Floor price scrapped, MSCI index to return in November; broker surveillance tightened

Staff Correspondent: The Bangladesh Securities and Exchange Commission (BSEC) has moved to tackle several longstanding weaknesses in the capital market, including the withdrawal of the floor price, efforts to bring back Bangladesh’s MSCI index and tighter oversight of brokerage firms, BSEC Chairman Masud Khan said on Monday.

Speaking at an open discussion titled “Current State of Bangladesh’s Capital Market and Future Course of Action”, organised by the Dhaka Stock Exchange Brokers Association (DBA), Masud Khan said the commission had taken several significant measures within two months of assuming office.

He said expectations were high when the new commission took charge, as the capital market had remained largely stagnant for a prolonged period.

Masud Khan said the BSEC withdrew the floor price on its second day in office, describing it as one of the market's major pain points, particularly for foreign investors.

He said the floor price had contributed to a negative perception of Bangladesh's market and led global index provider MSCI to suspend publication of its Bangladesh index.

According to the chairman, MSCI has decided to resume its Bangladesh index from November, which he described as an important milestone for the market.

The commission also resolved within a month a long-running London Stock Exchange-related issue involving Beximco Pharmaceuticals, Masud Khan said.

Failure to address the matter could have created difficulties for other Bangladeshi companies seeking listings on overseas exchanges, he said.

“Discussions are already underway with several major Bangladeshi companies regarding potential overseas listings,” the chairman added.

The BSEC is also working to make margin loan regulations more responsive to market needs.

Masud Khan explained that regulatory changes require consultations with stakeholders, legal scrutiny, public feedback and a final review before a gazette notification can be issued.

Stakeholders are generally given 15 working days to submit their views, he said.

On concerns over brokerage firms, Masud Khan said the commission had stepped up surveillance and was addressing regulatory violations as well as longstanding CC shortages.

He said the BSEC issues warnings and fines when rules are breached, but financial penalties alone may not always resolve serious irregularities.

In severe cases, criminal action could be considered if financial penalties fail to address major problems, he said, noting that court proceedings can otherwise continue for years.

“Action is being taken every day on various issues,” Masud Khan said.

The chairman also pointed to the government's decision to set the final tax on dividends received by individual shareholders at 15 percent as a positive measure for investors.

He said the rate provides a significant advantage compared with many other countries, irrespective of an individual's actual tax bracket.

Masud Khan said several other measures aimed at supporting the capital market had also been included in the current national budget.