The essential commodities act, 1957

1. 1
Introduction:
As a republican country, Bangladesh has various kinds of law, to control the various sectors
which are establish after & before our freedom war. To control Commodities there are an act in
1957, act no. III. For controlling commodities the act in 1957 are used in Bangladesh now. It
helps to control price and regulation of trade and commerce in between different areas in
Bangladesh. As an act of 1957 which is establish in Pakistan, the Second Schedule of the
Bangladesh Laws (Revision and Declaration). For controlling the price procuring any essential
commodity for purposes of export.
What is the commodity?
Commodities have a fixed price, that price being the cost of finding, mining or harvesting, and as
a result, they have no differential value. If their price rises or falls, then it does so universally.
The term „commodity‟ came into English use in the 15th century, and derives from the French
„commodité‟, which means to benefit or profit. This in turn derives from the Latin word
„commoditatem‟, meaning fitness or adaptation. Commodities in the modern sense derive from
the trading of agricultural products, whether that be animals, such as goats or pigs; or grain, such
as wheat or corn. Commodities such as these were often regarded as a type of primitive currency,
and were used to trade with other commodities, or purchase goods that were not commodities.
Complex mazes of trade agreements between many countries throughout the world were
common, with metals such as gold and silver being traded for wool, spices, and materials.
Commodities generally meet the following criteria:
 Tradability: The commodity has to be tradable, meaning there needs to be a viable
investment vehicle to help you trade it. For example, a commodity is included if it has
a futures contract assigned to it on one of the major exchanges, or if a company processes it,
or if there‟s an ETF that tracks it. For example, Uranium, which is an important energy
commodity, isn‟t tracked by a futures contract, but several companies specialize in mining
and processing this mineral. By investing in these companies, you get exposure to uranium.
 Deliverability: All the commodities have to be physically deliverable. Crude oil is included
because it can be delivered in barrels, and wheat is included because it can be delivered by
the bushel.
 Liquidity: Every commodity in this learning center has an active market with buyers and
sellers constantly transacting with each other. Liquidity is critical because it gives you
the option of getting in and out of an investment without having to face the difficulty of
trying to find a buyer or seller for your securities.

2. 2
What are the commodities trading?
All commodity futures contracts have several future delivery months you can trade.
As a potential speculator in search of profits in this what is futures trading primer are trading on
anticipated price movement of a commodity from the present moment you enter a contract, to
sometime in the future, prior to the contract delivery date of the futures contract month you are
trading.
(All commodity futures have several calendar months you can trade - some 5, some all 12
months).
A key question in our 'what is futures trading' section is, which futures month do you trade?
For example, in Gold, you can trade the (H, K, N, U, Z) futures contract months. In corn, you
can trade the (G, J, M, Q, V, Z) future contract months. Each letter corresponds to a different
month of the year. Some futures have 5 trading months, some all twelve months, and some fall in
between those two.
Example for Future Trading Commodities:
Let's look at a futures contract trading example in our is commodity trading overview.
You've analyzed and selected a commodity - Gold - to trade...and the specific month you want to
trade.
1) You expect the price of Gold to rise over the next 4 months.
2) So, you agree to buy ("go long") 1 futures contract of Gold today from a seller (through a
broker/exchange) for a fixed price (say $500), which, for this example, we'll say is the currently
trading price of Gold on the futures market.
You now have a 'long' position (expecting rising prices) with 1 Gold futures contract, with a
delivery date 4 months in the future. (All futures contracts have a delivery date, but you plan to
exit the contract before then).
So you have 3+ months during which you expect Gold to rise in price and hopefully realize a
profit.
The seller now has the corresponding 'short' position, having agreed to sell you the Gold futures
contract for $500. (That seller, for example, may feel Gold will fall in price over the same
period).
3) Over the next 4 months, the price of Gold rises, as you had hoped. This creates a profit for
you. (If the price of Gold fell, you would have incurred a loss on the futures contract trade.)

3. 3
In this example, the price of Gold rose, so you want to exit the trade and take your profit, not
take delivery of the physical gold commodity itself.
4) So, before the contracts' expiration date, you agree to sell your Gold futures contract to
another party who wants to buy it at the specified & current price of $600 (thinking it will go
higher still).
You sell your contract for $600, exit the trade, and pocket your profit (less commissions).
In a nutshell, that is a top line view how a trading a futures contract works, from the speculators
perspective.

4. 4
THE ESSENTIAL COMMODITIES ACT, 1957
(Act no. III of 1957)
[6th March, 1957]
An Act to provide for price control and regulation of trade and commerce 1[between different
areas in Bangladesh in respect of certain commodities].
Where as it is expedient to provide for price control and regulation of trade and commerce 2
[between different areas in Bangladesh] in respect of certain commodities;
It is hereby enacted as follows:-
Short title, extent and commencement
1. (1) This Act may be called the Essential Commodities Act, 1957.
(2) It extends to the whole of 3[Bangladesh].
(3) It shall come into force at once.
Definitions:
In this Act, unless there is anything repugnant in the subject or context-
(a) “Essential commodity” means any of the classes of commodities mentioned in the Schedule to this
Act, and such other classes of commodities as may be declared by the 5[ Government] by notification in
the official Gazette to be essential commodities for the purposes of this Act;
“Essential commodity” means any of the following classes of commodities:-
(i) foodstuffs;
(ii) cotton and woollen textiles;
(iii) paper including paper-board, pulp-board, wall-board, fibre board, straw board, box-board,
cellulose wadding, cellulose films and other similar materials which are manufactured wholly or
mainly either from vegetable fibres or a pulp thereof or both from such fibres and such pulp, but
does not include any of these materials;

5. 5
(iv) mechanically propelled vehicles, their spare parts and tyres and tubes for the same;
(v) coal;
(vi) iron and steel;
(vii) mica;
(viii) drugs and medicines, including those administered by injection;
(ix) chemicals including gases;
(x) electrical and radio goods and appliances, including wires and cables;
(xi) medical and surgical instruments and appliances;
(xii) glass and glassware including scientific and laboratory equipment;
(xiii) artificial silk yarn;
(xiv) cycles, their spare parts, and tyres and tubes for the same;
(xv) matches;
(xvi) timber;
(xvii) sanitary and water supply fittings;
(xviii) infant and patient foods and allied articles;
(xix) cement;
(xx) cigarettes;
(xxi) fertilisers;
(xxii) tallow;
(xxiii) torch cells;
(xxiv) such other classes of commodities as may be declared by the Government by notification
in the official Gazette to be essential commodities for the purposes of this act.
(b) “foodstuffs” shall include edible oilseeds and oils

6. 6
(c) “notified order” means an order notified in the official Gazette and
(d) “paper” shall include newsprint.
Powers to control production, supply, distribution, etc, of essential
commodities:
(1) The Government, so far as it appears to it to be necessary or expedient for maintaining, or
increasing supplies of any essential commodity or for securing its equitable distribution and
availability at fair prices, may be notified order provide for regulating, or prohibiting the
production, treatment, keeping, storage, movement, transport, supply, distribution, disposal,
acquisition, use or consumption thereof and trade and commerce there in.
(2) Without prejudice to the generality of the powers conferred by sub-section (1), an order made
there under may provide-
(a) for regulating by licences, permits or otherwise the production or manufacture of any
essential commodity;
(b) for controlling the prices at which any essential commodity may be bought or sold;
(c) for regulating by licences, permits or otherwise the storage, transport, distribution, disposal,
acquisition, use or consumption of any essential commodity;
(d) for prohibiting the withholding from sale of any essential commodity kept for sale;
(e) for requiring any person holding stock of an essential commodity to sell the whole or a
specified part of the stock at such prices and to such persons or class of persons or in such
circumstances, as may be specified in the order;
(f) for regulating or prohibiting any class of commercial or financial transactions relating to
foodstuffs or cotton textiles which, in the opinion of the authority making the order are, or if
unregulated are likely to be, detrimental to public interest;
(g) for requiring persons engaged in the production, supply or distribution of, trade or commerce
in, any essential commodity to maintain and produce for inspection such books, accounts and
records relating to their business and to furnish such information relating thereto, as may be
specified in the order;

7. 7
(h) for any incidental and supplementary matters, including in particular the entering, and search
of premises, vehicles, vessels and aircraft, the seizure by a person authorised to make such search
of any articles in respect of which such person has reason to believe that a contravention of the
order has been, is being, or is about to be committed, or any records connected therewith, the
grant or issue of licences, permits or other documents and the charging of fees therefore and for
collecting any information or statistics with a view to regulating or prohibiting any of the
aforesaid matters.
(3) An order made under sub-section (1) may confer powers and impose duties upon the
Government, or officers and authorities of the Government.
(4) The Government, so far as it appears to it to be necessary for maintaining or increasing the
production and supply of an essential commodity, may by order authorise any person (hereinafter
referred to as an authorised controller) to exercise, with respect to the whole or any part of any
such undertaking engaged in the production and supply of the commodity as may be specified in
the order, such functions of control, as may be provided by the order; and so long as an order
made under this sub-section is in force with respect to any undertaking or part thereof-
(a) the authorised controller shall exercise his functions in accordance with any instruction given
to him by the Government, so however, that he shall not have any power to give any direction
inconsistent with the provisions of any Act or other instrument determining the functions of the
undertakers except in so far as may be specifically provided by the order; and
(b) the undertaking or part shall be carried on, in accordance with any directions given by the
authorised controller in accordance with the provisions of the order, and any person having any
functions of management in relation to the undertaking or part shall comply with any such
directions.
4. [Delegation of powers.- Omitted by section 3 and the Second Schedule of the Bangladesh
Laws (Revision And Declaration) Act, 1973 (Act No. VIII of 1973).]
Delegation of powers by Government:
12 [4 A. The 13[ Government] may delegate any of its powers under section 3 to any of its
officers, by an order notified in the official Gazette, subject to such conditions as may be
specified in the order.]

8. 8
Effect of orders inconsistent with other enactments:
5. Any order made under section 3 shall have effect notwithstanding anything inconsistent
therewith contained in any enactment other than this Act or any instrument having effect by
virtue of any enactment other than this Act.
Penalties:
6. (1) If any person contravenes any order made under section 3, he shall be punishable with
imprisonment for a term which may extend to three years or with fine or with both, and if the
order so provides, any Court trying such contravention may direct that any property in respect of
which the Court is satisfied that the order has been contravened shall be forfeited to the
14[Government]:
Provided that where the contravention is of an order relating to foodstuffs which contains an
express provision in this behalf, the Court shall make such direction, unless for reasons to be
recorded in writing it is of opinion that the direction should not be made in respect of the whole,
or, as the case may be, a part, of the property.
(2) The owner of any vessel, conveyance or animal carrying any property in respect of which an
order under section 3 is contravened shall, if the carrying is part of the transaction involving the
contravention and if he knew or had reason to believe that the contravention was being
committed, be deemed to have contravened the order, and in addition to the punishment to which
he is liable under sub-section (1) the vessel, conveyance or animal shall, when the order provides
for forfeiture of the property in respect of which the order is contravened, be forfeited to the
15[ Government].
Attempts and abetments:
7. Any person who attempts to contravene, or abets a contravention of, any order made under
section 3 shall be deemed to have contravened that order.
Offences by Corporations:
8. If the person contravening an order made under section 3 is a company or other body
corporate, every director, manager, secretary or other officer or agent thereof shall, unless he
proves that the contravention took place without his knowledge or that he exercised all due
diligence to prevent such contravention, be deemed to be guilty of such contravention.

9. 9
False statements:
9. If any person-
(i) when required by an order made under section 3 to make any statement or furnish any
information makes any statement or furnishes any information which is false in any material
particular and which he knows or has reasonable cause to believe to be false, or does not believe
to be true, or
(ii) makes any statement as aforesaid in any book, account, record, declaration, return or other
document which he is required by any such order to maintain or furnish;
He/she shall be punishable with imprisonment for a term which may extend to three years or
with fine or with both.
Cognizance of offences:
10. No Court shall take cognizance of any offence punishable under this Act except on a report
in writing of the facts constituting such offence made by a person who is a public servant as
defined in section 21 of the 16[ * * *] Penal Code.
Powers to try offences summarily:
11. Any magistrate or bench of magistrates empowered for the time being to try in a summary
way the offences specified in sub-section (1) of section 260 of the Code of Criminal Procedure,
1898, may, on application in this behalf being made by the prosecution, try in accordance with
the provisions contained in sections 262 to 265 of the said Code any offence punishable under
this Act.
Special provision regarding fines:
12. Notwithstanding anything contained in section 32 of the Code of Criminal Procedure, 1898,
it should be lawful for any Magistrate of the First Class specially empowered by the
17[ Government] in this behalf to pass a sentence of fine exceeding one thousand 18[ taka] on
any person convicted of contravening an order made under section 3.

10. 10
Presumption as to order:
13. (1) No order made in exercise of any power conferred by or under this Act shall be called in
question in any Court.
(2) Where an order purports to have been made and signed by an authority in exercise of any
power conferred by or under this Act, a Court shall, within the meaning of the Evidence Act,
1872, presume that such order was so made by that authority.
Burden of proof in certain cases:
14. Where any person is prosecuted for contravening any order made under section 3 which
prohibits him from doing an act or being in possession of a thing without lawful authority or
without a permit, licence or other document, the burden of proving that he has such authority,
permit, licence or other document, shall be on him.
Protection of action taken under the Act:
15. (1) No suit, prosecution or other legal proceeding shall lie against any person for anything
which is in good faith done or intended to be done in pursuance of any order made under section
3.
(2) No suit or other legal proceeding shall lie against Government for any damage caused or
likely to be caused by anything which is in good faith done or intended to be done in pursuance
of any order made under section 3.
16. [Repealed by section 2 and 1st Schedule of the Repealing and Amending Ordinance, 1965
(Ordinance No. X of 1965).]
(1) The words “between different areas in Bangladesh in respect of certain commodities” were
substituted for the words “between the Provinces” by section 3 and the Second Schedule of the
Bangladesh Laws (Revision And Declaration) Act, 1973 (Act No. VIII of 1973)
(2) The words “between different areas in Bangladesh” were substituted for the words “between
the Provinces and between different areas in a Province” by section 3 and the Second Schedule
of the Bangladesh Laws (Revision and Declaration) Act, 1973 (Act No. VIII of 1973)

11. 11
(3) The word “Bangladesh” was substituted for the word “Pakistan” by section 3 and the Second
Schedule of the Bangladesh Laws (Revision and Declaration) Act, 1973 (Act No. VIII of 1973)
(4) Clause (a1) was omitted by section 3 and the Second Schedule of the Bangladesh Laws
(Revision And Declaration) Act, 1973 (Act No. VIII of 1973)
(5) The word “Government” was substituted for the words “appropriate Government” by section
3 and the Second Schedule of the Bangladesh Laws (Revision and Declaration) Act, 1973 (Act
No. VIII of 1973)
(6) Sub-section (1) was substituted by section 3 and the Second Schedule of the Bangladesh
Laws (Revision and Declaration) Act, 1973 (Act No. VIII of 1973)
(7) Clauses (aa) and (aaa) were inserted by section 4 of the Essential Supplies (Amendment)
Ordinance, 1962 (Ordinance No. IV of 1962)
(8) The words “different areas in Bangladesh” were substituted for the words “a Province or in
different areas in a Province” by section 3 and the Second Schedule of the Bangladesh Laws
(Revision and Declaration) Act, 1973 (Act No. VIII of 1973)
(9) The words “between different areas in Bangladesh” were substituted for the words “between
the Provinces or between different areas in a Province” by section 3 and the Second Schedule of
the Bangladesh Laws (Revision and Declaration) Act, 1973 (Act No. VIII of 1973)
(10) The words “between different areas in Bangladesh” were substituted for the words “between
the Provinces or between different areas in a Province” by section 3 and the Second Schedule of
the Bangladesh Laws (Revision And Declaration) Act, 1973 (Act No. VIII of 1973)
(11) The words “in an area in Bangladesh an essential commodity to sell in another area thereof”
were substituted for the words “in a Province of an essential commodity to sell in another
Province or another area of the same Province” by section 3 and the Second Schedule of the
Bangladesh Laws (Revision And Declaration) Act, 1973 (Act No. VIII of 1973)
(12) Section 4A was inserted by Article 2 and the Schedule of the Central Adaptation of Laws
Order, 1964 (President's Order No. 1 of 1964)

12. 12
(13) The word “Government” was substituted for the words “Provincial Government” by section
3 and the Second Schedule of the Bangladesh Laws (Revision And Declaration) Act, 1973 (Act
No. VIII of 1973)
(14) The word “Government” was substituted for the words “appropriate Government” by
section 3 and the Second Schedule of the Bangladesh Laws (Revision And Declaration) Act,
1973 (Act No. VIII of 1973)
(15) The word “Government” was substituted for the words “appropriate Government” by
section 3 and the Second Schedule of the Bangladesh Laws (Revision And Declaration) Act,
1973 (Act No. VIII of 1973)
(16) The word “Pakistan” was omitted by Article 6 of the Bangladesh (Adaptation of Existing
Laws) Order, 1972 (President's Order No. 48 of 1972)
(17) The word “Government” was substituted for the words “Provincial Government” by section
3 and the Second Schedule of the Bangladesh Laws (Revision And Declaration) Act, 1973 (Act
No. VIII of 1973)
(18) The word “taka” was substituted for the word “rupees” by section 3 and the Second
Schedule of the Bangladesh Laws (Revision And Declaration) Act, 1973 (Act No. VIII of 1973)
(19) The word “Bangladesh” was substituted for the word “Pakistan” by section 3 and the
Second Schedule of the Bangladesh Laws (Revision And Declaration) Act, 1973 (Act No. VIII of
1973)

13. 13
In Bangladesh Perspective essential commodity act uses:
Bangladesh Perspective-Background:
Agriculture and processed food account for about 23 per cent of the gross domestic product
(GDP) employing around 54 per cent of the total workforce and 64 per cent of rural workforce
(BBS 2011). Despite their important roles and contribution, these sectors have been beset with
impediments such as loan investment, poor state of rural market infrastructure, market
imperfections, absence of risk minimising instruments, fragmented markets, information
asymmetry, inadequate technical know-how and financial resources of farming communities.
These constraints resulted in incoherent supply responses, fluctuation of prices, unfair prices
faced by the farmers, presence of a large number of speculators driving a significant wedge
between farm gate and retailers' prices, low productivity and exposed to risks affecting rural
development, rural welfare and poverty situation.
Against this backdrop, the government of Bangladesh in general and the Ministry of Commerce
(MOC), in particular, have been exploring ways to mitigate uncertainties of farmers by reducing
their risks, dissemination of prices, attracting investments and improving the state of rural market
infrastructure. The widespread adoption of CESs across many emerging economies and
developing countries as an effective tool to address the above-mentioned impediments
encouraged the MOC to assess the feasibility of introducing such a system in Bangladesh. As
part of this exploration, the MOC fielded missions to various commodity exchanges as well as
conducted a comprehensive assessment of the system incorporating local market perceptions,
views and conditions for establishing the system in Bangladesh. The state of strength and
weakness of various pre-requisites is essential for successful implementation of a CES. The
observed strengths are-stable macro-economy, broad market infrastructure, presence of an active
regulatory institution with adequate provision to incorporate other derivatives. Weakness may lie
in the areas of ware housing, quality assurance facilities and banking network.
Pre-requisites:
A stable macro economy had been one of the strongest areas in Bangladesh during the last
decade. Most of the key macro-variables either experienced improvement or remained stable
during the last decade. Macroeconomic performance has been reasonably stable in a period of
global economic uncertainty and elevated food and fuel prices. During the 1990-2011, the
growth rate expanded significantly leading to over 5 per cent per annum on a 10-year average,
but importantly exceeding the 6 per cent for a number of years in 2000-2012. The rising long-
term growth trend gives optimism that even higher growth (i.e. over 6 per cent) is possible,
provided policy reforms further strengthen the determinants of past growth.
Bangladesh is also well placed to attain most of the millennium development goals. Moreover,
the economic outlook over the medium term also was projected to be strong and stable.
The Perspective Plan targets 8 per cent GDP growth rate by 2015, and 10.0 per cent by 2021
with a significant improvement in living standard through a substantial rise in employment,

14. 14
higher output and export growth as well as drastic reduction in poverty while maintaining
macroeconomic stability.
There is an extensive network of agricultural markets in Bangladesh with diverse economic
activities and market players including producers, collectors, and a myriad of traders,
wholesalers and retailers. Furthermore, compared to most countries in the region, the density of
market network in Bangladesh is very high, surpassed only by some of the more developed
Indian states such as the Punjab. For example, in the northwest of Bengal, the population served
the average of around 16,000 persons per market (Action Research Proposal & Scoping Report,
for KATALYST from HB Consultants, Ltd. p. 23).
According to the Upazila-based Local Government Engineering Department (LGED) of
Bangladesh, there are 17,121 rural markets, while a survey by the Department of Agricultural
Marketing (to see more, please visit http://www.dambd.org/welcome.htm) has reported that there
are 16,476 rural markets (Rural markets in the coastal char region, (MALLORIE/ASHRAF,
IFAD, 2005). Rural markets can very broadly be classified, in terms of size and economic
activity, as follows; (i) primary markets; (ii) assembly markets; (iii) secondary markets; (iv)
terminal/wholesale markets; and (v) other channels. In a survey of markets in 1994-95, the DAM
identified around 5,000 rural primary markets, 3,000 assembly markets, 55 urban wholesale
markets, 182 urban retail markets and 40 urban combined wholesale/retail markets. In reality,
few, if any, Haats are purely primary, secondary, or terminal in function. However, the majority
of high valued crops are sold by farmers at assembly markets (66 per cent) and through on-farm
or "farm-gate" sales (20 per cent). Distances to both primary and secondary markets in the
northwest of Bengal, for example, are very short, averaging 2.4 km and with catchment areas of
around 10 villages per market.
The Securities and Exchange Commission has been regulating the financial derivates since its
inception in 1993. The rules and laws of the SEC allow regulation of commodity derivates in
addition to the financial derivates. Relevant sections are found in the existing laws which make
possible for the part of the Securities and Exchange Commission of Bangladesh to promote and
regulate derivatives markets.
Information on ware housing and quality assurance facilities in Bangladesh are sketchy and
hence it is difficult to delineate a clear status of these linked elements of a commodity market
system (there are about 297 cold storages across the country with a capacity to preserve 22 lakh
tonnes of potato, including 4.5 lakh tonnes of seed). However, growth of these linkage industries
(or facilities) is likely to happen with satisfactory performances and growth of the commodity
exchange system. Their growth will be demand driven. The Indian experience is worth
mentioned in this case. Even if these facilities are inadequate at this stage, on the basis Indian
and global experiences it may be safe to suggest that adequate and propose facilities in the areas
of ware housing and quality testing would come up fast with the expansion of the commodity
exchange market.

15. 15
Local level Perceptions:
As part of the comprehensive study, a primary survey was conducted to obtain information on
value chains on two selected commodities - potato and jute - with a view to examining the
possibility of introducing CES for these two types of commodities. Field surveys were conducted
during September-October, 2008 with the help of structured pre-tested questionnaires. Around
500 respondents were interviewed in the field survey. In order to gather market participants and
farmers' views on some key attributes of the commodity future exchanges some questions were
listed keeping in mind the field situations, market conditions and potential benefits. More
specifically, we asked them: (i) if they were getting fair prices or returns from their activities; (ii)
if they think options for future sale of their products under formal arrangements may reduce the
risks; (iii) if they get benefits using ware housing facilities; and (iv) what is the current state of
quality control facilities at the warehouse. Most of the respondents of both potato and jute
surveys reported that they were not getting fair prices of their products. Almost all the
respondents favoured future selling and buying options since this may reduce their risks and
uncertainties significantly. Most of the respondents opined that provisioning of well functioning
ware housing system would help improve production and supply response.
A separate structured questionnaire containing eleven questions was also used to gather
perceptions of the 'stakeholders' drawn from business communities, think-tank and research
institutions, and academicians. An information package consisting of one questionnaire and a
brief note on commodity exchange was sent to the selected stakeholders before the interview was
conducted. The selection of stakeholders was done to cover a broad spectrum of them-
representatives of business community; derivatives market experts, representatives of think-tank,
representatives from the Better Business Forum, researchers and academicians. Most of them in
principle favour introduction of a commodity future exchange in Bangladesh since they believe a
properly regulated future exchange would benefit agriculture sector through price discovery, risk
management, coherent supply response, inflow of investment to improve rural market
infrastructure (i.e. spot market, warehousing and quality control etc). There are some differences
regarding identification of commodities for futures trading. Some of commodities identified by
them are: (i) Potato; (i) Jute; (iii) Tea; (iv) Sugar; (v) Gold; and (vi) Silver etc. Although most of
them opined about having a separate regulatory body to oversee the commodity future
exchanges, some of them preferred a phased progress towards an independent regulatory body.
That is, at the initial stage the Securities and Exchange Commission (SEC) may oversee the
activities of a future exchange through a specialised division which in due course based on
market expansions and needs is turned into a separate regulatory body.

16. 16
Concluding Observations:
Although, in principle, any commodity fulfilling certain conditions may be traded on a CES, to
avoid complexities of handling large numbers as well as sensitive commodities, trading in a
limited number of commodities is recommended in the initial few years of its inception. The
choice (mainly of agricultural commodities) is governed by the evidence of distress selling (e.g.
Potato and Jute), encouraging production via risk management (i.e. hedge) and discovering fair
prices, and linkage with global market. More specifically, these are: (i) Potato, (ii) Jute, (iii)
Spices, (iv) Pulses, (v) Gold, and (vi) Silver.
Experiences in other countries suggest that effective regulation overseeing contract,
monitoring actions of the actors, finding out innovative solutions are critical for success of a
CES. Majority of the respondents who took part in the perception survey recommended that
a "specialised regulatory commission" should oversee the operations of a commodity
exchange. Agreeing to their view, we recommend formulation of a new 'Specialised
Regulatory Framework' in phases commensurate with the expanding operations of the
commodity future exchange. Our suggestion is that the SEC may act as a regulatory body
through formation of a separation division during the initial stages. In due course,
depending on demands, the volume of transactions and the nature of contract, a full-fledged
regulatory body may be established.
It is noted that investment requirements are large and a significant part of the resources will
be used for acquiring automation and related technology. This is a technology and human
resource-based activity and hence success of this venture would depend critically on
engagement of experts and technology. There is little scope for experimenting with the
technical aspect of the commodity exchange. Both local and foreign entrepreneurs who are
conversant in this field would most likely come forward to investment in this venture.
Warehouse/cold storage receipts may be allowed to be traded on the proposed commodity
exchange. We believe this measure will encourage rural financing via warehouse/cold
storage as well as create a scope for direct participation of the producers in commodity sale.
Quality and quantity control of commodities traded on an exchange is an integral
component of the exchange. Quality and quantity control task may be only entrusted to the
private sector organisations thereby paving the way for participation of private institutions.
Trading in commodities on commodity futures exchanges is a new concept in Bangladesh.
The responses received during field/perception surveys indicate the low level of knowledge
about potential impacts of a commodity exchange. As is true with any instruments, the
success depends on optimal use of an instrument. Lack of knowledge could surely bar
stakeholders from taking full advantages of the system. Thus to reap full benefits with wider
participation of stakeholders a massive awareness campaign must be initiated at all levels of
the system. Government, private sectors, media, development partners, non-government
organisations, and civil society activists should be encouraged to participate in the

17. 17
Reference:
 Wikipidea.com
 Bdlaw.minlaw.gov.bd
 www.lawcommissionbangladesh.org
 Weekly Financial express
 Md. Jahidul Alam
Assistant Professor
BUP