DSE Brokers Association (DBA), an organization of brokerage house owners of Dhaka Stock Exchange (DSE), wants amendments to the Demutualization Act regarding defects in initial public offer or IPO process and separation of management from ownership of the stock exchange. The organization has put forward a set of recommendations for the development of the stock market.
The DBA leaders presented these recommendations in a meeting with the capital market regulatory body Bangladesh Securities and Exchange Commission (BSEC). Saiful Islam, president of the organization, led DBA in the meeting. On behalf of BSEC, Chairman Khandkar Rashed Maksud and three commissioners and executive directors were present. Today this meeting was held at the BSEC office in Agargaon of the capital. In this, the DBA leaders highlighted a set of recommendations for the reform of the capital market.
According to the source of the meeting, it has been said by the DBA that for 20 years it has been seen that a huge number of applications have been submitted for the IPO of any company within a few minutes. Usually a company has a few days to apply for an IPO. But within a few hours, applications were received several times more than expected. This happens because there is a lump in the whole process. Such incidents are being organized to increase the share price by manipulation. The whole process needs to be corrected by looking into why this is happening.
Apart from this, the DBA also demanded re-evaluation of demutualization laws and schemes. As an argument for this, the organization said that when the stock exchange was demutualized in 2013, it was said to be revalued after 10 years. But that was not done. Even though an era has passed since demutualization, the stock exchanges have not benefited much from it. During this time the capacity or efficiency of the stock exchange has not increased but their speed has decreased. It is important to investigate why this has happened and take necessary measures.
In the meeting, the DBA also proposed to raise the fixed interest rate on margin loans offered to investors against shares and make it market-based. The reason given by the organization was that when 12 per cent interest was fixed, bank interest rates were low. Bank deposits and fixed interest rates have already been withdrawn. As a result, market-based interest rates need to be implemented in the case of margin loans as well. Apart from this, the organization recommends distribution of interest as an integrated customer of the brokerage house, canceling the decision of withdrawal of investment of the brokerage houses outside the core business, and taking immediate and effective measures regarding any irregularities.
When asked, DBA President Saiful Islam said, “We have recommended several effective reforms for the development of the share market. I asked stock exchanges to be empowered to act effectively as primary regulatory bodies. We have also said that the capacity of market intermediaries needs to be enhanced without leaving the power of decision-making on minor market issues to the regulatory body. However, if any institution or organization does not fulfill its proper responsibilities, the regulatory body can take necessary measures.
