Presentation on The financial

market indicators of bangladesh

 Submitted to
 Mohammad Rakib Uddin Bhuiyan
chairman
Department of International Business, faculty of Business
University of Dhaka
 Submitted by :
 01. Mohammad Mahbub Alam Id No:801723049
 02.Md. Habibur Rahman Sarker Id No:801516049
 03.Sayed ifakhar alam Id No:801722036
 04.Mohammad Riyad Ghauri Id No:801723047
Introduction on Bangladesh
financial market
 The financial market in Bangladesh is mainly of
following types:

 Money Market: The money market comprises banks

and financial institutions as intermediaries, 20 of
them are primary dealers in treasury securities.
Interbank clean and repo based lending, BB's repo,
reverse repo auctions, BB bills auctions, treasury bills
auctions are primary operations in the money market,
there is also active secondary trade in treasury bills
(upto 1 year maturity).
Foreign Exchange Market
 Foreign exchange Market is a place in which foreign
exchange transactions take place. In other word,
foreign exchange transaction is a market where foreign
money were brought and sold. It is a part of money
market in financial centre.
 Capital market:The primary issues and secondary
trading of equity securities of capital market take place
through two (02) stock exchanges-Dhaka Stock
Exchange and Chittagong Stock Exchange. The
instruments in these exchanges are equity securities
(shares), debentures and corporate bonds. The capital
market is regulated by Bangladesh Securities and
Exchange Commission (BSEC).
 Taka Treasury Bond market: The Taka treasury
bond market consists of primary issues of treasury
bonds of different maturities (2, 5, 10, 15 and 20 years),
and secondary trade therein through primary dealers.
20 banks performing as Primary Dealers participate
directly in the primary auctions. Other bank and non
bank investors can participate in primary auctions and
in secondary trading through their nominated Primary
Dealers. Non-resident individual and institutional
investors can also participate in primary and secondary
market, but only in treasury bonds.
3.Presently indicators on
bangladesh money market and
comment on its status
The Bangladesh economy is within the mainstream of
the continuously changing global financial system.
Domestic as well as international trade also
characterizes Bangladesh economy. Hence a financial
system has developed here consisting mainly of the
capital and the money market..
 Money Market: The money market comprises banks
and financial institutions as intermediaries, 20 of
them are primary dealers in treasury securities.
Interbank clean and repo based lending, BB's repo,
reverse repo auctions, BB bills auctions, treasury bills
auctions are primary operations in the money market,
there is also active secondary trade in treasury bills
(upto 1 year maturity).
 The money market in Bangladesh is in its transitional
stage. The various constituent parts of it are in the
process of formation, while continuous efforts are
being made to develop appropriate and adequate
instruments to be traded in the market. At present,
government treasury bills of varying maturity,
Bangladesh Bank Bills and Certificates of Deposits etc
in limited supply are available for trading in the
market
 The money market currently existing has also
developed due to certain needs. In general, these
needs can be termed as need for short term liquidity
within our financial system, to carry out the day to day
economic activities and obviously to meet and match
need for short term lending and borrowing of the
participants within the financial system. T-bill market
is by far the largest component of the money market in
Bangladesh
 The money market of Bangladesh reached its present
phase through a series of changes and evolution.
Initially, after liberation, money market was the major
constituent part of the financial market of the
country.
An Overview
Bangladesh Capital Market & It’s Status
 The capital market will remain moderately bullish this year thanks to the stable economic
growth and low interest rates.
 The forecasts were made by the majority of the respondents in a recent survey on the
Bangladesh capital market conducted by Lanka-Bangla Securities.
 DSEX, the benchmark index of Dhaka Stock Exchange, crossed
the 5,700-point mark for the first time, while turnover
scaled a six-year high of Tk 2,100 crore.
 Weak regulatory framework will be the biggest risk to the capital
market this year, according to 31.8 percent of the respondents.
 Local infrastructure bottleneck will pose the biggest risk to
Bangladesh economy this year.
 Lack of investor confidence, political stability and intervention
through frequent policy changes by regulators were also identifi-
ed as risks to the capital market, according to the survey.
Introduction
 Bangladesh Capitalis one of the smallest and third largest in South Asia running
with two full-fledged automated stock exchanges Dhaka Stock Exchange and
Chittagong Stock Exchange.

 Over the last 12years, Bangladesh Economy sustained an average GDP growth of
6% p.a.

 As per the capital market master plan set out (2012-2022), Bangladesh made
significant strides towards strengthening Capital Market.
Presently indicators on Bangladesh
foreign exchange market and
comment on its status
 Foreign Exchange Market
 Foreign exchange Market is a place in which foreign
exchange transactions takeplace. In other word,
foreign exchange transaction is a market where
foreign moneywere brought and sold. It is a part
of money market in financial centre.
 Function of foreign exchange market:
 The basic andprimaryfunction
of a foreign exchange market is to transfer purchasing
power betweencountries. The transfer function is
performed through T.T, M.T, Draft, Bill of exchange,
Letters of credit, etc. thebill of exchangeis the most
importantand effective method of transferring
purchasing power between two parties
 Limits of Foreign Exchange Trading
 The foreign exchange market of the country is confined to the
city of Dhaka. The 32 scheduled banks operating as authorized
dealers in the inter-bankforeign exchange market are not
permitted to run a position beyond
certainlimits. In the event of speculation on an appreciation of th
e value, anauthorized dealer may buy more foreign currencies
than it needs, but at theend of the day it must maintain its limit
by selling excess currencies either inthe inter-bank market or to
customers. Authorized dealers maintain clearingaccounts with
the Bangladesh Bank in dollar, pound sterling, mark and yento
settle their mutual claims.
 Size of the Market
 The size of the market may be difficult to measure but estimates
can bemade based on figures of export, import, remittance, and
interbank foreignexchange transactions.Before deregulation of
foreign exchange market the volume of inter-banktransaction
was low. The assured access to funds from Bangladesh Bank
atknown cost as well as the assured buy-sell margins and
transaction feescontained in the pre-determined exchange rate
provided little inducementfor authorized dealers to engage in
inter-bank transactions. However, thesituation has been
changing and the reliance of authorized dealers on
theBangladesh Bank is gradually declinin.
Presently indicators on
bangladesh derivatives market
and comment on is status
 Derivatives are an important class of financial
instruments that are central to today’s financial and
trade markets. They offer various types of risk
protection and allow innovative investment strategies.
 Definition of derivatives:
 A derivative is a contract between a buyer and a seller
entered into today regarding a transaction to be
fulfilled at a future point in time.
 Types of Derivatives:
 Over-the-counter (OTC) derivatives are contracts that are traded directly
between two parties, without going through an exchange or other intermediary.
 Exchange-traded derivatives (ETD) are those derivatives instruments that are
traded via specialized derivatives exchanges or other exchanges. A derivatives
exchange is a market where individual trade standardized contracts that have been
defined by the exchange.
 Forward is a non-standardized contract between two parties to buy or to sell an
asset at a specified future time at a price agreed upon today, making it a type of
derivative instrument.
 Futures contract is a standardized contract between two parties to buy or sell a
specified asset of standardized quantity and quality for a price agreed upon today
with delivery and payment occurring at a specified future date, the delivery date,
making it a derivative product.
 Swap is a derivative in which two counter parties exchange cash flows of one
party's financial instrument for those of the other party's financial instrument. The
benefits in question depend on the type of financial instruments involved.
 Derivatives present status in Bangladesh
 It has increased volatility in capital market.
 It has increased defense against abnormal growth in
capital market.
 It has increased protection in major export sector.
 It has increased protection in major import sector.
 The derivatives market has attained the highest growth of all
financial market segments in recent years and has become the
central contributor to the stability of the financial world. In
recent years, derivative markets have grown by leaps and bounds
in emerging economics and given the high level of economic and
financial risks faced by market participants and investors in
emerging countries, derivatives contribute to a country's
economic development by making these risks manageable. Due
to the recent catastrophic fall of capital market, rapidly declining
FDI and scarcity of investment opportunities in an equity centric
economy, investors of Bangladesh is crying out for an innovative
and versatile financial product such as derivative securities for
hedging and market expansion
Conclusion
 Bangladesh’s financial sector would need to play an important role in
achieving the economic and social development objectives of the
Seventh FYP and it is understood that the developing the financial
system is a long term process. Given the range of issues confronting
each important segment of the financial sector, separate sets of
recommendations have been made for all financial sector components.
The government in collaboration with the relevant regulatory agencies
(such as Bangladesh Bank, Security and Exchange Commission of
Bangladesh, IDRA) should be able to implement most of these
recommendations during the Seventh Plan period in consultation with
private sector stakeholders. Technical support from international
development and financial institutions like the World Bank and IMF
(as in the case of the banking system), Asian Development Bank ( as in
the case of stock market and insurance sector reforms) and others may
be helpful in implementing the reform agenda.