BM Desk : To stop investors’ money from being embezzled in the stock market, the Dhaka Stock Exchange Brokers Association (DBA) has requested an additional two months to implement the necessary “tamper-proof back-office software.” June 30 marked the conclusion of the third extension of the deadline for installing this software, which is essential to preventing digital theft.
In a letter to the Dhaka Stock Exchange (DSE), DBA President Saiful Islam stated that the software suppliers chosen by the securities regulating body are unable to adequately service brokers because of a lack of personnel. He added that the lengthy Eid holiday and other government holidays last month had also slowed down the development of software-related operations.

The DBA President also noted that all brokerage firms have signed agreements with vendors sanctioned by the Bangladesh Securities and Exchange Commission (BSEC).

As per sources from BSEC and DSE, the original deadline for the installation of the immutable back-office software was set for April of last year. This deadline was extended three times at the request of DSE and DBA. BSEC spokesperson Md. Abul Kalam verified that the market regulator has received the extension application, and a decision will be made in the upcoming commission meeting.

DSE officials report that out of 302 TREC (Trading Rights Entitlement Certificate) holders, 255 have successfully installed the required back-office software, while the remaining firms are in the process of implementation. According to BSEC regulations, brokerage firms must ensure complete utilization of the software post-installation, and the regulator will conduct periodic inspections of these firms. Those already utilizing the software in accordance with the regulator’s guidance will need to secure a certificate from the stock exchange.

A stockbroker’s back office is responsible for storing data related to clients’ assets, transactions, cash balances, and deposit balances. In the past, some unscrupulous brokers using in-house back-office software manipulated trade and transaction data, inadvertently misappropriating clients’ funds. Approved software vendors are anticipated to deliver consistent services to stockbrokers to safeguard investors’ money and assets.

In February 2022, following incidents of fund embezzlement by various firms, the securities regulatory agency instructed major stock exchanges to develop guidelines for software installation. The embezzlement and mismanagement of client funds by brokers has been a persistent issue.

Crest Securities, Dawn Securities, Tamha Securities, Banco Securities, and Shah Mohammad Sagir & Company collectively misappropriated approximately Tk 3 billion from 2019 to 2021, marking a significant scandal in the nation’s stock market. The latest scandal involving the embezzlement of funds and shares by Mashihur Securities emerged in August of last year.

Sources indicate that brokerage firms have been deceiving investors by unlawfully utilizing counterfeit back-office software and disseminating misleading information regarding their investment statuses. Furthermore, several other brokerage firms have also misappropriated substantial sums from their customer accounts, which were then used for trading.

Market analysts suggest that these financial irregularities have arisen due to insufficient oversight by major stock exchanges and regulatory bodies. They assert that no effective measures have been implemented to recover the embezzled funds.