Home ›› 03 Nov 2022 ›› Stock
The Dhaka Stock Exchange (DSE), the premier bourse of the country, is set to introduce the Alternative Trading Board (ATB) where debt securities, open and mutual funds, alternative investment funds and non-listed companies will be traded.
“The main purpose of the capital market is for companies to raise capital. If the ATB market is launched, this task will be much easier and the complexity will be reduced in this regard,” Ashequr Rahman, managing director of Midway Securities Limited, told The Business Post (TBP).
The Bangladesh Securities and Exchange Commission (BSEC) has already approved the Alternative Trading Board Regulation 2022. A notification in this regard will be issued soon, said sources.
According to the regulations, seen by TBP, any company not listed in the capital market will be able to directly list on ATB and trade shares by converting to a public limited company from a private limited company. Interested companies must have demat shares (electronic shares) and audited financial reports of the last three fiscal years. However, companies with less operating years will also be considered to be listed in ATB.
Determining share prices
Shares of companies in ATB will be determined depending on their operating years.
The share value of companies that are doing business for at least three years will be fixed using net asset method and yield method, according to the ATB Regulation 2022.
However, the regulation prescribes a different approach for companies that have been doing business for less than three years. For such companies, the lower of the face value and the net asset value of a company will be considered as its shares’ fair value.
No margin loan will be available for buying shares of companies traded in the ATB market.
Circuit breaker
For companies that will trade in ATB, the circuit breaker value has been set at 4 per cent of the total trade done in the first two days. The transaction
will be closed for settlement on the third day. The circuit breaker value will be 5 per cent on the fourth day.
Conditions for trading
A company can be listed in ATB by paying a Tk10,000 fee, according to the BSEC approved regulations.
Approved companies must sell 10 per cent of their shares in the market within 30 working days of starting trading. However, no company owner can sell more than 49 per cent of the company’s shares in the market. At least 51 per cent of the shares must always be in control of a company’s sponsoring directors.
Companies that will be issuing shares for listed securities in ATB must inform stock brokers three working days before selling shares.
Meanwhile, primary shareholders of a company can offer their shares for sale in the ATB market for the first two days. The minimum and maximum lots of a company will be determined by the issuing companies.
BSEC executive director and spokesperson Mohammad Rezaul Karim told The Business Post that all types of company investors can invest in the ATB market.
ATB Regulation 2022 states that even if an investor makes a profit by trading shares in ATB, they cannot withdraw the profit before three months. If any investor makes a profit within three months, the BSEC must be informed and the profit needs to be deposited in the Investor Protection Fund to be withdrawn.
New life for dying OTC companies?
A total of 18 companies of the now defunct Over the Counter (OTC) market will be able to transact in ATB subject to compliance with the conditions set in the ATB Regulation 2022.
The companies include, Bangla Process Industries, Dandy Dyeing, Dynamic Textiles, Metalex Corporation, Mita Textiles, Modern Cement, Pharmaco International, and United Airways, etc.
The BSEC launched the OTC market with companies delisted from the main trading boards of the Dhaka Stock Exchange and the Chittagong Stock Exchange in 2009. But the platform was abolished by the capital market regulator in last September as most of the companies in it were non-performing and many of them could not be traced.
There has been concern that dying OTC securities will be rehabilitated on ATB. But a DSE official said that is not the case.
“Most of the companies in the defunct OTC market do not have the necessary qualifications to trade in the ATB market,” said the official, adding that ATB will mainly deal with the shares of the large number of companies outside the capital market.
