Bangladesh Bank (BB) is introducing a comprehensive electronic Foreign Exchange (FX) Market Module to automate and streamline foreign exchange intervention auctions, interbank FX transactions and the collection of market data for preparation of the reference exchange rate.
According to the Operational Guidelines on the FX Market Module, the system is designed to improve efficiency, transparency, accuracy and regulatory oversight in the country's foreign exchange market.
The module will automate the entire FX intervention process, including auction management, bid submission and evaluation, allocation, reporting and record-keeping. Bangladesh Bank may conduct FX buying or selling auctions when required as part of its market intervention operations.
Under the system, Bangladesh Bank will publish auction notices specifying the auction amount, date and time, transaction type, eligible participants and other applicable requirements. Authorized Dealer (AD) banks will then submit their bids electronically within the prescribed cut-off time.
The system will also operate as a centralized electronic dealing platform for interbank FX transactions among AD banks.
Spot, Forward and Swap transactions will be conducted through the platform, with trade confirmation, transaction monitoring, reporting, audit trails and record management incorporated into the system.
For Spot transactions, the settlement cycle may be up to T+2, while Forward transactions will be settled according to the specified tenor. Swap transactions will consist of two legs-a spot transaction and a forward transaction, or vice versa-with separate settlement procedures for the near and far legs.
The guidelines provide separate responsibilities for Front Office, Mid Office and Back Office users of AD banks.
Front Office users will create and accept FX deals and submit or authorize auction bids, while Mid Office users will administer user IDs and dealer limits. Back Office users will handle foreign currency and taka settlement as well as reporting.
The new system will also support preparation and publication of the official FX Reference Rate (RR).
AD banks will submit standardized client-level data on export, import and remittance transactions, which will be used to calculate the reference rate for the foreign exchange market.
Under the guidelines, AD banks will have to submit client-level FX transaction data three times on each business day.
Data covering transactions up to 11:00am must be submitted by 11:30am, while data up to 4:00pm must be submitted by 4:30pm. Transactions conducted after 4:00pm may be reported by 11:00am on the following working day.
Even if there is no reportable FX transaction during a reporting period, banks will have to submit a "Null Report".
Transactions equivalent to US$100,000 or above are required for construction of the reference rate, while wage-earner remittance transactions must be reported regardless of their size.
The guidelines say AD banks will be able to submit client-level data either through a prescribed Excel file or by entering individual transactions directly into the system.
Submitted data will be subject to approval by designated Checker users, creating a maker-checker mechanism for the reporting process.
The electronic platform is expected to reduce manual intervention and processing time while strengthening transparency and standardization in Bangladesh's foreign exchange market.