DSE seeks BSEC support to increase institutional participation

The Dhaka Stock Exchange (DSE) has asked the stock market regulator, BSEC, to arrange a coordination meeting, including putting forward some demands to increase institutional participations in the capital market.

The country’s prime bourse wants an increased exposure limit in the stock market and a reduction in the corporate tax rate of listed companies.

To this end, the DSE acting managing director (MD) sent a letter to the chairman of Bangladesh Securities and Exchange Commission (BSEC) last week. 

In the letter, the MD said: “We would like to request the Bangladesh Bank to relax the exposure limit of the capital market for banks and financial

institutions for the purpose of increasing institutional participations in the market.”

DSE officials said that the objective of seeking efforts to enhance the base of institutional investors in the capital market, which is mainly dominated by retail investors. 

The stock exchange seeks investment from banks and financial institutions in all listed bonds kept outside the purview of capital market exposure.

The maximum threshold of the capital market investment for banks and financial institutions may be enhanced by an additional 5 per cent, as per the letter.

The Dhaka Stock Exchange has requested the BSEC to initiate or forward the policy issues to the respective regulators by arranging a coordination meeting or any other suitable manner. 

The country’s prime bourse also urged the National Board of Revenue (NBR) to exempt tax on interest earnings from the bond.

It said interest earnings arising from any corporate bonds, similar to zero-coupon bonds, listed on any board

of stock exchanges, irrespective of issuers and investors, may be exempted from tax to establish a vibrant bond market.

To encourage potential issuers to be listed, the corporate tax rate differential between listed and unlisted securities should be at least 15 per cent.

The stock exchange wants that the exemption limit on dividend income may be increased from existing Tk 50,000 to Tk 2,50,000.