Describing the stock market as very important and effective source of resource mobilisation for the sustained growth and progress of the country, they suggested that introduction of these new products can help build investors' confidence.

Introduction of 'derivatives' will push the liquidity of the existing equity market, while a scientific process of price discovery through initial public offering (IPO) like 'book building' can ensure an appropriate balance between the demand of a company's share and an investor, they told the workshop.

Derivative is a financial instrument whose characteristics and value depend upon the characteristics and value of an underlier, typically a commodity, bond, equity or currency. Examples of derivatives include futures and options. Advanced investors sometimes purchase or sell derivatives to manage the risk associated with the underlying security, to protect against fluctuations in value, or to profit from periods of inactivity or decline. These techniques can be quite complicated and quite risky.

To promote derivative instrument and book building method, the Chittagong Stock Exchange (CSE) organised it for the local journalists at its Conference Hall, according to a press release.

Editor of the daily Azadi M A Malek attended the workshop as chief guest.

CSE First Vice President Nasiruddin Ahmed Chowdhury and the bourse's Chief Executive Officer (CEO) A B Siddique spoke among others.

M A Malek said,"The more active and vibrant the capital market of a country, the greater its industrialisation pace and robustness of economy."

He asked for a concerted effort among journalists, professionals and investors to address the hurdles prevailing in the capital market.

The veteran journalist pointed to the fact that Bangladesh's market capitalisation is around 6 billion US dollars, which is approximately 8 to 9 percent of GDP, whereas in India, market capitalisation is 80 percent of its GDP and in Pakistan it is 40 percent.

The speakers said in most of the countries, public issue of common shares is generally carried out in two ways: fixed price method and book-building method.

They said in Bangladesh, fixed price method is being followed, which does not provide comfort to the big issuers with regard to actual price discovery of their particular issue and they feel shy to go public for inappropriate pricing of their securities.

This feeling encourages many companies to look at other avenues for raising funds instead of IPO, they also pointed out.

In book building method, the issuer in association with the issue manager sets a floor price with a price-band, with a lower limit ('the floor') and an upper limit ('the ceiling') within which the investors are allowed to bid for shares. The final price, however, is determined by the demands received from the investors. The investors' demand at a specified price band is recorded in an electronic order book and a book is built. Thus the term 'book building' emerges.