Shortage of good instruments
FE Report | Friday, 6 June 2008
The Chittagong Stock Exchange (CSE) Thursday launched a 5-day certification course on Financial Derivatives for the professionals of the brokerage companies and financial Institutions in a bid to sensitise capital market operators with the products of derivative market.
The course has been jointly organised by CSE and National Stock Exchange (NSE) of India which began on the day at BRAC Inn at Mohakhali in the city. The Securities and Exchange Commission (SEC) Chairman Faruq Ahmad Siddiqi, inaugurated the certification course as the chief guest.
Mr. Ramakrishna Srinivas Lyengar of National Stock Exchange of India, an expert on financial derivatives instruments, which became popular in the bourses of the foreign countries as a risk management tool, will conduct the training course. A total 40 participants are taking part in the course to be concluded on June 9.
Speaking at the inauguration ceremony, CSE President Nasiruddin Ahmed Chowdhury said securities like, shares, bonds and mutual funds are traded in stock markets of Bangladesh. "There are demands for good instruments in the market, but the supplies are limited. As a result, we experience that too many investors are running after limited number of securities, leading to an unhealthy competition in the market."
"Our investors are paying hefty amounts for buying securities several times more than those are expected to fetch. The introduction of Book Building pricing method, however, will be able to solve this problem to some extent," he said.
"In the recent past, Derivatives has emerged as a strong tool in the Capital Market all over the world, including our neighbouring country India. It is a powerful speculative instrument to hedge risks against future price fluctuations. Introduction of various derivatives like, 'Options' and 'Futures' has contributed to significant rise in Market Liquidity and reduction in volatility, which, in turn, contributed to investors' confidence in the Capital Market," the CSE president added.
Speaking at the inauguration, SEC chairman said that introduction of such products will help prepare the market operators to brace the new products introduced in the developed markets. "And this surely will help in bringing product diversification and help investors to have options to invest in."
The SEC chairman said these new financial instruments are an increasingly important vehicle for unbundling risks. These instruments enhance the ability to differentiate risk and allocate it to those investors most able and willing to take it.
This unbundling risk improves the ability of the market to bring about a set of product and asset prices far more calibrate to the value preferences of investors than is possible before derivative markets are developed. The derivatives product and asset price signals enable entrepreneurs to finely allocate real capital facilities to produce those goods and services most valued by investors, a process that has undoubtedly improved national productivity growth and standards of living, the SEC chairman noted.
A. B. Siddique, Chief Executive Officer of the CSE said the derivative products, which do not exist at all in Bangladesh's stock markets, are the most popular investment instruments for the institutional as well as individual investors in both developed and developing countries such as India and Pakistan.
CSE Vice President Fakhor Uddin Ali Ahmed offered the votes of thanks.
The course has been jointly organised by CSE and National Stock Exchange (NSE) of India which began on the day at BRAC Inn at Mohakhali in the city. The Securities and Exchange Commission (SEC) Chairman Faruq Ahmad Siddiqi, inaugurated the certification course as the chief guest.
Mr. Ramakrishna Srinivas Lyengar of National Stock Exchange of India, an expert on financial derivatives instruments, which became popular in the bourses of the foreign countries as a risk management tool, will conduct the training course. A total 40 participants are taking part in the course to be concluded on June 9.
Speaking at the inauguration ceremony, CSE President Nasiruddin Ahmed Chowdhury said securities like, shares, bonds and mutual funds are traded in stock markets of Bangladesh. "There are demands for good instruments in the market, but the supplies are limited. As a result, we experience that too many investors are running after limited number of securities, leading to an unhealthy competition in the market."
"Our investors are paying hefty amounts for buying securities several times more than those are expected to fetch. The introduction of Book Building pricing method, however, will be able to solve this problem to some extent," he said.
"In the recent past, Derivatives has emerged as a strong tool in the Capital Market all over the world, including our neighbouring country India. It is a powerful speculative instrument to hedge risks against future price fluctuations. Introduction of various derivatives like, 'Options' and 'Futures' has contributed to significant rise in Market Liquidity and reduction in volatility, which, in turn, contributed to investors' confidence in the Capital Market," the CSE president added.
Speaking at the inauguration, SEC chairman said that introduction of such products will help prepare the market operators to brace the new products introduced in the developed markets. "And this surely will help in bringing product diversification and help investors to have options to invest in."
The SEC chairman said these new financial instruments are an increasingly important vehicle for unbundling risks. These instruments enhance the ability to differentiate risk and allocate it to those investors most able and willing to take it.
This unbundling risk improves the ability of the market to bring about a set of product and asset prices far more calibrate to the value preferences of investors than is possible before derivative markets are developed. The derivatives product and asset price signals enable entrepreneurs to finely allocate real capital facilities to produce those goods and services most valued by investors, a process that has undoubtedly improved national productivity growth and standards of living, the SEC chairman noted.
A. B. Siddique, Chief Executive Officer of the CSE said the derivative products, which do not exist at all in Bangladesh's stock markets, are the most popular investment instruments for the institutional as well as individual investors in both developed and developing countries such as India and Pakistan.
CSE Vice President Fakhor Uddin Ali Ahmed offered the votes of thanks.