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Dhaka Stock Exchange, the country’s premier bourse, has failed to achieve its objectives set forth by the demutualization scheme over the last eight years, especially due to the board’s influence on its management.
The office of the Managing Director, the most vital post of the demutualized Dhaka Stock Exchange, seems to have become a revolving door.
In the last 24 years, 12 people have held the title of managing director or chief executive officer on the stock exchange with only three completing the full three-year term.
After the stock market crashed in 2010, stakeholders demanded that the government ensure monitoring to stop manipulation and bring transparency to the stock market to restore investors’ confidence.
Following the demand, the act was passed in parliament in 2013.
Some top officials of the stock exchange said due to a series of disagreements with the premier bourse’s board of directors and the board’s interference in regular work, the MDs of DSE had not been able to complete their full terms.
A director of the DSE preferring anonymity told The Business Post that some managing directors were bypassing the DSE’s internal rules and regulations while relevant committees and the board thought their behavior to be arrogant.
The office of MD becomes a revolving door
The bourse’s most recent MD Tarique Amin Bhuiyan resigned 13 months into his term. He resigned on Tuesday allegedly following a series of disagreements with the premier bourse’s board of directors.
The resignation of Tarique Amin was accepted by its board of directors on Thursday. The resignation of Tarique Amin will take effect after 14 days of its acceptance as per rules since the appointment was not permanent, officials who were present at the meeting told The Business Post.
The promotion of around 95 DSE employees this week included several eligible senior posts but Tarique Amin did not care about any of the Nomination and Remuneration Committee (NRC) of the DSE Board approval.
On 25 July last year Tarique joined DSE. The DSE Board of Directors in its 1,008th meeting held on 4 July 2021 decided to appoint him as the Managing Director.
Its earlier managing director Kazi Samaul Huq resigned on 8 October 2020, citing personal reasons. On 8 February 2020 he was appointed for three years. He joined the DSE as the MD on 9 February. He worked for only six months.
After the demutualized stock exchange’s managing director Professor Swapan Kumar Bala completed the full three-year term he passed away on 22 December last year.
Professor Bala was made the managing director of DSE back in 2013. His tenure ended in 2016.
His next managing director KAM Majedur Rahman also completed the full tenure. Majedur’s tenure expired on 11 July 2019. He joined the DSE as the MD on 11 July 2016 for a three-year term.
Prior to demutualization, Shubra Kanti Chowdhury was the DSE’s Chief Executive Officer (CEO) from December 2012 to 15 April 2013.
Dr Musharraf M. Hussain couldn’t complete his tenure. Brg. Gen Zahurul Alam, Satipati Moitra and A F M Shariful Islam also couldn’t complete their three-year term.
Salahuddin Ahmed Khan joined DSE as Chief Executive Officer on 10 September 2003. After his first tenure he also completed his entire extended second three-year term.
Mofizuddin Ahmed and Rezaur Rahman failed to hold on to the CEO post of the Dhaka Bourse.
In January 1998, G Q Chowdhury joined as the CEO of the stock exchange but he resigned before completing the full three-year term in October 2000.
Board’s influence on DSE management
With the view to making it a more professional and profitable organization, the bourse went through demutualization in 2014, a process that separated the bourse’s ownership from its management.
Stock market insiders say after eight years of demutualization, the stock exchange is walking the same old path when its owners or members directly managed the bourse.
Several former MDs also resigned or were forced to resign due to the displeasure of some board members while exercising their powers on various issues. Many qualified people have lost interest in coming to the post of MD of the company.
Officials seeking anonymity said managing directors were unable to work freely after becoming the premier bourse’s top boss.
Sources said there was disagreement among the DSE board members over that appointment as the bourse’s managing director.
Speaking to The Business Post, a former MD of the Dhaka Bourse said there is no professionalism and freedom. There is less opportunity to go beyond the opinion of the powerful owners. Therefore, it is very difficult to work professionally in the DSE.
“Eight years has gone by but none of its goals laid out in the demutualization agenda have been achieved, which is unfortunate,” said an analyst.
On condition of anonymity, a DSE member put the blame on the former and current board members for not achieving the targets. “Most board members do not have stock market experience. Inefficient management is also a big factor.”
However, DSE Director and former President Shakil Rizvi told The Business Post, “We’ve got strategic partners. It is a major achievement for demutualization. We’re working to implement other issues.”
Rizvi also said changes had been made in the stock exchanges’ operational structures. Brokers are no longer in control of the stock exchange.
DSE fails to meet its demutualization goals
The stock market regulator BSEC has expressed its utter dissatisfaction with the DSE’s failure to achieve its all 12 objectives laid out in the demutualization scheme in the last eight years.
As a result, it intends to appoint an independent auditor in the DSE to investigate the causes of failures. The 12 objectives were supposed to be achieved by the 2020 deadline. But none has been attained,” said the evaluation report of the BSEC.
Earlier this year, in June, DSE appointed an auditor to investigate the reasons for its failure to meet all 12 objectives outlined in the demutualization scheme.
It has recently picked up ACNABIN Chartered Accountants to do so as per the instruction of the Bangladesh Securities and Exchange Commission.
The auditor will examine whether the ongoing functions of the DSE are in compliance with the code of conduct, code of ethics and other issues as per the provisions of the Dhaka Stock Exchange (Board and Administration) Regulations, 2013 and the Exchanges Demutualization Act, 2013, said the BSEC.
BSEC officials said the DSE failed to achieve the objectives set out by the demutualization scheme over the last eight years.
Rizvi also said the Shanghai and Shenzhen Stock Exchanges were found to be the world’s largest stock exchanges partner, like strategic investors.
It is a major achievement of the demutualized Dhaka Stock Exchange, he added.
“To create a good capital market, it’s not just the DSE alone, everyone has to work together,” Rizvi said.
According to the Stock Exchange Demutualization Act 2013, 40 percent of the DSE’s shares were credited to its members’ accounts while the remaining 60 percent were kept in a blocked account.
The rest 35 percent would be offered in an initial public offering (IPO) by the exchange.
