Bangladesh Securities and Exchange Commission (BSEC) Commissioner said that our role should change according to the changes in the economy. Abdul Halim. He said, I am hopeful that derivatives products will be launched by 2025. Meanwhile, CCBL (Central Counterparty Bangladesh Limited) will start its operations.
Regarding the current situation of the stock market, he said that the market will not remain in this condition with the initiatives taken in the stock market. It will be great if the plan is implemented. No one from outside will come and improve the market. It is up to those who are here to find out what the problem is, and what can be done. Only then will the market be good.
He said these things while speaking as the chief guest at a workshop titled ‘Financial Derivatives of Exchange Traded Platform-M’ organized by Dhaka Stock Exchange (DSE). DBA President Saiful Islam was the special guest.
The two-day (May 2 to 3) workshop was held at BRAC CDM, Gazipur with the participation of top executives from the stock market regulatory body Bangladesh Securities and Exchange Commission (BSEC), CDBL, CCBL, merchant banks and asset management companies.
Abdul Halim said, today’s workshop on derivatives is not the end. There are many more programs to be done with it. Many countries around the world have been operating in this regard for a long time. Therefore, those who will work on this issue must bring education from those countries. Market will not grow with equity alone. More variety of products is needed to grow the market. CCBL has some challenges. It has already started working on derivatives and CSE is working on commodities. CSE Commodities is hopeful of launching by October 2024.
He said, traditional thinking will not work. You have to think a little differently. A lot has changed in the market. Workshops just for the sake of doing won’t do. You have to think we’ll do it. In that case, I will not see the problem of CCBL, the major shareholder of CCBL is DSE. If necessary, inform them of the problem. If necessary, do a separate workshop on them.
Special guest DSE Brokers Association President Saiful Islam said that the regulatory bodies are lagging behind in bringing product differentiation in the stock market of the country. However, I thank Bangladesh Securities and Exchange Commission and Dhaka Stock Exchange for organizing this today. DSEK should come forward in this regard. Because if DSE doesn’t work then BSEC can’t do anything.
He said, there was a discussion long ago to differentiate the product. But nothing worked. That’s why there is no genius in this market. Because those who come, they don’t get any new products to work with here. Our market is mainly equity oriented. And currently there are only 400 companies in the market, whereas the number of companies in Bangladesh is more than 40 thousand. Among the 18 crore people of the country, the number of investors is only 17 lakh. As a result, BSEC and DSE should focus on these things, where is the problem? In order to improve the market, the product should be differentiated.
He also said that we have been working on bonds in our market for a long time. But the matter is still not well executed. And one of the reasons is the tax issue. We have been talking about BSEC and NBR sitting together to solve this issue. Besides, even after five years of CCBL, the work has not yet started. And product differentiation without CCBL is very challenging. At present, DSE holds the majority share of CCBILL. Besides, there are more shareholders. They can take this matter forward. Besides, there are several other factors, which need to be worked on to differentiate the product.
Saiful Islam said, no one gets the opportunity to invest because there are less products in our market. When someone makes a profit in the shares, they sell and take the money. Because he has no new investment opportunities. If there were different types of products today, then they would sell shares and invest in other products. So there is no alternative to product differentiation to keep the market good. You should start working on these.
The workshop was conducted by the general manager of the market development department of DSE. Shamiul Islam. Welcome speech was given by the managing director of DSE. ATM Tarikuzzaman. He said DSEO is keen to diversify its products. We are working in unison with BSEC to formulate rules/regulations and making necessary preparations to launch derivatives market very soon.
ATM Tarikuzzaman said that financial sector derivatives products are very timely for Bangladesh. Derivatives products are highly sophisticated products and effective risk mitigation tools, which play a positive role in the economy by providing greater efficiency in stock market liquidity and risk management.
He also said that most of the developed stock exchanges in the world have various types of derivatives products. The size of the derivatives market is many times larger than that of the equity market. Dhaka Stock Exchange is working to keep pace with its neighboring exchanges in terms of product diversification to attract domestic and foreign investors in the country’s economic development. Apart from this, several other legal, technical and infrastructure issues have to be done.
Executive Director of BSEC. Anwarul Islam said, when we started working, our market was very small. At that time there was an opportunity to see many big international markets, compared to that this market was nothing. At that time I thought and hoped that our stock market would grow. But not grown up yet. The market is still in its infancy. The market is in this condition because our market is less product, equity oriented market.
He said, there are no new areas of investment and no new products. As a result, domestic and foreign investors face problems in investing in the country. Now Dhaka Stock Exchange and Bangladesh Securities and Exchange Commission have jointly launched derivatives products. This training program is part of that.
DSE Deputy General Manager Mohammad Shafiqul Islam Bhuiyan presented the keynote at the workshop. In the original article he discussed Types of Derivatives, Significance and Impact of Derivatives Market, Reasons for Growth of Global Derivatives Market, Features of Exchange Traded Derivatives, Types of Settlement in Derivatives Market, Difference Between Forward and Futures, Limitations of Forward Contracts, Limitations of Futures Contracts, Different Terms in Futures Trading, Specifications of Futures Contracts , Difference between futures and options, various aspects of options trading, advantages of options trading, option pricing methods, specification of option contracts, options trading techniques, use of derivatives, hedging and its types, fundamental risk, cross hedge and associated risks, limitations of hedging , parties involved in futures and options trading on exchange platforms, derivatives trading process, stock and index selection criteria for futures and options, various types of corporate action management, risk management, margin management, initial margin, maintenance margin and margin call, payment of margin, various types Clearing and settlement, settlement process and overall preparation for launching exchange derivatives.
Dhaka University Finance Department Professor Dr. Mahmud Osman Imam talks about options trading strategizing, return maximization strategy, covered call, value protection strategy, bull, bear and butterfly trade, long and short strangle, option pricing methods, black-souls model in discussion on futures and options. Also Binomial Tree Model, Control Variete Technique, Futures Pricing, Futures Contracts, Pricing Forwards, Stock Indices, Index Arbitrage, Pricing Forwards vs. Futures, Long and Short Positions, Hedging Principal, Short and Long Hedge, Perfect Hedge, Basis and Basis Rex, Hedge focuses on forward vs futures and optimal hedge ratio.
