The New Nation - Internet Edition

Staff Reporter

The Chittagong Stock Exchange for the first time in the country is going to introduce 'financial derivatives' like the some other bourses in Asia and Europe.

A draft regulatory and operational framework, in this regard, is under scrutiny of the Securities and Exchange Commission, said CSE officials.

Derivative is an instrument/product, which does not have any value on its own but derives value from underlying assets like stocks, bonds and commodities in a contractual manner. In the commodity market whenever something is priced based on underlying commodity is called derivative.

CSE president Nasiruddin Ahmed Chowdhury yesterday at a seminar organised for journalists at a city hotel said, "Bangladesh's Capital market will have a new dimension in the near future when derivatives will be added with the existing equity products."

He said these new financial instruments are 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," he said.

"As we approach the twenty-first century, both Exchange and brokers will need to continually reassess whether the risk management practices have kept pace with their own evolving activities and with changes in financial market dynamics and readjust accordingly," Chowdhury added.

CSE Head of Compliance Atiquzzaman in his presentation said derivatives are the essential products for risk management while investing in the stock market and when there is any derivative on a stock, it increases the liquidity of that stock in the cash market resulting in the overall liquidity in the market.

CSE Chief Executive Officer MAB Siddique, Manager G Faruque and Deputy Manager AKM Shahroze were present, among others, on the occasion.