DSE seeks more time for its demutualisation

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Mohammad Mufazzal
Dhaka Stock Exchange (DSE) said its demutualisation will take time as the market is not yet ready to see a change in the structure of the prime bourse.
"We agree on the necessity of demutualisation of DSE, but it's not the perfect time to demutualise DSE for the sake of the market," DSE chairman Shakil Rizvi told the FE.
His comment came following a reminder given by Securities and Exchange Commission (SEC) regarding finalisation of a draft on demutualisation of the DSE.
In reply to an SEC letter, the DSE said it will finalise the draft on demutualisation of the exchange after it completes study on such demutualised stock exchanges of other countries. A delegation will visit those stock exchanges to gather knowledge on the demutualisation, according to a competent source.
He said the DSE board of directors discussed the issue after the SEC through a letter wanted to know current the status of the draft latest by November 25 last.
He said the DSE board admitted the necessity of demutualisation of DSE, but it argued that it would need to have more study, practical knowledge and necessary papers for the purpose demutualisation.
Demutualisation refers to the legal structure of an exchange whereby the ownership, the management and the trading rights at the exchange are segregated from one another.
Whereas, in a mutual exchange, three functions of ownership, management and trading are concentrated into a single group. Here the broker members of the exchange are both owners and traders on the exchange and they further manage the exchange as well.
When asked SEC Chairman Ziaul Haque Khondker said it is a decision of the government to demutualise DSE as the market has expanded much by this time.
Mr Rizvi said it was first letter from the SEC regarding the demutualisation status.
"What will happen to the monitoring system of the stock market if the DSE members relinquish their positions?" he questioned.
"London Stock Exchange was demutalised after two hundred years of its establishment. Why this stock exchange was demutualised after so many years despite the investors of England were more educated than the people of Bangladesh?" he wondered.
"We will send a delegation including two members of the SEC to visit Bombay stock exchange to have practical idea regarding demutualisation," DSE president said.