The securities regulator and the Chittagong Stock Exchange (CSE) are intensifying efforts to launch a commodity derivatives market, aiming to diversify the capital market, which heavily relies on equities.
Stakeholders say commodity derivatives could open a new frontier for new products, modern risk management, and improved price discovery mechanisms. However, the initiative has repeatedly been delayed due to gaps in technology, legislation, broker readiness, and policy coordination.
These issues were highlighted at a workshop titled "Commodity Exchange: Bangladesh Perspective," jointly organised by the Capital Market Journalists' Forum (CMJF) and the CSE, where top officials from the regulator and the exchange spoke at length.
At the event held at the CMJF Auditorium on Sunday, BSEC Commissioner Farzana Lalarukh said the commission wants to take the capital market to greater heights but stressed the importance of being realistic about preparedness.
She confirmed that the CSE's commodity derivatives regulations were approved in 2025 and that the regulatory groundwork is nearly complete. The next steps will follow once the exchange finalises its operational readiness and product selection.
Ms Lalarukh noted that capital markets usually comprise equities, bonds, and commodities, but Bangladesh's market remains overly equity-driven.
Explaining the purpose of derivative markets, she said price discovery and hedging are the two core objectives - helping stakeholders anticipate future prices and protect against price risks - both of which are especially relevant for Bangladesh's agriculture-driven economy.
CSE Chairman AKM Habibur Rahman revealed that nearly Tk 100 crore has already been invested to establish the commodity derivatives segment, though additional investment will be needed to make it fully operational. He added that preparations have been underway since 2023, and while the exchange had hoped to launch the platform last year, that was not possible.
He expressed hope that the segment would go live by the end of the year.
CSE Managing Director Saifur Rahman Majumder described the country's stock market as still essentially a "simple equity market," noting that adding derivatives or commodity products - as seen in more advanced markets - requires significant changes to both technology and regulatory frameworks.
He pointed out that the exchange's technology remains largely import-dependent, with trading platforms, servers, and software sourced from abroad, adding to both costs and delays.
"We completed our technical preparations about a year and a half ago but haven't been able to move forward due to legal and coordination constraints," he said, acknowledging that a lack of coordination among various agencies and stakeholders has been a major bottleneck.
"To build a new market, regulators, exchanges, brokers, and the government all need to work together. No new product can succeed without coordinated efforts."
Mr Majumder also noted that launching a commodity market requires a new category of brokers, authorised traders, and a separate legal framework, all of which are still in progress.
Officials indicated that trading will initially begin with cash-settled futures on simpler products, with plans to later include essential agricultural commodities such as rice and wheat.
Analysts believe that while Bangladesh's capital market has long suffered from low investor confidence, poor liquidity, and a narrow product range, commodity derivatives could inject new life into the market.
However, success will depend equally on technological capability, strict regulation, skilled market participants, and investor awareness.
The workshop was presided over by CMJF President Monir Hossain, while CMJF Secretary Ahsan Habib served as moderator.
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