Bangladeshi Exchange Goes Advanced-Auto with FlexTrade and NASDAQ OMX Solution

Bangladesh’s main financial trading venue has reported a partnership with two global giants to evolve its capital and financial markets infrastructure.

The Dhaka Stock Exchange (DSE) will engage with NASDAQ OMX and FlexTrade Systems to develop a revolutionary trading terminal. The move comes as Asian economies migrate their trading ecosystems to accommodate the growing needs of institutional and foreign investors.

The DSE chose NASDAQ OMX and FlexTrade after a rigorous review of several technology solutions over a 6 month period. In South Asia, the DSE has been at the forefront of automated systems since the pre-millennial period. The exchange installed its first fully automated trading system in August 1998.

Under the new arrangement, the DSE will deploy NASDAQ’s solution for exchange participants, the XStream INET. The trading terminal gives DSE a number of mechanisms to further develop its financial markets trading landscape, with advanced order types, pre and post trade Risk Management and reporting tools. XStream INET, a multi-asset platform, will enable the DSE to offer a full front-to-back regulated and supervised solution.

The Managing Director of NASDAQ OMX, Robert Fröjd, commented about the partnership in a statement, he said: “We are very proud to have been selected by Dhaka Stock Exchange, the premier exchange in Bangladesh, to provide it with our world leading trading system, X-Stream INET. We look forward to a long and successful relationship with Dhaka Stock Exchange and supporting its business development plans in this strategic and dynamic part of the world.”

Bangladesh has been an example economy which has undergone significant change and development over the last thirty years, a country that was engulfed by poverty, it has strengthened its overall position. In 2013, the Bangladeshi economy grew over 6%.

The government is keen to enhance the stock exchange as it believes it is a pivotal part of the overall economy. The average daily trading volume at the exchange is $38 million, however in a 5 year plan for the exchange submitted in 2013, DSE officials are looking to reach $250 million in ADV.

FlexTrade extends its global reach through the partnership. The firm, founded by Vijay Kedia, was established in 1996. FlexTrade has recently renewed its solution to one of India’s largest private banking groups, ICICI.

Bertrand Rassat, Principal and Executive Director at FlexTrade Systems, spoke about the new system collaboration in the media briefing:“We are delighted to be part of the process of upgrading the trading system at Dhaka Stock Exchange. Our deployment at the Dhaka Stock Exchange represents an important milestone in the strategic positioning of our global exchange execution management systems. We are confident of meeting the needs of Dhaka Stock Exchange in this mission critical project.”

The DSE has been active for over half a century, it was established in 1954 and is the main securities market place for primary offerings. The exchange boasts over 3 million trading accounts.

Margin Trading

Bangladesh has been slow to enter the world of online margin trading in comparison to its neighbours, despite being a latecomer, the 150 million plus nation has been one of the fastest growing markets for the derivatives product as investors look outside traditional asset classes for higher yields. FX is promoted through online affiliates & banner advertising with most novice traders having little or no prior exposure to investment products.

Over the last six years a number of domestic introducing brokers (IB) have been operating in the country, primarily promoting the product through running training sessions, (webinars, seminars and blogs) and consequently introducing the clients to international brokerage firms. The main brokers with a physical presence either through an IB or the broker's own office include; Insta Forex , Admiral Markets and UWC FX.

BDFOREX Pro, a popular forum in Bangladesh language allows users to discuss topics related to FX trading. Social media channels have been a useful channel of communication for traders and brokers, NordFX’s Bangladesh Facebook page has over 18,000 likes, in addition a Bangladeshi FX traders group has 1,800 members.

In 2012 the country’s banking regulator warned investors of the dangers of high risk investment products. Bangladesh has significant growth opportunities for FX and CFD trading as the middle class grows with access to higher disposable income. Like neighbours India and Pakistan, Dubai could act as an intermediary for firms looking to establish operations without the baggage of domestic regulation. There are over 500,000 overseas Bangladeshi's living in Dubai.

The deployment of FlexTrade’s execution management systems paves the way for advanced systems that can be implemented across asset classes, in its 5 year plan, the DSE states that it expects to launch financial derivatives during this period.

*This article has been updated since its first release.