CSE partners with MCX to set up Bangladesh’s first commodity exchange

Chittagong Stock Exchange Ltd (CSE) and Multi Commodity Exchange (MCX) are entering into a partnership to establish the first commodity exchange in Bangladesh.

The agreement will be formally signed on April 12 at a hotel in Dhaka. A press conference was held in this regard on Monday.

MCX will work as an offshore consultant for the exchange. It will offer consultancy services on regulations, products, clearing and settlement services, trading and warehousing among others.

Bangladesh Securities Exchange Commission on October 7, 2021, issued a letter to the port city bourse allowing it to establish commodity exchange subject to ensuring consumer rights and all the necessary infrastructure facilities.

The move was part of a series of pioneering development initiatives and significant structural reforms for the development of the capital market in Bangladesh.

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

Md Ghulam Faruque, managing director (acting) of CSE told the Business Insider Bangladesh that the exchange will initially start operation in a non-delivery cash settlement system and will gradually move to a serial option.

The exchange is likely to start with the trading of 11 commodities that are commonly seen at other exchanges, he informed.

These may include commodities of energy, metal, livestock and meat, and agriculture.

The CSE MD also hoped the exchange will start operation by this year, and said general investors can participate in trading, however with memberships.

A CSE presentation paper on the exchange said it will be formed as per the existing securities laws in Bangladesh and with the approval of BSEC.

For forming the exchange, other than MCX, CSE also communicated with other intuitions/consultants at initial stage for being the imminent project partnership.

These include Nation Stock Exchange (NSE), India; Bursa Malaysia; Indonesia Commodity Exchange (ICDX); Price Waterhouse Coppers (PwC); Russian Investment Federation; and Pride Group, UAE.

Globally, energy commodities are most traded at such exchanges, followed by agriculture and metal.