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Commodities exchange may begin with jute

  • Published at 03:53 pm July 24th, 2013
Commodities exchange may begin with jute
The government plans to initiate commodities exchange with jute crop on pilot basis. Futures contracts among the traders would be set up on the platform of commodities exchange.   The decision was taken at a meeting between the Textile and Jute Ministry and stakeholders at the ministry on Wednesday.   Textile and Jute Minister Abdul Latif Siddique, high officials and stakeholders were present at the meeting.   “We are planning to introduce jute as first crops on pilot basis for future contracts at the exchange,” said an official attended the meeting. Once it implemented, he said the exchange will help discover fair prices and hedge risks of products grew by the farmers.    Other agricultural products like jute, wheat, potato, corn and soybean in the agricultural sector and, gold and silver in the precious metal sector will be followed to trade in the platform.   Setting up commodities exchange for the first time in the country comes to the fore after the parliament has brought an amendment to the Securities and Exchange Ordinance 1969 in November last year, allowing establishment of a “commodity exchange.”   The securities regulator of Bangladesh is also working to formulate norms in introducing commodities exchange as part of its efforts to provide a platform for producers to discover fair prices and hedge risks of their products, sources said.   A commodity exchange, a very new concept in Bangladesh, is a place arranged to allow for the selling and buying of commodities. On commodity market, futures contracts for tangible commodities are bought and sold. On stock market, investors trade shares of the listed companies.   A feasibility study has already been completed by the Asian Development Bank under its capital market development project (phase-III).   “The move is at initial stage. A guideline on trading, disciplinary, membership rules and other required rules will be formulated to introduce the exchange,” said a source familiar with the initiative.      Some broker firms have already trained their executives on how to execute trade in the commodities market, said a broker. “They have been trained mainly on gold trading,” he added.   Experts believe a commodities exchange could be developed in the country to help stabilise the commodities market, which now experiences peaks and troughs as quality changes with the changing of weather patterns.   A well-functioning marketing system with a commodity exchange can handle the demand-supply uncertainties, reduce transaction costs and improve food security.
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