BSEC directs DSE, CSE to report by Jan 10

The securities regulator has instructed the country’s two stock exchanges to submit reports on their achievements of demutualisation objectives and initiatives by January 10.

On Sunday, the directive was given on account of the Dhaka Stock Exchange (DSE) and Chittagong Stock Exchange (CSE)’ failures to meet the objectives as per the demutualisation scheme.

The Bangladesh Securities and Exchange Commission (BSEC) also wrote the DSE and CSE to file a draft regulation on the self-listing or cross-listing process, including the issuance of Depository Receipts (DR) in compliance with the Exchange Demutualisation Act, 2013.

The stock exchanges were also directed to appoint a compliance auditor to conduct a special audit within the next 30 working days.

The BSEC also asked the stock exchanges to submit service regulations without further delay, according to the latest letter issued by the BSEC.

The CSE was instructed to set a timeline to complete agreement with strategic investors, as it is a vital requirement in implementing the demutualisation scheme. Both the stock exchanges were also instructed to take the initiative to introduce a yield-based trading platform for the vibrant trading of debt instruments, including government securities, said the letter.

“The stock exchanges failed to achieve the main objectives laid out in the demutualisation scheme within the scheduled time that expired in 2020,” BSEC Commissioner Shaikh Shamsuddin Ahmed told the Business Post.

“In the last eight years, the two stock exchanges failed to enjoy the benefits offered by the demutualisation scheme. There is no progress on their listings,” he said.

“We are also appointing an independent auditor to the stock exchange to further evaluate its failure in meeting the goals,” said the BSEC commissioner.

As part of the demutualisation process, the BSEC ordered the DSE and CSE to submit their IPO plans as per the scheme after a meeting called earlier by the regulator to review the progress of the objectives.

A few weeks back, the BSEC expressed its utter dissatisfaction with the DSE’s failure in achieving all 12 objectives as per the demutualisation scheme in the last eight years.

Against this backdrop, it plans to appoint an independent auditor in the DSE to evaluate the reasons behind the failure. “The 12 objectives were supposed to be achieved by the 2020 deadline. But none was attained,” said an evaluation report of the regulator.

According to the Demutualisation Act, forty per cent of the stock exchanges’ shares must be credited to its member accounts and the remaining 60 per cent in a blocked account. Of the blocked account, the bourse will have to sell 25 per cent of its total issued shares to strategic shareholders and the remaining 35 per cent through an IPO.

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.

With the view to making it a more professional and profitable organisation, the bourse went through demutualisation in 2013, a process that separated the bourse’s ownership from management.