April 12, 2022:

Chittagong Stock Exchange Limited (CSE) is going to establish the first ever Commodity Exchange in Bangladesh. In this regard, CSE has signed an agreement with Multi Commodity Exchange of India Limited (MCX) - the largest Commodity Exchange of India to work as consultant. The signing ceremony with MCX was held on today 12 April 2022 at the Grand Ballroom, Radisson Blu Water Garden, Dhaka.

The signatories from both Exchanges are - Mr. Md. Ghulam Faruque, Managing Director (Acting), CSE and Mr. P. S. Raddy, Managing Director & CEO, MCX and other senior officials of the Exchanges were also present during the signing ceremony.

A commodity exchange is an organized marketplace where buyers and sellers come together to trade commodity related contracts following rules set by the exchange.

The purpose of establishing commodity exchange is to provide a centralized marketplace where commodity producers can sell their commodities to those who want to use them for manufacturing or consumption. The beauty of a commodity futures exchange is that someone like a corn farmer can lock in a price for his crops months before they are even harvested. This process increases business survival among farmers, and the exchanges always make sure there is a buyer for every seller, provided their prices meet. ​For an emerging economy like Bangladesh, the commodity market will result in reduction of post-harvest losses through price stability, improvement in commodity price risk in both locally produced and imported supplies and credit risk management, provision of a transparent and competitive price discovery mechanism, reduction in transaction and marketing costs, etc.

Commodity Exchanges serve a vital role in a growing economy by providing a structured, reliable, and efficient marketplace to trade suitable commodities for the purpose of natural commercial instruments, financing, risk management and hedging. Commodity Exchanges play an important role in the development of the ecosystem for physical market trading in emerging countries like Bangladesh. The benefits of establishing a vibrant commodity derivative and spot markets in Bangladesh are manifold. It will help the government effectively monitor the movement of prices of essential commodities and lubricate the supply chain, bringing in competitiveness and efficiency in market mechanisms which will affirm food security and an enhanced backward linkage for the export and import oriented sectors.

The authentic price discovery and efficient price risk management are the foremost outcome of the Commodity Exchange. Therefore, application of a structured market affirms the following-

1. Price Discovery
2. Price Risk Management
3. Import and Export competitiveness
4. Predictable Pricing
5. Control over unfavorable price fluctuations for farmers/producers
6. Credit accessibility
7. Improved product quality

CSE has been instrumental and keenly working for the establishment of a commodity futures exchange in Bangladesh since long. CSE has recently obtained approval from the Bangladesh Securities and Exchange Commission to move forward in establishing the first ever Commodity Exchange in Bangladesh.

The knowledge-based gap is the focal issue to be mitigated before planning to establish a prospective but ambiguous business diversification ideology like Commodity Future Exchange in Bangladesh. CSE has been searching for a suitable knowledge sharing partner and explored with its acquainted international Commodity Exchanges and sovereign consultants. E.g.- NSE India, Multi Commodity Exchange of India Limited (MCX), Bursa Malaysia, Indonesia Stock Exchange (IDX), PwC, Pride Group UAE, Russian Investment Group etc.

Considering the financial aspect, previous relationship, practical implications in the execution phase and solid cultural integration, CSE has entrusted MCX India to work as a consultant.

MCX will facilitate CSE to frame Byelaws, Rules and Regulations based on international best practices, product identification, clearing and settlement methods, trading and surveillance systems and warehousing, delivery infrastructure and partnership models.

Mr. Tipu Munshi, M.P., Hon'ble Minister, Ministry of Commerce, Govt. of the People's Republic of Bangladesh has graced the occasion as the Chief Guest. Professor Shibli Rubayat-Ul-Islam, Chairman of Bangladesh Securities and Exchange Commission (BSEC) and H.E. Mr. Vikram K Doraiswami, High Commissioner of India to Bangladesh have joined as Special Guests. Dr. Shaikh Shamsuddin Ahmed, Commissioner, BSEC has graced the program as the Guest of Honor. Besides them, representatives from MCX, The Securities and Exchange Board of India (SEBI) and Bangladesh High Commission in India attended the program virtually. Moreover, distinguished guests from different Ministries, BSEC, Capital Market Intermediaries, Stakeholders, CSE Board of Directors & Executives and representatives from other organizations have attended this historical event. 

For Details

Tania

CSE-P & C R

Phone: 01760745736