PM informed of issues affecting capital market development

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Bangladesh Securities and Exchange Commission (BSEC) Chairman Prof. Shibli Rubayat-Ul-Islam briefed Prime Minister Sheikh Hasina on issues affecting the development of the country’s capital market.

“We have highlighted the problems that hinder spontaneous movements in the capital market,” he told The Business Standard after an exclusive meeting with the prime minister on Wednesday.

“The government will support the growth of the country’s capital market.

Ahead of the meeting, BSEC Commissioner Dr Shaikh Shamsuddin Ahmed spoke with senior officials of the Bangladesh Bank to reiterate BSEC’s position on excluding bonds from banks’ market exposure. capital.

He also called for the adoption of a cost-based calculation method, which would allow banks to maintain or increase their investments in capital markets.

Due to the market price basis for calculating exposure, banks are forced to get rid of their stocks as soon as prices rise in the market, which creates selling pressure on the exchanges.

When exposure is calculated on the basis of cost price – the price a bank paid for a stock, the exposure is not affected by changes in the market price.

Dr Ahmed said in a press briefing on Tuesday that the central bank responded positively to each of the proposals and that he hopes the expected changes will happen gradually.

The BSEC had initiated a series of discussions with the central bank to urge measures to be adopted to adopt the BSEC Corporate Governance Code to enable listed banks to form nomination and remuneration committees and have at least 20% of independent directors on their boards of directors.

He also asked the Bangladesh Bank to allow banks to pay dividends in accordance with the International Financial Reporting Standard, and also to transfer unclaimed dividends to the Capital Market Stabilization Fund.

The BSEC further requested the central bank to partner with the capital market regulator before acting in the area of ​​the capital market.

Some recent initiatives of the Bangladesh Bank, such as directly requesting detailed data from asset management companies, requesting daily reports on banks’ capital market activities created panic among investors which triggered a plunge in the market. Marlet.

After Prof. Islam took over as chair of BSEC, DSEX, the general index of the Dhaka Stock Exchange (DSE), began to recover in mid-2020 after a multi-year low.

The index, after more than doubling in 15 months, began to experience selling pressure in October and fell below 6,700 on Tuesday, compared to 7,400 on October 10.

However, the BSEC’s meeting with the Bangladesh Bank and the Prime Minister restored investor confidence and the DSEX jumped 2.1% on Wednesday to close at 6,847.

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