So long the prevailing concept about the stock market was that the small and marginal investors would invest in the capital market through both initial public offering (IPO) and secondary market. Another honest purpose was to channel common people's savings through the capital market for boosting up national investment. In fact, stock exchanges enjoy certain benefits like less corporate tax for listed companies, exemption of share transfer fees, less tax on dividend by the listed companies, etc. The government is always urged, particularly before the budget, to reduce the profit on savings certificates so that the investors are compelled to come to stock exchanges. This demand is seriously backed by a large section of economists, hitherto known as capital market experts. From the initial stage of the re-opening of the stock exchanges common investors, especially say common people, showed interest in the stock exchanges and IPOs. Almost all IPOs were oversubscribed. However, the share market got a big thrust when the foreign investors were allowed to invest both in the IPO and stock exchange. An unusual phenomenon could be observed. Foreign investors showed interest in all companies apparently without judging the qualities of the shares. Onrush of foreign investment made the people euphoric and share prices started to rise, as if, the sky is the limit. There was a cry for more and more finance and a section of share market experts orchestrated instead of examining the practical aspects. The foreign investment mostly come from only a Hong Kong - based company. The story was like this that Bangladeshi taka was transferred to Hong Kong and then retransferred as dollars. Whatever might be the facts, hundreds of thousands of people rushed to the stock market. The natural consequence was the crash of the market. That happened in 1996. World famous economic weekly The Economist commented that the crash was like the slaughter of the Innocent. "Again in 2009-10 there was another crash and the Economist published the story with the same title, "Slaughter of the Innocent". The people's euphonic mood was responsible for this disaster. But the tragedy was; Securities and Exchange Commission, the stock exchange authorities, could not stop the innocent people from moving to the slaughter house which was impelled by the seminal lunacy. However both SEC and the Ministry of Finance considered it as their sacred duties to take certain concrete steps for stopping the recurrence of such a crash. One of the major flaws was the administrative structure of the stock exchange. Stock Exchange behaved like a private member and a total negation of corporate rule and discipline. Late Finance Minister A.M.A Muhith succeeded in demutualizing the stock exchange and establishing corporate administrative ideals. In this connection it may be mentioned that the majority of the victims were small or marginal investors and savers who included even housewives. Probably the SEC thought that certain rules should be imposed upon the small investors so that the share market shenanigans could not play with these people. The system of the beneficiary owners account (BO Account) was introduced. There will be no free ride in the share market. An investor should open an account known as the BO account either in a bank, merchant bank or brokerage house. He is to pay Tk. 450 annually for maintaining the account. At the time of applying for shares in IPO the investor will have to keep shares worth Tk. 50,000 in his account, notwithstanding the fact that he will have to pay the amount for the shares he wants to buy in the IPO. Meanwhile, most of the quality shares, otherwise known as the blue chips, have been very costly. A senior member of the stock exchange said no investor with less than one million taka should think of coming to the share market. It will not be an exaggeration to say that some of the steps for protecting the small investors have backfired. Virtually the small investors have fled from the market or do not have the capability of coming to the market. In view of this changing pattern the question arises as to who are to be defined as small investors. In future the issue of profit on savings certificate should be considered because the doors of the share market are closed for the people who are marginal savers. Social security/safety net is not enough for survival of the needy people. It may not be totally relevant with this write-up. But still it cannot be ignored. Protagonists of the publicly traded companies call for reducing the corporate taxes and compare with other countries, particularly the European companies. But they never utter a single word that the latter pay social security tax.
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