Dhaka: The Dhaka Stock Exchange (DSE) is gearing up to introduce financial derivatives on its exchange-traded platform by January 2028, aiming to diversify products, deepen the capital market, and enhance market efficiency. The announcement was made during an awareness and consultation program organized by the DSE at its Training Academy in the city, attended by leading brokerage firms, merchant banks, asset management companies, and other stakeholders to discuss the introduction of financial derivatives, according to a press release.
According to Bangladesh Sangbad Sangstha, Bangladesh Securities and Exchange Commission (BSEC) Commissioner Nafis Al Tarek, CFA, expressed optimism about introducing derivatives in the country’s capital market. He emphasized the necessity of ensuring market readiness, adequate infrastructure, and effective risk management before launching the products. He highlighted that derivatives could open new avenues for investment and risk management, but without proper preparation, they might expose the market to additional risks.
A time-bound roadmap has been adopted with the target of launching derivatives by 2028. Preparations include necessary amendments to existing regulations, implementing a Central Counterparty (CCP) system, and enhancing the technological and institutional capacity of the Central Counterparty Bangladesh Limited (CCBL). Nafis noted the importance of an effective CCP for launching derivatives and stressed the need to strengthen the capacity of brokers, traders, and other market participants alongside the development of essential technological infrastructure. He referred to international experiences where future markets offer investors opportunities to hedge and manage portfolio risks, particularly addressing liquidity and volatility risks.
BSEC Executive Director Md Abul Kalam mentioned that financial derivatives, particularly index derivatives, could be introduced relatively easily through cash settlement. However, their successful implementation would require robust regulatory, technological, clearing, settlement, and risk-management frameworks. He stated that the existing Exchange Derivatives Rules would be updated to establish an appropriate regulatory framework. Additionally, a derivatives trading platform, CCP, real-time margining, position monitoring, and mark-to-market mechanisms would be established. Kalam assured that the progress of preparations would be regularly monitored according to the action plan and timeline, with the initiative being swiftly implemented to deepen and diversify the capital market.
DSE Managing Director Nuzhat Anwar described the initiative to introduce new financial products on the exchange-traded platform as a significant step towards developing the country’s capital market. She expressed gratitude to the BSEC for its cooperation and guidance in implementing the initiative. Anwar noted that the DSE and the commission had jointly prepared a specific roadmap and timeline, with the initiative to be implemented gradually based on stakeholder feedback. The DSE plans to organize detailed workshops and awareness programs on derivatives in the future.
DSE Market Development Division General Manager Syed Mahmud Zubayer stated that the DSE plans to introduce derivatives products in January 2028, with the BSEC having approved the plan. He explained that the DSE had prepared a strategy and action plan and submitted it to the BSEC to ensure the necessary regulatory framework, technological infrastructure, and stakeholder preparedness for launching derivatives. Initially, the DSE intends to introduce its own index-based Stock Index Futures, followed by Single Stock Deliverable Futures and, in the longer term, an Options Market. The consultation program aimed to raise awareness among market participants about derivatives and gather stakeholder views on the opportunities, challenges, and preparations required for introducing such products in Bangladesh.