Focus shifts to commodity market to reduce equity dependence

To move the country's capital market beyond its share-dependent structure, the regulator and Chittagong Stock Exchange (CSE) have intensified efforts to launch a commodity derivatives market.

Stakeholders say commodity derivatives could open a new horizon by introducing new products, risk management tools and a modern price discovery framework. However, the initiative has been delayed several times due to gaps in technology, legal readiness, broker preparedness and policy coordination.

These issues were highlighted at a workshop titled Commodity Exchange: Potential, Structure and Future, jointly organised in the capital on Sunday by the Capital Market Journalists' Forum and Chittagong Stock Exchange.

Speaking as chief guest, Bangladesh Securities and Exchange Commission Commissioner Farzana Lalarukh said, "We want to take the capital market to a much higher level. But we also need to understand how prepared we really are. We want to move forward with full readiness."

She said CSE's commodity derivatives regulations were approved at a commission meeting in 2025 and most regulatory work has already been completed. The next phase will begin once the exchange ensures readiness, product selection and operational capacity.

Farzana Lalarukh said the country's capital market has three main pillars – equity, bonds and commodities. However, Bangladesh's market has long remained largely equity-dependent.

Emphasising the responsible role of journalists in avoiding confusion or rumours among the public regarding commodity derivatives, she said, "Your pen is very powerful. Please write about commodities in a way ordinary people can understand. It has to be explained from the basics."

She added, "Some progress is being seen in the bond market. Now we want the derivatives market to develop as well."

She explained that the two major objectives of the derivatives market are price discovery and hedging – meaning creating expectations about future prices and protecting against price risks. She noted that this could play an important role in an agriculture-based economy.

Chittagong Stock Exchange Chairman AKM Habibur Rahman said around Tk100 crore has already been invested to launch the commodity derivatives segment. However, further investment will be needed to make it fully operational.

He said, "We have been preparing for this since 2023. We had hoped to launch it last year, but that was not possible. We expect the segment to become operational within this year."

Chittagong Stock Exchange Managing Director Saifur Rahman Mazumder said the country's stock market is still operating mainly as a "simple equity market". Introducing derivatives or commodity products like developed markets would require major changes in the technological and regulatory framework.

He said the country's exchange technology is still heavily dependent on foreign sources. Since advanced trading platforms, servers, software and hardware are import-dependent, both time and costs have increased.

"We completed most of the technological preparations around one and a half years ago. But we could not move forward because of some legal and coordination-related limitations," he said.

CSE Managing Director Saifur Rahman Mazumder acknowledged that the project had been delayed due to a lack of coordination among different agencies and stakeholders.

In his view, "To create a new market, the regulator, exchange, brokers and government all need to work together. No new product can succeed without a coordinated effort."

He added that launching the commodity market would require new types of brokers, authorised traders and a separate legal framework. Preparatory work is still ongoing.

Stakeholders said cash-settled futures trading in comparatively simple products will be introduced first. Later, essential agricultural products such as rice and wheat are also planned to be included.

According to stakeholders, the country's capital market has long suffered from weak confidence, low liquidity and a limited range of products. In that context, commodity derivatives could create new opportunities. However, success will require equal emphasis on technological capability, strict regulation, skilled participants and investor awareness.

The workshop was chaired by Capital Market Journalists' Forum President Monir Hossain, while CMJF Secretary Ahsan Habib moderated the event