The government is working on brining diversity as well as depth in the capital market by introducing government bond, derivatives and forward market, said Prof Shibli Rubayat Ul Islam, Chairman Securities and Exchange Commission.
“Work for issuing government bond has already begun. We will soon introduce government treasury bonds. The capital market will soon start bond trading. When bond trade is to be introduced, the market cap will increase. The index will change. Then the share price will go up,” Prof. Islam said at an exclusive interview with online portal Raisingbd.com
He said opportunities of trading bond will be kept for general investors open. “The market is already ready for the introduction of government treasury bonds. Negotiations are underway with Bangladesh Bank. Government treasury bonds will be introduced this year,” he added.
About derivatives the SEC Chairman said many people in our country do not understand derivatives properly. “So we have launched the Financial Literacy Program to give ideas on these issues. We will teach people about derivatives through financial literacy to make bonds popular. Financial literacy activities are now underway online. When we finish learning, I will start the derivatives market.,” he explained.
“Capital market is not a place only for trading share script of a few companies, the market should have diversified products. If the Bangladesh capital market could buy oil from international during the period of lower international market and sell it at forward market at upper rate, it could be one of the great product for capital market traders,” Prof Shibli Rubayat Ul Islam.
Most of the capital markets but are s not just equity based. Investors are constantly looking at whether the share price has risen or fallen, whether the index has risen or fallen. There should have many more components in the capital market, he dais.
“If the DSE could by oil from international market when it fell down to 5 to 10 percent it could be now traded at higher trade,” He added.
He said think of our FDR. “Banks are giving loans for 5 to 10 years with FDR money taken for one year. As a result, they are having problems in liquidity management. Because after one year the depositor has to return the money of that FDR. But the loan is being given for 5 to 10 years against the money of one year.
This makes the liquidity imbalanced. The account becomes classified for various reasons. Non-performing loans continue to grow in the banking sector” he further said.
So the capital market will be the center of long-term financing. The short and medium term financing will be done by the banking sector. On the one hand, it will be much easier to manage their liquidity. On the other hand, non-performing loans will also come down.
In addition, if the capital market can provide long-term financing, businesses will be able to avoid the pressure of paying monthly installments every month, including the hassle of debt classification. Their business will not be disrupted. When businesses get financial solutions through long-term financing, they can do business with ease.