FE Report
Chittagong Stock Exchange (CSE) has proposed for introducing financial derivatives market to reduce the risk of investors through risk management tools, officials said.
The CSE President Al Maruf Khan made the proposal at a workshop titled "Introduction of Financial Derivatives Market in Bangladesh" organised jointly by the CSE and National Stock Exchange of India held at CSE's Chittagong office.
The two-day long workshop ended on Sunday and three SEC members---Professor Helal Uddin Nizami, Md. Amzad Hossain and A Salam Sikder attended the programme.
The CSE president said the primary objective of any investor is to maximise returns and minimise risks, although the risk is a characteristic feature of any market.
"Investors in the share market are also subject to a continuous price risk, which we call market volatility. But without the risk management products, investors are left vulnerable to the vagaries of the markets," CSE President Mr. Khan said terming the derivatives as proper risk management tools.
A derivative is a financial instrument whose value is based on one or more underlying assets. In practice, it is a contract between two parties that specifies conditions, especially the dates, resulting values of the underlying variables, and notional amounts, under which payments are to be made between the parties.
The most common types of derivatives are: forwards, futures, options, and swaps. And the most common underlying assets include: commodities, stocks, bonds, interest rates and currencies.
The CSE president said the country's capital market will have a new dimension in the near future if the derivatives can be added with the existing equity products.
"But for this we may need to have some reforms in our existing policies and rule and regulations."
He said initially the derivatives market can be started with single stock futures.
Chittagong Stock Exchange (CSE) has proposed for introducing financial derivatives market to reduce the risk of investors through risk management tools, officials said.
The CSE President Al Maruf Khan made the proposal at a workshop titled "Introduction of Financial Derivatives Market in Bangladesh" organised jointly by the CSE and National Stock Exchange of India held at CSE's Chittagong office.
The two-day long workshop ended on Sunday and three SEC members---Professor Helal Uddin Nizami, Md. Amzad Hossain and A Salam Sikder attended the programme.
The CSE president said the primary objective of any investor is to maximise returns and minimise risks, although the risk is a characteristic feature of any market.
"Investors in the share market are also subject to a continuous price risk, which we call market volatility. But without the risk management products, investors are left vulnerable to the vagaries of the markets," CSE President Mr. Khan said terming the derivatives as proper risk management tools.
A derivative is a financial instrument whose value is based on one or more underlying assets. In practice, it is a contract between two parties that specifies conditions, especially the dates, resulting values of the underlying variables, and notional amounts, under which payments are to be made between the parties.
The most common types of derivatives are: forwards, futures, options, and swaps. And the most common underlying assets include: commodities, stocks, bonds, interest rates and currencies.
The CSE president said the country's capital market will have a new dimension in the near future if the derivatives can be added with the existing equity products.
"But for this we may need to have some reforms in our existing policies and rule and regulations."
He said initially the derivatives market can be started with single stock futures.
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