Sunday, April 28, 2024
The Dhaka Stock Exchange (DSE) has requested the securities regulator to introduce a circuit breaker calculation based on reference price or yesterday’s closing price (YCP) for the alternative trading board (ATB) instead of on a fair value basis which has now been in place, to make it more investor-friendly.
The country’s prime bourse, in a proposal, also requested the Bangladesh Securities and Exchange Commission (BSEC) to allow beneficial owners to make gains through the purchase or sale of equity securities without any attributed timeframe.
Currently, if an investor or beneficial owner makes any gain by the purchase and sale, or the sale and purchase, of any equity security within a period of less than three months, his or her capital gain is seized and is sent to the investor protection fund.
In this regard, DSE’s Acting Managing Director M Saifur Rahman Mazumdar, told The Business Post that the major aims of the amendments are to make the regulations more investor-friendly, provide venture capitalists, foreign investors, and strategic investors with an exit route, and encourage more foreign participation and industrialisation.
“Our proposal also aims to create some provisions so that regular sponsors or directors would not be allowed to offload majority of their securities to general investors within a very short span of listing making the company vulnerable or risky,” he added.
The amendments also focus to overcome the existing market impediments and to create ownership change opportunities for general investors without any restriction and at a lower cost.
“We believe these initiatives will increase liquidity and fair pricing in the alternative trading board for the greater interest of the capital market,” he continued.
The DSE launched the ATB, an alternative stock trading platform, but it is yet to make any significant headway due to policy complexities.
Now, the stock exchange and the regulator itself understand that they should simplify policies to encourage more companies to come to this platform, and necessary measures have already been taken to make this happen.
Six months have already passed since the inception of the ATB on January 4 this year, but so far, only a single company has gotten listed on this platform.
BSEC Chairman Professor Shibli Rubayat Ul Islam told The Business Post, “The ATB market fails to become popular owing to the complexity of some policies, and one of them is setting the 90-day timeframe for share selling.”
“This provision was put in place due mainly to prevent manipulation in the ATB market, but now the issue is being seen as a barrier; so, it should be changed. And we are working to simplify policies to make this platform popular among investors.”
“We, however, are considering introducing an alternative option for the protection of the ATB market,” the BSEC chairman further said.
The prime reason for the aversion towards this trading platform is that an investor cannot sell any ATB-listed shares before 90 days after the purchase of any share.
If they sell shares breaching this rule, their profits are seized and deposited in the investor protection fund.
Both the top brass of the BSEC and the DSE now feel that this policy is the major hindrance to popularising the ATB market.
Currently, Lankabangla Securities, and Pran Agro Limited Unsecured Guaranteed Bond-1 are the lone listed firm on the ATB Market, while Bengal Meat and AFC Health are in the listing pipeline.
Lankabangla Securities, an associate firm of Lankabangla Finance, got listed on the ABT market through the issuance of Tk 2.69 crore in shares.
In a press conference in May 2022, the Dhaka bourse said that 76 open-end mutual funds, 18 equity securities, and 15 debt securities in the country were ready for listing on the ATB.
Another barrier to the vibrancy of the ATB market is that each listed security may increase or decrease by only 4 per cent in the first two working days. Trading in those securities gets closed on the third working day, and on the fourth working day, a circuit breaker of 5 per cent is imposed.
Investors do not get any margin benefit from buying any ATB securities.
The ATB platform was launched to facilitate trading of unlisted and listed securities, including corporate bonds, alternative investment funds, and perpetual mutual funds.
There is no minimum capital limit for enrollment in ATB. Any unlisted company registered with the Directorate of the Registrar of Joint Stock Companies and Firms (RJSC) is allowed to trade shares on this platform.
Besides, on September 16, 2021, a directive from BSEC asked 18 companies in the over-the-counter (OTC) market to shift to ATB platform.
