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Increased Oversight over Commodity Markets with the Bangladesh Securities and Exchange Commission’s New Rules

November 2, 2023

The framework consists of 66 rules along with various forms and exhibits, aimed at ensuring a level playing field, efficiency, transparency, and orderliness in trading commodity derivatives contracts. These rules serve to protect the interests of investors and the public while fostering the growth of the commodity derivatives market.

Key highlights

The new regulations cover a wide range of aspects of the commodity exchange market, including registration, conduct, oversight, examination, enforcement, and penalties. Here are some key highlights:

Registration: The rules outline detailed procedures for the registration of commodity exchanges, commodity derivatives brokers, clearing houses, and clearing and settlement companies. To be registered, entities must obtain approval from the BSEC and meet specific conditions and requirements.

Conduct guidelines: These regulations establish codes of conduct for registered entities and their personnel, including directors, officers, employees, and agents. They cover responsibilities related to diligence, loyalty, the prohibition of fraudulent practices, and the maintenance of accurate records, among other things.

Oversight requirements: The rules mandate that registered entities establish and maintain systems to oversee their operations and activities. These systems should include internal controls, risk management measures, and surveillance mechanisms, among other elements.

Inspection and compliance: The regulations empower the BSEC to inspect registered entities to ensure compliance with the rules and other relevant laws. The BSEC has the authority to take corrective actions or impose penalties based on the findings of these inspections.

Disciplinary procedures: The rules outline procedures for addressing violations of the rules by registered entities or their associated individuals. Disciplinary actions can range from issuing warnings and fines to suspension or revocation of the entity’s registration.

Enforcement mechanisms: The rules establish mechanisms for enforcing compliance with the rules and orders of the BSEC. They include adjudication proceedings, avenues for appealing to the BSEC or the courts, and similar measures.