The Chittagong Stock Exchange (CSE) is working to launch the country’s first-ever commodity exchange by the end of this year, initially trading in cotton, crude palm oil, silver, and gold.
“Although several tasks still need to be carried out by external parties, the CSE is trying its best to make it happen at the end of 2025,” CSE Chairman AKM Habibur Rahman told The Daily Star yesterday.
For all latest news, follow The Daily Star’s Google News channel. A commodity exchange is a marketplace where raw materials such as oil, gold, wheat, and coffee are traded. Rather than exchanging physical goods, businesses and investors deal in contracts that promise delivery at a future date, based on agreed prices.
Producers like farmers and miners use these exchanges to lock in prices and manage risks. Meanwhile, traders seek to profit from price fluctuations. Major global platforms, such as the Chicago Mercantile Exchange and the London Metal Exchange, help set international benchmark prices for key commodities.
Talks about setting up a commodity exchange in Bangladesh began as early as 2007, but the initiative only gathered pace in 2020.
The government has now finalised the legal framework and published a gazette last week regarding the rules, regulations, and procedures for the market.
As this will be the country’s first such exchange, Rahman said the CSE is prioritising large-scale training for intermediaries. The bourse will also invite brokers to join the exchange.
The new exchange will operate as a public limited company, functioning as a subsidiary of the CSE.
It will have a paid-up capital of Tk 400 crore and a 13-member board of directors, including a chairman.
According to regulations, existing TREC (trading right entitlement certificate) holders of the CSE are eligible to become brokers for the commodity exchange.
The CSE has already called on them to apply for licences. Once applications are received, the port city bourse will forward them to the Bangladesh Securities and Exchange Commission (BSEC) for final approval, Rahman said.
Each broker will need a minimum paid-up capital of Tk 10 crore. Like TREC holders, they will also need to comply with risk-based capital adequacy rules, maintaining enough capital to absorb potential losses in line with regulatory guidelines.
The CSE is making preparations to run acceptance tests with end-users to check if the system is ready for rollout. Once completed, it will move on to trial runs of commodity trading.
The CSE chairman said technical preparations, such as installing new software and hardware that are separate from those used for equity trading, are now going on.
At the same time, the CSE is drafting sample contracts, which set out the terms for delivery or receipt of specific quantities of commodities in future months.
These samples will have to be approved by the BSEC as they will be the main instruments traded on the exchange, according to Rahman.
The port city bourse took the initiative to launch the commodity exchange in 2022, with the aim of narrowing the gap between producer and consumer prices.
Saiful Islam, president of the DSE Brokers Association of Bangladesh (DBA), said brokers are keen to support and join the new exchange.
“It should have been launched much earlier,” he said.
However, the DBA president added that traders are still unfamiliar with such a market. “A massive awareness campaign is necessary so that traders and investors properly understand both the risks and opportunities of commodity trading.”
Islam, who is also a director of BRAC EPL Brokerage, a TREC holder of the CSE, sought dummy trading for at least three to six months.
“This market will be linked to international prices and involve various factors,” he said.
In April 2022, the CSE appointed the Multi Commodity Exchange of India as a consultant to help develop rules and regulations. The CSE received its licence to operate the exchange in October 2023, but progress was somewhat stalled due to the absence of a regulatory framework.
Last month, the BSEC approved the Chittagong Stock Exchange (Commodity Derivatives) Regulations, 2025.
The new rules cover areas such as clearing and settlement, paving the way for broker licensing, listing of derivatives, and appointment of authorised representatives.
AB Mirza Azizul Islam, a former finance adviser to the caretaker government and a former chairman of the BSEC, said plans to set up a commodity exchange date back to 2007.
“Before launching such an exchange, a detailed plan should have been in place,” he said. “It requires proper storage and preservation systems to prevent wastage.”
He added that the exchange could help stabilise prices, but only if farmers and all other stakeholders understand how it works.