Bangladesh Bank (BB) has introduced a comprehensive electronic Foreign Exchange (FX) Market Module designed to automate and streamline foreign exchange intervention auctions, interbank FX transactions, and the collection of market data for the preparation of the reference exchange rate. The system aims to improve efficiency, transparency, accuracy, and regulatory oversight in the country's foreign exchange market.
The FX Market Module will automate the entire FX intervention process, including auction management, bid submission and evaluation, allocation, reporting, and record-keeping. Bangladesh Bank will conduct FX buying or selling auctions when required as part of its market intervention operations. Auction notices will be published specifying the auction amount, date and time, transaction type, eligible participants, and other applicable requirements.
Authorized Dealer (AD) banks will submit their bids electronically within the prescribed cut-off time. The system will also serve 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 the 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 the construction of the reference rate, while wage-earner remittance transactions must be reported regardless of their size.
