Introduction about Derivative Market:
Derivatives are an Instruments or Items that have no value by itself but derives its value from underlying assets. The underlining assets could be a stock, bonds, goods, rate of interest, forex rates or stock or any other market indices, rain fall, temperature etc. Derivatives are leveraged products. Derivatives could be traded under Forward Contract, future contract and Options.
In Bangladesh there’s no Future and Forward Market yet. But there’s enormous chance for Future and Forward Market. You will find really three kinds of investors exist later on and Forward Market. Speculators, take position to achieve in the expected fluctuation within the cost of future contracts with time. Hedgers, take position to lower their possibility of movements of great interest rate or stock cost later on. And Arbitragers, who makes make money from temporary cost fluctuations. Future and Forward Marketplace is a structured marketplace where financial futures contracts are traded. These market places obvious, settle and guarantee all transactions that occur on their own exchanges.
2. Prospects and Benefits of Future and Forward Market in Bangladesh from various Stakeholders View Points:
2.1 In the Authoritys (SEC) Perspective:
As you may know in Bangladesh SEC (Security Exchange Commission) may be the authority to which the next and Forward Market will establish and brought care off. According to SECs view point they stated that today the entire focus of person investors, institutions and corporations take presctiption Stock Market. This place a limitation for various investors to select investment options. If there’s any Future and Forward Market beside Stock Market it may offer an choice for the investors to escape incurring losses. Our economy is definitely an emerging economy but still growing. Because the economy will grow the soon you will see Future and Forward Market.
2.2 In the Investors perspective:
As it’s been stated earlier that, the investors are prepared to convey more choices for their investment. Future and Forward Market could possibly be the solution on their behalf. Different factors in regards to this matter discussed bellow,
Like every one (investor) who invested in stock market as well as an index market of securities. Its an Hedging according to index. So, the investor may incur reduction in share market but he is able to grow in the hedging for your product market.
Countries that have unstable economical condition like Bangladesh Forward and Future contract could be helpful. Due to unstable economy cost fluctuation is typical within our country. Future and Forward Market can help to eliminate problems arise because of unpredictable cost condition.
Future and Forward Marketplace is a spot for all type of investors. Individuals, who wish to take risk (Speculators), who wish to avoid risks (Hedgers) and who wish to utilize temporary cost fluctuations (Arbitragers).
2.3 In the Macro Economical Perspective for Bangladesh:
Mostly investments derive from the Stock Market these types of this it be a very sensitive sector. Fall which can make economical disaster. And that’s why there must be parallel market which will also help the economy to obtain heal when there any economical catastrophe especially due to Stock Exchange.
To be able to permit the economy to develop it is important to disseminate different branches to produce new investment possibilities. Stock markets along with other derivatives market associated with a country is just one of indicator which informs the effectiveness of that countrys economy. Additionally, it preferred for Bangladesh. Because the economy goes beside stock market the nation may also searching for other investment possibilities. This can leads the idea of creating the next and Forward Market in Bangladesh.
3. The Drawbacks to determine Future and Forward Market in Bangladesh:
Beginning something the very first time is definitely required to face and overcome some obstacles. To be able to set up a Future and Forward Market in Bangladesh we want some logistic supports.
First of all, we want plenty of experts who can design and control the marketplace. We all know this can be a very new idea for many of the people in our country. Because there’s no such market in Bangladesh these types of this there’s a couple of figures of pros and knowledge of here. Lesser quantity of graduates we’re getting in regards to this subject from your universities and institutions who are able to work with this sort of project. Lesser quantity of researchers we’re getting within our country. To be able to set up a Future and Forward Market we have to hire professionals and expert individuals from the overseas countries and that is costly.
Next, within our country investors aren’t much educated who are able to understand Future and Forward Market scenarios and activities. It will require time for you to get educated or comprehend the market. At the moment someone may want to enjoy extra benefit that is undesirable.
Thirdly, for any Future and Forward Market we want large numbers of investors which we’re presently missing off. Like a developing nation we don’t have sufficient investors who’re getting bulk quantity of financial reserve. Whereas the next and Forward Market requires a strong quantity of investors whose investment will run as bloodstream from the market and it alive.
Another factor is the fact that once the investors do their business later on and Forward Market they’re ensure through the market about the caliber of their underlining product. Whereby Bangladesh there’s a hazard in this sort of matter or activities. Last although not minimal, the political instability is yet another major problem with this kind business. Problems arise because of Political instability could be a drawback for Future and Forward Market. There are lots of farming assets that might get unusable whether it stored for extended time or might the price increases because of lengthy time upkeep or stock.
We’re developing nation and our economy keeps growing daily to be able to contend with the planet emerging economy. As part of development we’re expecting Future and Forward Sell to type in our economy in addition to country. We surely benefited form it, when we can correctly keep it in check. We are able to have our minerals like Gas is definitely an underlining asset. You can lessen the cost fluctuation mainly cost rise in the daily goods like grain along with other farming goods. For that wellbeing from the economy we have to establish our Future and Forward Market in the united states.