To stabilise Bangladesh's capital market and protect investors, the government has established a committee to probe past irregularities, corruption, and market manipulation, particularly under the 15-year rule of the now-fallen Awami League government.
According to a press release from the finance ministry, rampant corruption in the capital market mirrored misconduct in other sectors of the economy during the last decade and a half. Weak and near-defunct companies were frequently listed, creating a burden that weighs down the market on Sunday.
Unchecked manipulation of the market led to sharp price increases in so-called "junk" stocks, draining the investments of ordinary shareholders.
Artificial measures, such as floor prices and circuit breakers, were employed to mask the market's instability. However, as these interventions are phased out, the long-term consequences of systemic irregularities are becoming more apparent.
The finance ministry emphasised that these actions have allowed market manipulators to siphon off investor money. Despite efforts to cover up the damage, the fallout from continuous corruption and manipulation is now impossible to ignore.
Task force established for market reform
To address these issues, the Bangladesh Securities and Exchange Commission (BSEC) has formed a five-member task force aimed at reforming the capital market.
The task force will focus on improving regulatory compliance, enhancing institutional governance, modernising technology, and fostering product development. Additionally, efforts will be made to boost investor education and expand investment opportunities.
BSEC is also engaged in broader reform activities beyond the task force. Discussions with market stakeholders have already led to valuable recommendations that are expected to shape the future of the capital market.
The government believes that once these recommendations are fully evaluated and implemented, they will yield long-term benefits for the market.
In a bid to strengthen monitoring, BSEC has sought cooperation from the World Bank to develop advanced surveillance systems for detecting and curbing market manipulation. Regular meetings with major industrial groups are also part of ongoing efforts to increase the supply of fundamentally strong shares in the market.
Key focus areas include facilitating long-term financing through the capital market, simplifying IPO approvals, and accelerating the listing process for companies. These reforms aim to attract companies with strong fundamentals, particularly those in vital sectors, further strengthening the capital market.
The government is also revising the Public Issue Rules 2015 to ensure companies receive fair valuations during listing. This initiative is expected to attract well-established and multinational companies to the market, boosting investor confidence and driving industrial growth.
Moreover, to expand investment opportunities, state-owned enterprises (SOEs) are being encouraged to list on the stock exchange. The finance ministry stressed that corporate governance practices will be mandatory for all listed institutions, ensuring transparency through regular business disclosures.
The listing of SOEs will not only deepen the capital market but also strengthen the capital base of these institutions, the finance ministry said, highlighting the expected positive impact of this reform.
The government is optimistic that these measures will provide quick benefits to investors, particularly those who have suffered in recent market downturns and share scams. By addressing past misconduct and implementing strong governance, officials hope to restore confidence among large, medium, and small investors alike.
