SEC moves to make training must for top stock traders

Mohammad Mufazzal | Published: March 13, 2011 00:00:00 | Updated: February 01, 2018 00:00:00

Mohammad Mufazzal
The securities regulator is set to make training on capital market management a must for top officials of brokerages and merchant banks in an effort to help increase supply of quality professionals for the stock market. Chairman of the Securities and Exchange Commission (SEC) Ziaul Haque Khondker told the FE Saturday that the regulator had taken the decision in view of acute crisis of professional traders and fund managers in the market. "Anyone who intends to work in a senior position in brokerages, merchant banks or financial institutions that directly deal with stocks must have long training on securities and capital market management," he said. The training must be either from the newly created Bangladesh Institute of Capital Market (BICM) or by qualified institutions known across the globe. "Lack of quality professionals is a big problem in the stock market. The market does not have enough skilled hands who can make sure it is properly governed and its growth prudently managed," Mr. Khondker said. The benchmark index of Dhaka Stock Exchange (DSE) has grown by more than 300 per cent in the last three years before it crashed in December last year. The plunge has impoverished hundreds of thousands of small and ill-informed investors. It also forced the government to order probe and admit mistakes in handling the unfolding crisis. "There is a scarcity of professionals in different merchant banks and brokerage firms. Compared to the size of our market, the number of skilled professionals is a few and far between," the SEC chairman said. Mr. Khondker said quite a few skilled stock traders have returned home from bourses in the West and are now actively involved in the market. "But they make up only a tiny slice of the skilled traders needed for the market." At present, the country's two bourses have 11 asset management companies, 37 merchant banks and 384 brokerage firms based mainly in the capital Dhaka and the port city of Chittagong. But most of these firms only employ one or two professional traders who have limited expertise on how a modern stock market performs, said a leading merchant banker. "Acute crisis of professional traders has been a major reason why we had such an unsustainable growth over the last few years. We have good securities laws and rules. But unless we have professional traders, how can you expect the market to perform according to the rules?" he told the FE. Former SEC Chairman and ex-secretary Faruq Ahmed Siddiqi said the market lacked professionals because there have been no "established institute" to churn out skilled stock traders. "I don't know of any university in Bangladesh which has a course on capital market management," he said. "The market has grown beyond anyone's expectations. Yet, it does not have a big pool of professional managers who can ensure standards in securities trading," he said. Mr. Siddiqi said the creation of the BICM last year was a good move and it should be properly manned to train professionals. Sheikh Mortuza Ahmed, the president Bangladesh Merchant Bankers Association (BMBA), backed the SEC move, saying key officials of stock-related firms must have proper and long term training. "The education and expertise of our traders are not up to the mark," he said. "We also lacked experienced hands. The standard of our professionals is very poor compared to the growth of the stock market." "I have told my association (BMBA) to hold trainings for merchant bankers so that even I can also enhance my skills," Ahmed said. Abdul Hannan Zoarder, the chief executive director of BICM said his institute won't be able to achieve its goal unless it is manned properly. "The government should fill up the faculty of BICM with top teachers of the country and foreign experts. They must be compensated handsomely," Mr. Zoarder told the FE. He said the SEC move could fall through if the parent companies of the securities firms do not allow their officials to undertake long term courses in the BICM.