Summary:

The country’s first commodities (CX) exchange license will be granted to the Chittagong Stock Exchange (CSE) by the Securities Commission on March 20, 2024, around four months after the guidelines were published. Shaifur Rahman Mazumdar, the Managing Director of CSE, attested to this and stated that the bourse would determine the next step upon obtaining the license. According to him, transactions on the CX should start this year once the necessary procedures are finished. The legal body that establishes and upholds the guidelines for trading in standardized commodity contracts and associated investment products is known as a CX. The exchange is unable to commit funds for things like market model specification, product selection, and IT infrastructure before obtaining the licensee. 

Context:

The legal body that establishes and upholds the guidelines for the trading of standardized commodity contracts and associated investment products is known as a commodities exchange. Bangladesh is about to start its first commodity market by 2024, although nearby nations like India, Nepal, and Pakistan have had one for a long time. In an effort to close the gap between producer and consumer prices, the CSE intended to open the nation’s first commodity exchange in 2022. The Commodity Exchange license was given to Chittagong Stock Exchange by State Minister for Commerce, Ahsanul Islam Titu through an event organized on March 20th 2024 making CSE the first-ever receiver of a Commodity Exchange License. When the commodities market is opened, the Minister suggested the Chittagong Stock market include goods such as potatoes, soybean oil, palm oil, and raw sugar. He continued that since potatoes can be preserved in cold storage, it is feasible to include them in the commodity exchange. However, the majority of our raw sugar and edible oil comes from outside. These can be incorporated into the conversation as well,” he remarked. In the upcoming days, the commodity exchange will be crucial to the nation’s industry, he added. BSEC chairman Professor Shibli Rubayat-Ul-Islam believes that commodity exchanges are essential for nations prioritizing import and export, as they reduce intermediaries’ role, benefit consumers, and resolve issues of over- and under-invoicing. He believes that Bangladesh has not yet implemented such exchanges, indicating a need for increased business efficiency. Later in 2024, Asif Ibrahim, the chairman of the CSE, intended to formally open Bangladesh’s first commodity market. “Work related to hardware and software procurement is progressing well,” he stated. “CSE is pleased to have acquired the commodity exchange license at last. It’s an accolade that fits us well,” he remarked. Three IT consultants have already been chosen by the CSE: Chella Software of India, Intellect Design of India, and MIT of Sri Lanka. These IT consultants will be appointed by the CSE upon receipt of the license. The securities regulator will receive a draft of the bourse’s CX regulations at the same time. Programs for product selection and awareness will go on in the interim. The CX’s rules were authorized by the Bangladesh Securities and Exchange Commission (BSEC) last year, and a gazette notification was published regarding it. Regulations based on the guidelines authorized for the CX are being drafted by the CSE. In 2021, the CSE received primary approval from the securities regulator to build a commodity exchange. The port city bourse formulated regulations with the assistance of an Indian expert who was hired in 2022. Crude oil, cotton, and gold will be the CX’s first products. The Port City Bourse will own a subsidiary of the CX in accordance with the requirements. It will have Tk 4 billion in paid-up capital, and 13 people will make up the board. 

Picture and Article Sources: The Financial Express &  The Daily Star