Bangladesh Securities and Exchange Commission (BSEC) Chairman Masud Khan said the commission will take steps to halt trading in shares of companies that have shut down production or remained non-operational for a long time.
He made the remarks Thursday at a “CMJF Talk” event organized by the Capital Market Journalists Forum (CMJF) in Purana Paltan, in the capital.
He further said there is no scope anywhere in the world for trading shares of defunct companies. That is why steps are being taken to halt trading in shares of long-inactive companies on Bangladesh’s capital market as well. At the same time, various measures are being taken to make the capital market more efficient, transparent and investment-friendly, including simplifying the IPO process, expanding direct listing opportunities, revising margin loan policy, introducing T+1 settlement, bringing the bond market into the main market, and introducing derivatives.
Masud Khan said several important changes have already been made to capital market management. The Dhaka Stock Exchange (DSE) has been given greater authority in market monitoring. Previously, DSE had to wait for commission approval to take action on abnormal share price movements or trading activity. It has now been given the necessary authority to take immediate action. The authority to set circuit breakers has also been handed to the stock exchange.
He said strengthening the country’s capital market requires strengthening the mutual fund sector. Since it is difficult for most retail investors to select good companies, there are plans to introduce a financial advisor certification, modeled on foreign practice. Work is also under way to revise mutual fund, margin loan and public issue rules.
The BSEC chairman said entrepreneurs currently have to wait a long time and submit extensive paperwork to go public through an IPO. As a result, many companies choose bank loans as an easier alternative. For this reason, steps have been taken to simplify the IPO process.
He further said large private companies will also be given the opportunity for direct listing in the future. Currently, only state-owned companies receive this facility by offloading 25% of shares. Under the new system, all types of companies will be able to pursue direct listing by offloading just 10% of shares.
On margin loan policy, Masud Khan said the existing policy has so many conditions that it has become difficult for investors to obtain loans. A draft of new rules on this will be published next week. Once the gazette is published, obtaining margin loans will become easier.
He said that despite criticism after taking office, the decision was made to withdraw the floor price. Steps have also been taken to resolve issues related to Global Depository Receipts (GDRs) to protect the country’s image in international markets.
The BSEC chairman also spoke of efforts to reduce settlement time. He said share trading settlement currently takes two days to complete. Steps are being taken to reduce this to T+1, meaning one day. Bangladesh Bank is working on this matter.
Masud Khan also spoke of plans to change the legal framework to ensure effective punishment for those who violate capital market rules.
He said that although BSEC currently imposes fines, most of them get held up in court. One past commission imposed fines totaling nearly Tk 15 billion, but only Tk 3.3 million was actually recovered. To change this situation, steps are being taken to form special benches and to allow direct filing of cases in capital-market-related tribunals.
He also spoke of plans to activate the bond market by listing bonds currently on the Alternative Trading Board onto the main market. Preparations are also under way to introduce derivatives.
বাংলায় মূল প্রতিবেদন পড়ুন · Read the original Bengali report