Stock Exchange

Stock Exchange once stock exchange was a place for companies' stocks trading. But now, stock exchange is a facilitator of stocks trading through computer based automatic trading system. But it has still an address that is only for administrative and communicative purposes. Among others, the stock exchange also performs the following functions: i) listing of securities which include stocks, bonds and mutual funds; ii) trading provision for listed securities; iii) real time on line market surveillance of trading and regular monitoring and compliance inspection of trading operation; iv) settlement and clearance of executed trades.

Any other function is to be directed by the regulator, the Securities and Exchange Commission (SEC).

The major stock exchange of Bangladesh is the dhaka stock' exchange Ltd which started trading in 1956. It is a broker owned stock exchange and incorporated under Companies Act 1994. The Dhaka Stock Exchange is a Self Regulatory Organisation (SRO), administered and regulated by-Companies Act 1994; Memorandum and Articles of Association; Securities and Exchanges Ordinance 1969; Securities and Exchange Rules 1987; Other rules as issued by the SEC.

The Dhaka Stock Exchange Ltd (DSE) is administered by a Board of Directors numbering 25, of whom 12 are elected from brokers and 12 are chosen from outside the exchange with the permission from the securities and exchange commission for a period of three years. The Chief Executive Officer (CEO) is an ex-officio director without voting power.

However, the brokers-owned Dhaka Stock Exchange is under demutualisation process through a separate Act as to be passed by the jatiya sangsad. If done so, the exchange will undergo a substantial change in both administrative and trading system. A demutualised exchange will be a shareholders' company with limited liability. It will also be a profit making company if the Act permits.

Presently, the DSE has 236 members of whom 218 are active. As per memorandum, the remaining 14 members are now under process of sell. The members are the brokers and they are entitled, under license from the SEC to do the trading functions of the exchange. Most of the brokers are also dealers with a separate license from the SEC. The dealers can buy and sell stocks in their own accounts, whereas the brokers can not. The brokers can only buy and sell for the clients.

The stocks are no longer paper stocks issued by listed companies. Now they are units of accounts deposited with the Central Depository of Bangladesh Limited (CDBL). In other words, stocks are electronic stocks and accounts are maintained by the CDBL which came into being by the Security Depository Act 1999. The SEC regulates CDBL.

Upto April 2012, 235 companies, 40 Mutual funds and 8 debentures are listed with the Dhaka Stock Exchange with a market capitalisation of US$ 32.49 billion.

Bangladesh has another Stock Exchange named the Chittagong Stock Exchange (CSE). The CSE came into being in 1995. The administrative and trading system are more or less same as that of DSE. In some cases, CSE took the lead in bringing reforms and sophistication in the exchange administration and trading system. The CSE is also under the demutualisation process. When both DSE and CSE are demutualised, there will be either one demutualised exchange in the country or both the exchange can exist separately if SEC decide so.

Over the years, the Bangladesh Stock Market grew both in issuance of capital and trading volume. In its journey from a very nascent stage, the market received strong policy support from the regulator SEC and also from the government. [Abu Ahmed]