Regulatory Alerts2008-05-25
Added · Updated
FE Circular No. 04: Hedging the price risk of commodities
Authorized Dealers in Foreign Exchange in Bangladesh may hedge customer commodity price risks using standard exchange-traded futures, options, and OTC derivatives, subject to prior approval from Bangladesh Bank. Transactions are permitted only for genuine underlying exposures, requiring full back-to-back hedging with international banks, strict prohibition of speculation, and mandatory disclosure of costs and downside risks to clients. Authorized Dealers must submit suitability forms and price forecasts with applications, adhere to IAS 39 accounting standards, and report all approved transactions and maturities to Bangladesh Bank on a monthly basis.
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