2024-03-20 00:16:47
Commodity exchange platform is a new product for the financial market of the country. The process of launching the country’s first commodity exchange has been taken a long way by the entrepreneurial organization Chittagong Stock Exchange (CSE) and the regulatory body Bangladesh Securities and Exchange Commission (BSEC). As a result, CSE is finally going to get registration certificate as per ‘Bangladesh Securities and Exchange Commission (Commodity Exchange) Rules 2023’. On Wednesday (March 20), the BSEC will formally grant the certificate of registration to CSE as a commodity exchange.
CSE sources confirmed this information to RisingBD on Tuesday (March 19). This has also been confirmed from BSEC.
State Minister for Commerce Ahsanul Islam Titu will be present as the chief guest at the certificate awarding ceremony under the chairmanship of BSEC Chairman Professor Shibli Rubaiyat-ul-Islam. The former governor of Bangladesh Bank will be present as a special guest. Mohammad Farasuddin Ahmed and Bangladesh Insurance Association (BIA) President Sheikh Kabir Hossain. At this time, CSE Chairman Asif Ibrahim, Managing Director M Saifur Rahman Majumder and others will be present.
Those concerned say that considering a large market like Bangladesh, there is a lot of potential for commodity exchange. A new level of development will be added to the country’s economy through the launch of commodity exchange. When the commodity exchange is launched, everyone will get an idea about the price of the product in the international and domestic market. Then no one will be able to import and export by under or over invoicing (under or over invoicing). As a result, money laundering and revenue evasion will be stopped. After all, new horizons will open in the country’s economic development. This is one of the major achievements of BSEC, according to the capital market.
In continuation of this, BSEC has already made rules for fair, efficient and transparent trading of commodity derivatives market and derivatives products and published them in the form of gazette. CSE applied for registration of the exchange with the Commission. BSEC will give the certificate to CSE after considering the overall aspects.
Those concerned said that minerals and agricultural products will mainly be bought and sold in the commodity exchange. Initially, preparations are underway to list three mineral products. The sale of the listed products will be done either through cash settlement or non-delivery cash settlement.
A commodity exchange is much like a stock exchange or share trading market. In the stock market many companies sell shares to raise capital and are bought by a large number of investors. So are commodity exchanges. However, here, not shares, but commodities are traded. This commodity trading is not like normal wholesale market. In large wholesale shops (wholesalers call mokams), buyers and sellers bargain directly for goods. But, commodity exchange does not allow buyers and sellers to directly trade products. Commodity certificates issued by the seller are sold much like shares. By seeing the quality certificate, the buyer is sure about the quality of the product and also buys shares from other countries. Commodity exchange like stock market also has to buy and sell products through specific and approved brokers. Must have an account in the name of the organization. It’s just like buying shares from the stock market. However, in this market the purchased certificate is sold to someone else without taking delivery of the product. Much like delivery order or DO purchase on Millgate.
It is a legal process market that facilitates buying and selling of commodities or products and related investment products by setting and applying rules or procedures. Commodity exchanges or futures markets facilitate competitive pricing between producers and buyers of commodities.
The Bangladesh Securities and Exchange Commission (Commodity Exchange) Rules 2023 have proposed a minimum paid-up capital of Tk 400 crore for establishing a commodity exchange. 75 percent of paid up capital should always be kept as net assets. As per the Companies Act 1994, a Commodity Exchange must be a Public Limited Company.
Commodity exchanges will have strategic partners, who will invest as institutional investors. This strategic partner can invest from a minimum of 10 to a maximum of 25 percent of the total paid-up capital of the commodity exchange. According to the CIB report, the directors or shareholders can hold a minimum of 5 percent or more shares of the commodity exchange unless the bank is insolvent. No director, officer or employee of this exchange shall be guilty of fraud, breach of trust or any criminal offence. Subject to the fulfillment of these conditions, an application for establishment of commodity exchange should be made to the commission through payment order, bank draft or electronic fund transfer of Tk 10 lakh.
At the establishment of the commodity exchange, seven of the 13-member board of directors will be independent directors. One of those independent directors will be elected as Chairman.
According to the information, the Chittagong Stock Exchange (CSE) authority has taken the initiative to establish a commodity exchange for the first time in the country. The BSEC approved the opening of commodity exchanges in September 2021 subject to several conditions.
For this, CSE signed a Memorandum of Understanding (MoU) with India’s Multi Commodity Exchange (MCX) as a consultant. After the agreement, CAC has also conducted several awareness trainings with its own technical representatives in collaboration with MCX.
Meanwhile, Bashundhara Group, one of the country’s leading industrial conglomerates, has come into strategic ownership of CSE by buying one-fourth stake last year.