Chittagong Stock Exchange (CSE) has been granted commodity exchange certificate by Bangladesh Securities and Exchange Commission (BSEC), the regulatory body of the stock market. This certificate of registration has been issued as per ‘Bangladesh Securities and Exchange Commission (Commodity Exchange) Rules 2023’.
This registration certificate was given through a ceremony organized at the BSEC office on Wednesday (March 20). State Minister for Commerce Ahsanul Islam Titu was the chief guest on the occasion.
It was presided over by BSEC Chairman Professor Shibli Rubaiyat-ul-Islam. Bangladesh Insurance Association (BIA) President Sheikh Kabir Hossain, CSE Chairman Asif Ibrahim and others were also present in the event.
Speaking as the chief guest at the event, the state minister for commerce said, “We had long thought to do it (commodity exchange) in Bangladesh.” Unfortunately, the truth is that when I took the initiative, our government, our ministry rejected it on the pretext that the market would not be stable.
CSE chairman Afis Ibrahim said, we hope to start the commodity exchange activities this year.
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 investors. So are commodity exchanges.
But here, not shares, but products are traded. This commodity trading is not like normal wholesale market. In large wholesale shops (called mokams by wholesalers) 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, certificates purchased without taking delivery of the product in this market are sold to someone else. Much like delivery order or DO purchase on Millgate.
It is a legal process market that facilitates the buying and selling of commodities and related investment products by applying rules or procedures. Commodity exchanges or futures markets facilitate competitive pricing between producers and buyers of commodities.
In the meantime, BSEC has gazetted the rules for fair, efficient and transparent trading of commodity derivatives market and derivatives products. Commodity exchanges mainly deal with minerals and agricultural commodities. Initially, preparations are underway to list three mineral products. The sale of the listed products will be either through cash settlement or non-delivery cash settlement.
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 the 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 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 establishing a commodity exchange should be made to the Commission through a payment order of 10 lakh rupees, bank draft or electronic fund transfer.
At the establishment of the commodity exchange, seven of the 13-member board of directors will be independent directors. One of those individual directors will be elected as Chairman.
MAS/KSR/GKS
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