Six brokers get nod for commodity derivatives licence

The Bangladesh Securities and Exchange Commission (BSEC) has given in-principle approval to six stock brokerage firms to operate as commodity derivatives brokers, marking a major step towards launching the country's first commodity exchange.

The securities regulator decided to issue letters of intent (LOIs) to the firms at a commission meeting today (19 October), following their applications and recommendations from the Chittagong Stock Exchange PLC (CSE).

The six brokerage firms are Sohel Securities Limited, Island Securities Limited, NLI Securities Limited, Be Rich Limited, PHP Stocks & Securities Limited, and UCB Stock Brokerage Limited.

The CSE is preparing to launch the nation's debut commodity derivatives exchange, a regulated marketplace where commodities or related contracts are traded similarly to company shares. 

Operating through futures and options contracts, the derivatives platform allows participants to discover fair prices, hedge against market volatility, and manage financial risk without requiring the immediate physical exchange of goods.

The CSE has proposed launching the exchange with futures contracts for gold, silver and crude palm oil, using internationally recognised pricing benchmarks for these commodities.

CSE officials noted that gold and silver prices are globally transparent, while crude palm oil represents a key import commodity for Bangladesh. 

Successful implementation with these initial assets is expected to pave the way for gradually introducing essential agricultural commodities like rice and wheat.

Incorporating agricultural products into the exchange will enable farmers and local producers to secure prices months ahead of harvest, mitigating post-harvest distress sales and stabilising supply chains. 

All financial instruments and products introduced on the exchange will remain subject to regulatory approval from the BSEC to maintain market oversight, according to the CSE officials.