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Bangladesh Securities and Exchange Commission (BSEC) has extended the deadline for submitting the Dhaka Stock Exchange (DSE)’s compliance report.
On Sunday, ACNABIN Chartered Accountants appointed by the DSE as per the instructions of the securities regulator was given 30 more days to submit the report.
In June, the auditor was entrusted with a task to find out the reasons behind the DSE’s failure to achieve all 12 objectives laid out in the demutualisation scheme.
Earlier, the auditor was given 45 days to submit the report to the DSE board.
The auditor is examining the accomplishment of the decoupling of ownership and trading rights in line with the spirit of the Exchanges Demutualization Act, 2013.
BSEC officials said that the DSE failed to comply with the objectives set out by the demutualization scheme over the last eight years.
Last year, the BSEC instructed the prime bourse to appoint an auditor to look for reasons behind its failure to meet the objectives. But the DSE took six months to appoint an auditor.
The auditor will examine whether the ongoing functions of 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 Demutualisation Act, 2013, said the BSEC.
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.
DSE has failed to achieve its objectives set out 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.
As a result, it plans to appoint an independent auditor in the DSE to investigate the causes of the failure by the 2020 deadline.
“Twelve objectives were supposed to be achieved. But none was attained,” said the BSEC in an evaluation report.
The commercial objectives are: achieving a sustainable average daily turnover of Tk 2,500 crore, ensuring steady domestic and offshore institutional investments of at least three-fourths of the total investments in the market, attracting more foreign investments in order to maintain a steady level of at least 30 per cent of total market capitalisation, and increasing the total number of listed securities, the depth, and liquidity of the bond market, including bringing government securities under the trading net and increasing the breadth of the market by listing new products, such as index futures, ETFs, Sukkuk, and derivatives.
