Scenario of Securities Markets in Bangladesh
Scenario of Securities Markets in Bangladesh . The securities market of Bangladesh started functioning with the reactivation of Dhaka Stock Exchange and Investment Corporation of Bangladesh ICB, the largest investment banker and underwriter, in 1976. Subsequently, in 1980s, National Credit Limited and Bangladesh Commerce and Investment Ltd. also started functioning in securities market activities in Bangladesh. DSE is the largest organized exchange at present in Bangladesh. After her independence in 1971, the then existing securities market (The Dhaka Stock Exchange) was abolished by the decision of the government. All the listed companies were converted into sector corporations. The controls were vested with government. New industrial policy was formulated that deterred the growth of new companies. But subsequently, it was found that the publicly owned enterprises increasingly became losing concerns. Private enterprises became to grow in 1976 and they started functioning side by side with the public sector enterprises. As a result of the revamping of the private sector, Dhaka Stock Exchange resumed in 1976 with 9 listed companies. Under denationalization policy in 1982, the government returned some of the jute and cotton mills to their previous owners. The dimension of privatization spirit results in the development of stock exchange. In 1980s, two private investment companies viz., National Credit Ltd. and Bangladesh Commerce and Investment Ltd. were permitted to function in the securities market activities along with Dhaka Stock Exchange and Investment Corporation of Bangladesh. At present National Credit Ltd. and Bangladesh Commerce and Investment Ltd. do not function in the capital market. However, the securities markets in the country are developing its operation in all respect and the second securities market in Chittagong started operation in 1995. Other individual firms came forward to help investors to take part in the stock exchange activities. However, in the context of Dhaka Stock Exchange, and Chittagong Stock Exchange are involved in bringing together the buyers and sellers of securities as per provisions of the Securities and Exchange Commission (SEC for short), Bangladesh. These two secondary markets take the responsibilities to meet the demands of buyers and sellers of the market by setting transactions. They have no authority to fix the price of the securities; rather they confirm the transactions in the market. Both the exchanges are conducted by Computerized Automated Trading System and are self-regulated.
Each stock exchange establishes listing requirements, approves, suspends or removes listing privileges of companies, monitors listed companies in compliance with regulatory provisions and permits dual listing.
In order to protect the interest of the investors government has established Securities and Exchange Commission on 8th June 1993 the main functions of which are to develop and regulate markets and ensure proper issuance of securities. This Commission acts as a Central Regulatory Agency that guides the entire capital market. Thus, a lot of policies and regulations were framed by the government through the Commission to protect and enhance the securities markets helping channelize savings of different investment opportunities. But now-a-days the dual authority of Bangladesh Bank and Securities and Exchange Commission could jeopardize the development and function of Merchant Banking policy.