BSEC puts on hold commodity exchange project on legal grounds

The securities regulator has put on hold the activities of the proposed private commodity exchange until the issues regarding legality of such an initiative are resolved, officials said.
The instruction came from the Bangladesh Securities and Exchange Commission (BSEC) just a day after a private company -Bangladesh Jute and Commodity Exchange (BJCE) - published an advertisement to run a commodity exchange to trade jute-related goods.
A BSEC policy-maker said: "We have already assigned Mohammad Saifur Rahman, our executive director, to look into the legal basis of the announcement on the formation of a commodity exchange. The securities regulator will give its opinion after getting the report from our senior officer."
The commodity exchange is a platform, where various commodities and derivative products are traded, and the BSEC is the regulator of such exchanges.
The regulator, however, is yet to introduce the rules for running such a commodity exchange in Bangladesh.
According to the amendments, brought to the Securities and Exchange Ordinance 1969, the regulator will introduce the rules for running the commodity exchange.  
When asked, BJCE chief investment officer Rahman Habib told the FE that they initiated a pilot project to run the commodity exchange following permission from the Ministry of Jute and Textiles (MoJT).
"The MoJT permitted us to run the pilot project through five purchase centres. We were supposed to submit the output of conducting the pilot project to the ministry."
Mr. Habib, however, said the BSEC executive officer concerned asked them to refrain from any announcement for running the commodity exchange until delivery of further instruction.
He also said the BJCE earlier applied to the securities regulator, seeking approval for running the exchange.
"Perhaps the regulator is studying the issue of introducing the commodity exchange," he added.
BSEC executive director Saifur Rahman said they asked the BJCE to submit the papers regarding the commodity exchange, received from other authorities concerned.
"We have told the company that such an announcement is unlawful as per the ordinance of 1969. The regulator will give its next instruction after getting report on justification of the legal aspects of giving advertisement on the commodity exchange," he added.
The BSEC sources said Wali-ul-Maroof Matin, managing director of Alliance Capital Asset Management, first applied for running the commodity exchange.
"I am waiting for the rules that will be introduced in line with the amendments brought to the ordinance," he added.