The floor price mechanism for the country’s bourses will continue until the market is stabilised, the newly appointed chairman of the Bangladesh Securities and Exchange Commission, Professor Shibli Rubayat Ul Islam said in an exclusive interview with the Business Mirror.
“The mechanism has helped restore confidence of the investors a lot during this unstable period caused by the coronavirus. The index has crossed 4,000 mark today (Tuesday). I hope the floor price will not impede the market going forward,” the BSEC Chairman said.
He said “The mechanism has been introduced at a time when the whole world is ravaged by a major pandemic. It will continue until the coronavirus situation is over,” Mr. Rubayat said.
Trading on both bourses resumed more than a month ago after the government lifted a nationwide shutdown of offices and public transport. The trading came to total halt between March 26 and May 31 when the country was technically under a virus lockdown.
But weeks before the lockdown in mid-March, the BSEC introduced a new pricing system in an effort to halt abrupt fall in prices of securities. Under the system, the market prices of the listed securities do not have any scope to fall below individual floor prices.
The floor price system has generated huge debate with traders and experts arguing its merits and demerits. But most analysts believe the price-cap should stay for a while until the pandemic is over in the country.
The BSEC Chairman said the regulatory body is going to introduce online automation to conduct most of its activities including the scrutiny of IPO applications, company prospectus, and financial assessment.
“We want to make the task of collecting fund from capital market simple and hassle free. With this aim, we will introduce true automated process at all steps of the BSEC,” Prof. Islam added.
The trading platform of the stock exchanges is also being fully digitalised and automated by the stock market regulator so that all activities can be run without human assistance, Mr. Rubayat said.
Settling share trade in the platform currently requires manual intervention, he said adding “We will hire people who have international experience. They will help us automate all infrastructures of the stock market so that market activities can be carried out easily in a smooth manner.”
“I have been in conversation with the Dhaka Stock Exchange (DSE) since I became the BSEC chairman asking why they have not implemented their plans for an automated IT platform.”
Only two per cent of beneficiary owner (BO) accounts have been registered for online trading, according to the DSE data.
The BSEC chairman also said the government enterprises are not interested to float shares in the stock market, as they face some deep seated issues including proper valuation of their net worth.
“If they enter the regulatory market, they have to update their accounts properly and a state-run company needs proper valuation,” he said, adding most of the government organizations do not maintain proper accounts and have not done valuation of their assets for a long time.
Professor Rubayat said at the moment the stock market regulator is focusing on the listed companies and how they can ensure good governance.
“We wrote to all the banks and leasing companies and told them to update their status regarding their capital market exposure. Some have already replied to our letters and some companies have already started investment again.” he said.