MoU signed on starting T-bond trading next month

Five organisations have signed a memorandum of understanding (MoU) to begin trading Treasury Bonds (T-bonds) in a bid to revitalize the country’s ailing bond market.

To this end, Bangladesh Bank, Bangladesh Securities and Exchange Commission (BSEC), Dhaka Stock Exchange, Chittagong Stock Exchange and Central Depository Bangladesh Limited signed the MoU at an event at the ministry of finance, according to a statement from the BSEC.

The T-bond trading is expected to start in the secondary market in July. At present, 221 treasury bonds with tenure ranging from 5 to 20 years are listed on the stock exchanges. The general investors will be able to invest in the T-bonds after the securities are listed with stock exchanges.

The offer price of the T-bonds is Tk 100 per unit and the market lot will be 1,000 units. As a result, the offer price of a lot of the T-bonds is Tk 10 lakh.

The sellers of the T-bonds will get accrued interest or profit and the buyers or coupon holders will get the coupon price in a bank account through BEFTN on the coupon date.

“There is no possibility of incurring losses investing T-bonds. Investment risk will be reduced through diversification of investors’ portfolios,” said the BSEC in the statement.

Yield-curve will also be available from the T-bonds to be traded in the secondary market.

General investors had no access to the MI (market infrastructure) module introduced by the central bank for the transaction of the T-bonds.

To commence trading of the T-bond, the BB’s MI module has been integrated with the trading software of both the stock exchanges.

On October 14, 2021, the DSE successfully experimented with the first trading of a treasury bond using its trading system after 16 years. The settlement of the transaction was completed through the Central Depository Bangladesh Limited.