The Bangladesh Securities and Exchange Commission (BSEC), the regulatory body of the country's stock market, is being reorganized step by step, but could not yet restore the confidence of investors and stakeholders.
As a result, investors are taking losses. In this situation, the experts advised the regulatory body to take prudent decisions to regain the confidence of the investors.
Sources said both the country's bourses-- Dhaka Stock Exchange (DSE) and Chattogram Stock Exchange (CSE) -- on Thursday plunged further due to mainly price fall in large-cap securities.
DSEX, the prime index of the Dhaka Stock Exchange (DSE), went down by 97.37 points or 1.70 per cent to 5,639.13. Two other indices also ended sharply lower with the DSE 30 Index, comprising blue chips, plunged 30.11 points to finish at 2,064.93 and the DSE Shariah Index (DSES) lost 31.26 points to close at 1,261.94.
On Wednesday, DSEX, the prime index of the Dhaka Stock Exchange (DSE), went down by 41.45 points or 0.72 per cent to 5,736.51. The DSE 30 Index, comprising blue chips, plunged 14.41 points to finish at 2,095.05. But the DSE Shariah Index (DSES) closed the day with 5.07 points up at 1,293.20.
Ahmed Rashid Lali, former senior vice-president of the Dhaka Stock Exchange, said the stock market is a sensitive market. Here the decision has to be made with discretion. Otherwise, investors' confidence will not return.
If the confidence of the investors does not return, the capital market will not develop, the country's economy will not get the benefits of the stock market.
Sources said that even after 14 years of collapse in 2010, the stock market of the country still lacks confidence among investors. It still remains a losing market. Investing in good or bad companies is not profitable. Therefore, there is no new interest among investors to enter the market.
After the stock market collapse in 2010, the capital market regulator Bangladesh Securities and Exchange Commission (BSEC) was reorganized on the recommendation of the inquiry committee formed by the government. After that the government has appointed as a chairman M Khairul Hossain, a professor of Dhaka University.
But even in the long term, he could not return the confidence of the investors. Then in 2020, another professor of Dhaka University, Shibli Rubayat-ul Islam, as the chairman, BSEC commission served for more than 4 years. But even the Shibli Commission could not restore the confidence of the investors.
Later, after the downfall of Sheikh Hasina in the coup of students on August 5 this year, on August 8 an interim government was formed led by Dr Muhammad Yunus. With responsibility, the interim government embarked on reforms in banks, financial institutions, stock markets, insurance and the National Board of Revenue.
Dr Ahsan H Mansur has already given a positive response in the banking sector by taking charge as the Governor of Bangladesh Bank. M Aslam Alam, former secretary to the government in the insurance sector, has also given a positive response to the responsibility. On the other hand, the Chairman of the Board of Revenue has also initiated positive reforms.
Stock market participants said that the restructured BSEC is not able to restore confidence in the stock market. A kind of mistrust has been created among the stock market participants including investors.
On August 19, Khondoker Rashed Maqsood started the reform process in BSEC after taking over as chairman. But in that reform process itself, BSEC, stock exchange and other investors could not spread confidence.
According to BSEC sources, several wrong decisions of the new commission of BSEC have already given rise to controversy. Even the competence and prudence of those appointed to the commission are being questioned. As a result, instead of restoring confidence in the capital market, there has been an infighting between BSEC and market intermediaries.
Sources said that after observing the activities of BSEC for the last one and a half months, the Commission has not yet been able to activate the Dhaka and Chattogram Stock Exchanges by appointing chairman and independent directors.
BSEC has made three wrong decisions to appoint independent directors of stock exchanges. Market intermediaries, including stock exchanges, have undervalued the offering, leading to infighting.
The question arises because the policymakers of the Commission do not have the mindset to coordinate among the capital market stakeholders (brokerage houses, merchant banks, asset managers, investors and experts).
Sources said that BSEC appointed seven independent directors in DSE on September 1. Among them, DSE's former managing director (MD) Mazedur Rahman, Dhaka University teacher Dr Helal Uddin and additional secretary of the financial institution department of the Ministry of Finance Dt Nahid Hossain.
Those concerned raised questions that there has been a breach of law in the appointment. In view of this, Mazedur and Helal Uddin expressed their inability to perform the duties of independent director of DSE.
AF Nesaruddin, partner of audit firm Huda Bhasi Chowdhury and Syeda Zakerin Bakht Nasir, chief consultant of ZN Consultants, were appointed in their place in the second phase. But as the auditing firm Huda Bhasi Chowdhury is the auditor and ZN Consultant is the consulting firm of DSE, they also expressed their disqualification due to conflict of interest as per law.
In the third phase, former MD of financial institution IPDC Mominul Islam and former country manager of multinational Wells Fargo Bank Shahnaz Sultana were appointed.
The third point also raises the question, as per sub-section 'K' of Section 5 of the Demutualization Act, 2013, if a person works as a director and officer of a listed company, the concerned person cannot be an independent director of the stock exchange. Whereas Mominul Islam was the MD of the listed company IPDC even a year ago.
Stakeholders feel that repeated wrong decisions in appointing independent directors indicate the inefficiency of the regulatory body.
