Scope of financial derivatives in BD

The Bangladeshi market for financial derivatives holds great potential as the country works towards modernising its financial sector. Financial derivatives like futures, options, and swaps help investors and companies hedge against risk by protecting them from price volatility in assets. With the growth in the economy and the entry of more local and foreign investors, the use of financial derivatives in Bangladesh will grow at a gradual pace.

The country's financial sector is changing because of new technology and new rules. The Bangladesh Securities and Exchange Commission (BSEC) has been working to make the market better for new ideas, which allows for new investment options. These options can help investors handle risks from changes in interest rates, exchange rates, and commodity prices, which are very important for a growing economy.

Furthermore, derivatives may be an attractive means of price discovery and market efficiency. For firms engaged in import and export activities, derivative products can provide a cushioning effect against adverse movement in currency exchange rates, which can buffer revenue in volatile global economies. As the Bangladeshi market is progressively drawing in overseas investment, increased liquidity and better risk management practices via derivatives may lead to increased market confidence.

Yet, there are still hurdles to overcome, like the requirement for robust regulatory frameworks and market infrastructure in support of derivative trading. Building the expertise of market participants and ensuring transparency will be key to unlocking the entire potential of these instruments. With careful policy implementation and persistent financial literacy programmes, financial derivatives are sure to revolutionise the evolving financial market scene in Bangladesh.

Fardin Ahmed

Student

North South University

fardin.ahmed04@northsouth.edu