Home ›› 23 Jan 2022 ›› Front
The securities regulator BSEC has instructed the Dhaka Stock Exchange (DSE) to submit an evaluation report on the technical and financial proposal made by the strategic investor for the country’s capital market development.
The DSE will have to file the report within seven days from the issuance of the letter issued by the regulator on Thursday.
“You (DSE) are instructed as per securities rules to submit an evaluation report on the technical and financial offer by the strategic investor as an offer of value addition as a strategic investor for the development of the capital market of Bangladesh,” reads the BSEC letter.
On February 6, 2018, the DSE struck a deal with the Chinese consortium of the Shenzhen Stock Exchange (SZSE) and the Shanghai Stock Exchange (SSE) to sell 25 per cent of its stake for Tk 947 crore. But the prime bourse’s performance left the strategic investors disappointed.
On the other hand, a DSE shareholder said the consortium is yet to make any contribution to the market’s development.
Early this month, the BSEC ordered the stock exchanges to submit report reports on their achievements of demutualisation objectives and initiatives.
Along with the achievement report, the commission also ordered for 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 DSE and CSE were also directed to appoint a compliance auditor to conduct a special audit within this month.
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 organization, the bourse went through demutualisation in 2013, a process that separated the bourse’s ownership from its management.
The Chinese bid reportedly also contained a technical package for more than $37 million of additional investment to overhaul the technology platform of the DSE. The SZSE alone has more than 1,000 people in its technology division.
Policy Research Institute of Bangladesh (PRI) Executive Director Ahsan H Mansur told the Business Post that there are huge opportunities for the development of the country’s stock market, but the DSE’s board did not set a goal from the consortium.
The DSE hasn’t benefited from the consortium because of a lack of understanding of the Chinese language, technology, and inefficient management in DSE, he said.
The ongoing COVID-19 pandemic is another obstacle to the proper functioning of the consortium, he added.
The Dhaka Stock Exchange is yet to secure any significant technology transfer from the consortium.
DSE Director Shakil Rizvi told The Business Post, “We got only taka and received free advice from the consortium.”
The consortium also offered to provide a trade-matching engine. The DSE is now using a Nasdaq user agreement that will expire in December 2024.
Rizvi, also the former President of DBA, said, “We will use the Chinese matching engine at the end of 2022 and start running it on a trial basis so that it can be officially worked on within a fixed period.”
He also said, “We have to realize that our management should be capable of creating a modern stock exchange.”
The Chinese consortium also offered to share its experience in market design, information disclosure, supervision of investor suitability management, IPO promotion, and other areas of interest for the development of an SME market in Bangladesh.
According to the Stock Exchange Demutualisation Act 2013, 40 per cent of the DSE’s shares were credited to its members’ accounts, while the remaining 60 per cent were kept in a blocked account.
After selling 25 per cent of its shares from the blocked account to strategic investors, the bourse would float the remaining 35 per cent through an initial public offering (IPO).
