Commodity Exchange Market in Bangladesh

Commodity Exchange Market in Bangladesh

Prepared by Kamal Uddin Department of Banking &Insurance Faculty of Business Studies,
University of Dhaka Outline
Rationale Define Commodity & Commodity Exchange Market How Commodity Exchange
Market Works? Necessity of Commodity Exchange Market in our Economy Requirement for a
Commodity Exchange Market What Bangladesh Doing? Recommendation Rationale: Price
Volatility in Our Economy
Reason Behind Price Volatility
Intermediaries between producers & end-consumers. Syndication. Absence of a proper market
system. To remove this barrier a proper market system is required where buyer and seller will have
the regular & updated information of market, they will have direct access to market for buying and
selling their desired products. This can be done by establishing a Commodity Exchange Market
Define Commodity and Commodity Exchange
A Commodity is a product which has a commercial value. It can be produced, bought, sold and
consumed. A commodities exchange is an exchange, just like any Stock Exchange where various
commodities and derivatives products are traded. Most Commodity Exchanges across the world
trade in agricultural products and other raw materials To be traded on an Exchange must meet
certain specification regarding self life, quality standard, demand and supply and some more.
Functionalities
Spot or Cash
Direct buy and sales Usually for immediate consumption Immediate delivery & payment
Futures
Agreement made to receive commodity on a later date Decide price today Deliver and pay (part)
later margin only now
The whole Market System

USERS Farmers & Farmer Cooperatives (Hedgers) Investors (Speculators) Traders (Arbitrageurs)
Logistics Companies
Storage & Transport Requirements Quality Certification Requirements
SUPPORT AGENCIES Public Warehouses Private Sector Warehousing Companies
Testing & Certifying Companies
Spot Markets
info
Commodity Exchange
Warehouse Receipt System Lending Agencies
Commodity Information
Players in Commodity Exchange
Hedger Speculator Arbitrageur
Someone wants to reduce the risk of exposure to the physical markets
Someone intended to grow wealth by making profits by taking on a certain amount of risk Anyone
wish to take advantage of a variable price movements in two different markets or contracts of two
different time Trading and Settlement