The Bangladesh Securities and Exchange Commission (BSEC) has launched a new effort to improve the efficiency of the Capital Market Stabilization Fund (CMSF). The commission has suggested creating a new law to establish the CMSF as a legal entity and to restructure its board of directors. The primary objective is to safeguard investors’ funds and enhance transparency in the fund’s management.

The newly established commission, which assumed its role following the political shifts of last year, has uncovered several irregularities in the operations of the CMSF. It is evident that the previous board’s operational expenses were excessively high; they convened approximately 10 meetings each month, with members receiving an honorarium of Tk 8,000 for every meeting attended. Consequently, the commission asserts that a new law is essential to fortify the legal framework of the fund and ensure orderly operations. This proposal is presently pending approval from the Finance Ministry.

BSEC spokesperson Abul Kalam stated that should the proposed legislation be enacted, all regulations pertaining to the CMSF will be consolidated. The new board, consisting of seven members, will be led by the BSEC chairman. Its members will include an additional secretary from the finance ministry’s financial institutions division, the chairmen of two stock exchanges, the chairman of the Investment Corporation of Bangladesh (ICB), the president of the Association of Publicly Listed Companies, and the CEO of CMSF.

CMSF CEO Wasi Azam remarked, “Managing substantial amounts of investor funds is not feasible without a board. The establishment of a new board is imperative at this time.”

To lower the fund’s operational expenses, the BSEC has suggested that CMSF align its activities with the BSEC’s Financial Literacy Wing or the Bangladesh Academy for Securities Market. This strategy will also help decrease office rental costs. Additionally, it has been determined that the funds deposited by CMSF cannot be utilized for direct stock trading; instead, the income generated from interest will be allocated to enhance investor awareness.

It is important to highlight that the primary duty of CMSF, which was established in June 2021, is to resolve the outstanding dividends owed to investors. Currently, the fund holds Tk 813 crore in cash and Tk 1,92 crore in share dividends.