A Bangladeshi firm has joined hands with a UAE-based company to float the country's first ever formal commodity exchange trading facility expecting to increase efficiency and transparency in market chains, according to reports today.
The consortium of investors - Bangladesh's Deshbandhu Group and UAE's Pride Group - would launch the Bangla Mercantile Commodity Exchange or BMEx with the Dubai-based company having adequate state-of-the-art technology to run the facilities around the globe, The Financial Express newspaper reported.
"Although this is completely private investment, our aim is to increase market efficiency and liquidity as well as improve transparency in agricultural marketing that remains uncontrolled for long," the report quoted Deshbandhu's chief investment officer Rahman Habib as saying.
The report said both the groups expected to avail shortly the government license to launch operations of the company with initial focus on trading in agricultural produces like jute, wheat, potato, corn and soybean in the agricultural sector and gold and silver in the precious metal sector.
The trading mechanism protects particularly the farmer from price drops and the buyer from price rises.
Under the mechanism a farmer can sell a future contract on his corn, which will be harvested at a later period on guarantee that the price he will be paid when he delivers while a breakfast cereal producer buys the contract now and guarantees the price will not go up when it is delivered.
The Deshbandhu officials said the country's first commodity exchange was intended mainly to increase transparency in the country's commodity chains saying they would try to control commodity market by ensuring that marginal farmers got the right price for their produces.
They said the BMEx would initially focus on establishing spot trading for agricultural commodities while an auction facility would be introduced soon.
The BMEx is being floated a year after the parliament amended the Securities and Exchange Commission Act allowing establishment of 'Commodity/Derivative Exchange' in Bangladesh.
Bangladesh's economy now stands at around USD 120 billion and has been growing at 6.0 plus per cent since 2005 with agriculture still remaining as one of the key contributors to growth.
