Bourses to form counterparty clearing company

The Dhaka and Chittagong stock exchanges plan to form a counterparty clearing company within a week, as part of efforts to introduce new products to the stockmarket.

The financial institution—Centre Counterparty Bangladesh Ltd—will take counterparty credit risk between parties to a transaction and will provide clearing and settlement services for trades in securities, options and derivative contracts. “Market efficiency will increase with this clearing company,” CSE Managing Director M Shaifur Rahman Mazumdar said.

A system capable of dealing with wider ranges of stock related products should be purchased so the company can start its operations within a year, he said. 

“The system would also help in introducing advanced products. The company would be capable of doing bigger scale risk management.” Stock exchanges now do the clearing work by themselves, he said.

The board members of the two bourses had a joint meeting yesterday on the premises of DSE to take the final decision about the formation of the company.

DSE Chairman Abul Hashem, Director Rakibur Rahman and Managing Director KAM Majedur Rahman, CSE Chairman AK Abdul Momen, Director Md Sayadur Rahman and In-charge of CSE's Dhaka Office Md Ghulam Faruque attended the meeting.

It was decided that the DSE will own 45 percent stakes of the new company, CSE 20 percent, banks 15 percent, the Central Depository Bangladesh 10 percent and the rest 10 percent would belong to the strategic investors.