whereas a stock exchange is an exchange where stock brokers and investors buy or sell stocks, bonds, and other securities.

The commission has also asked the CSE to fulfill six conditions. BSEC Assistant Director Mohammded Minhaz Bin Selim, who signed the approval letter, mentioned that the CSE will have to acquire infrastructural facilities and develop other capabilities before commencing full-fledged operations.

These are – ensuring measures for commodity quality assurance, registered facilities for warehousing, storing and transfer of commodities, and setting up a regulatory body for such activities.

Besides, the CSE will also have to ensure awareness programmes for market participants, appropriate pricing, control measures to ensure consumer rights, collecting appropriate data on commodities for the purpose of assessment and management of overall risk.

The regulator has been receiving suggestions from various groups and experts for launching a commodity exchange for some time. In a recent discussion held to mark the World Investment Week, BSEC Commissioner Dr Shaikh Shamsuddin Ahmed had highlighted its importance.

Commodity exchange markets are very popular all over the world. Various types of consumer goods are traded in these markets, including valuables such as gold. Market insiders say if this market is introduced in Bangladesh, it will help curb capital flight.