artk
Thu, Apr 25, 2019 9:01 AM
Sat, Mar 23, 2019 1:01

BSEC formulating rules for trading derivatives, Sukuk

media

Bangladesh Securities and Exchange Commission is formulating rules for derivatives and Sukuk to facilitate the trading of the products in the country’s capital market.

Bangladesh Securities and Exchange Commission is formulating rules for derivatives and Sukuk to facilitate the trading of the products in the country’s capital market.

BSEC officials said that the regulator took the move to versatile the market and to draw more investment to the market.

They said that the capital market of the country was only equity-based that made the market dull to the local and foreign investors.

Lack of depth made the market vulnerable and volatile, they observed.

BSEC executive director Saifur Rahman told New Age that rules for derivatives and Sukuk were being framed and those would soon be published for public opinions.

He said that the commission would formulate the rules to bring dynamism to the capital market.

Sukuk is the Arabic name for financial certificates but commonly refers to the Islamic equivalent of bonds.

Sukuk are structured in a way to generate returns to investors.

They are issued and traded in compliance with the principles of Shariah, which prohibit ‘Riba’ or interest.

When someone invests in Sukuk, his money is put into the assets of a project or investment in order to generate profit. 

The Sukuk holders will receive a certificate from the issuer as evidence of ownership and are entitled to receive periodic profit payments on the principal amount invested. 

Upon maturity, the Sukuk holder will get back the principal amount of investment.

There are different types of Sukuk including Musharakah, Mudharabah, Murabahah, and Al-Wakalah.

A derivative is an investment instrument that consists of a contract between parties whose value derives from and depends on the value of an underlying financial asset.

The underlying asset can be financial (interest rate, currency), equity (index, single stock), and commodity (rice, jute, tea).

Specifically, derivative transactions involve transferring those risks from entities less willing or able to manage them to those more willing or able to do so.

Derivatives can take the form of forwarding, future, option or any other hybrid contract.

The stock market regulator has recently sought public opinion on the draft of the BSEC (Alternative Trading Board) Rules-2018.

The proposed ATB would facilitate entry of new items to the stock market like corporate bonds, derivatives, Sukuk and open-end mutual funds.

newsbangladesh.com/nbd