Overview of stock exchange in Bangladesh
Introduction: Capital Market mainly refers to the Stock and Share market of the country. When bank-ing system cannot totally meet up the need for funds to the market economy, capital market stands up to supplement it. Companies and the government can raise funds for long-term investments via the capital market. The capital market includes the stock market, the bond market, and the primary market. Securities trading on organized cap-ital. markets are monitored by the government; new issues are approved by authorities of financial supervision and monitored by participating banks. Thus, organized capital markets are able to guarantee sound investment opportunities. This paper reveals the various aspects of the Capital Market in Bangladesh.
Bangladesh capital market is one of the smallest in Asia but the third largest in the south Asia region. It has two full-fledged automated stock exchanges namely
Dhaka Stock Exchange (DSE) and
Chittagong Stock Exchange (CSE) and an over-the counter exchange operated by CSE.
It also consists of a dedicated regulator, the
Securities and Exchange Commission (SEC), since, it implements rules and regulations, monitors their implications to operate and develop the capital market. It consists of
Central Depository Bangladesh Limited (CDBL), the only Central Depository in Bangladesh that provides facilities for the settlement of transactions of materialized securities in CSE and DSE.
History of Stock Exchange:Dhaka Stock Exchange was setup on 28th April, 1954 that started formal trading on early1956. Post–independence government did not promote a capital market during the first five years, and it was activated again in 1976 with 9 issues on board. In 1995, a second course, the Chittagong Stock Exchange, was setup with sophisticated logistic support and modern management.
Vision of the stock exchange:• Regulating the market structure through proper rules and strict compliance by members.
• Expansion of CSE trading network to cover 504 thanes.
• Introduce Book Building system in Bangladesh capital market.
• Introducing derivative market
• Continuous promotion of stock investment throughout the country.
• Create opportunity to cross border trading with SAFE countries.
• Introduce global depository receipts (GDR)
Mission:To create an efficient and transparent market facilitating entrepreneurs to raise capital so that it accelerates industrial growth for overall benefit of the economy of the country.
Objectives:• Develop a strong platform for entrepreneurs for raising capital;
• Provide an investment opportunity for small and large investors;
• Develop a transparent market ensuring investor’s interest;
• Provide a fully automated trading system with most modern amenities to ensure: quick easy, accurate transactions and easily accessible to all;
• Attract non-resident Bangladeshis to invest in Bangladesh stock market;
• Attract foreign institutional investors to invest in Bangladesh
Management of stock exchanges:DSE and CSE comprises of 25 members of whom 12 are elected through direct election from the 235 and 134 shareholders respectively. Another 12 members representing distinguished personalities from different key economic and social arena of the country. The CEO of the exchange is also a Director of the Board.
Functions:The functioning of an efficient capital market may ensure smooth floatation of funds from the savers to the investors. When banking system cannot meet up the total need for funds to the market economy, capital market stands up to supplement. To put it in a single sentence, we can therefore say that the increased need for funds in the business sector has created an immense need for an effective and efficient capital market. It facilitates an efficient transfer of resources from savers to investors and becomes conduits for channeling investment funds from investors to borrowers. The capital market is required to meet at least two basic requirements: (a) it should support industrialization through savings mobilization, investment fund allocation and maturity transformation and (b) it must be safe and efficient in discharging the aforesaid function. It has two segments, namely, securities segments and non-securities segments.
Function of DSE The major functions are:
– Listing of Companies. (As per Listing Regulations).
– Providing the screen based automated trading of listed Securities.
– Settlement of trading.(As per Settlement of Transaction Regulations)
– Gifting of share / granting approval to the transaction/transfer of share outside the trading system of the exchange (As per Listing Regulations 42)
– Monitoring the activities of listed companies. (As per Listing Regulations).
– Investors grievance Cell (Disposal of complaint bye laws 1997).
– Investors Protection Fund (As per investor protection fund Regulations 1999)
– Announcement of Price sensitive or other information about listed companies through online.
Mission of DSE: The Dhaka stock exchange will create a successful well-organized and transparent market of international standard to save and invest in Bangladesh in order to facilitate the competent entrepreneurs to raise capital and speed up industrial growth for overall benefit of the economy.
OBJECTIVES OF DSE:The prime objective of the DSE is to create a nation-wide stock market also beyond the national boundary, which will simultaneously act as a platform for industrial entrepreneurs and general investors. Explicitly the objectives of DSE are
Following:
1 To develop a strong platform for the entrepreneurs for raising capital.
2 To provide an investment opportunities for small and large-scale investors.
3 To develop a transparent market ensuring investors interest.
4 To provide a fully automated trading, Clearing and settlement system to ensure quick, easy, accurate and easily accessible to all transactions.
5 To attract non-resident Bangladeshis to invest in Bangladesh Stock market.
6 To attract foreign institutional investors to invest in Bangladesh stock market.
7 To collect, preserve and disseminate data and information on stock market.
8 To develop a corporate culture through mandatory corporate membership.
Vision of CSE:Aspire a global standard transaction place of securities and financial product.
Mission of CSE: Practice a set of core values to build competency in compliance, diversification and technology so that an accessible platform, market confidence and wealth maximization scope can be ensured.
Core values
• Value for people
• Transparency
• Excellence
• Harmony
• Commitment
• Integrity
Objectives of CSE• Increase business turnover
• Modernize trading system
• Ensure effective relationship management
• Achieve high level of confidence & professionalism
• Engage in product and market diversification
• Contribute to capital market policy development
• Ensure exchange related quality services
Sources:
https://www.bb.org.bd/fnansys/capmarket.phphttps://www.dsebd.org/http://www.cse.com.bd/
