The Bangladesh Securities and Exchange Commission (BSEC) has recently issued a new notification (BSEC/CMRRCD/2009-193/65/PRD/147 dated October 2, 2023) for regulating the commodity exchange market in Bangladesh which is called ‘The BSEC (Commodity Exchange) Rules, 2023’.
The Rules contains 66 rules and several forms and exhibits, aims to ensure fair, efficient, transparent, and orderly trading of commodity derivatives contracts, protect the interests of investors and the public, and promote the development of the commodity derivatives market.
The new rules cover various aspects of the commodity exchange market, such as registration, conduct, supervision, inspection, discipline, and enforcement. Here are some key highlights:
- Registration: The rules provide detailed procedures for the registration of commodity exchanges, commodity derivatives brokers, clearing houses, and clearing and settlement companies. The registration is subject to the approval of the BSEC and compliance with certain conditions and requirements.
- Conduct: The rules prescribe standards of conduct for the registered entities and their directors, officers, employees, and agents. The standards include duties of care and loyalty, prohibition of fraudulent and manipulative practices, maintenance of books and records, etc.
- Supervision: The rules require the registered entities to establish and maintain systems for supervising their operations and activities. The systems should include internal controls, risk management measures, surveillance mechanisms, etc.
- Inspection: The rules empower the BSEC to inspect the registered entities for compliance with the rules and other applicable laws. The BSEC can also take corrective actions or impose sanctions based on the inspection findings.
- Discipline: The rules provide disciplinary procedures for dealing with violations of the rules by the registered entities or their associated persons. The disciplinary actions can range from warnings and fines to suspension or revocation of registration.
- Enforcement: The rules establish enforcement mechanisms for enforcing the rules and orders of the BSEC. The enforcement mechanisms include adjudication proceedings, appeals to the BSEC or the courts, etc.
The new rules represent a significant step forward in regulating the commodity exchange market in Bangladesh. They provide a comprehensive legal framework for ensuring market integrity and investor protection. However, they also impose substantial obligations on the market participants. Therefore, it is important for anyone involved in the commodity exchange market to understand these rules and comply with them.