Experts, stakeholders, insiders hold varied views

Mohammad Mufazzal | Published: August 21, 2014 00:00:00 | Updated: November 30, 2024 06:01:00

Experts, stakeholders and insiders hold varied views regarding tangible success of the demutualised exchanges in bringing buoyancy in the country's capital market.
Some of the brokers of Dhaka Stock Exchange (DSE), who were on the boards of previous mutual exchange, say the demutualised exchange has failed
to show any visible success.
But the incumbent boards of both the demutualised exchanges have dismissed such a view and claimed some 'remarkable' successes achieved within the shortest possible time after the completion of demutualisation process.
"The demutualisation has brought the influential brokers on a par with ordinary ones. We are happy as we got the takes in exchange and now we expect dividends," said a DSE broker who had no involvement with the activities of previous DSE boards.
Experts hold the view that it is too early to make comment about the success of the demutualised exchange. They say it is a good beginning as the influence of some brokers has been reduced.
"The investors and markets will not be able to enjoy the full benefits of the demutualised exchanges until the international strategic and general investors are involved by offloading the blocked shares," Faruq Amad Siddiqi, a former chairman of the securities regulator, told the FE.
He said it's very urgent to find out strategic partner in a bid to open up the market globally.
Parliament passed the Exchanges (Demutualisation) Act-2013 Bill on April 29, 2013 with a view to implementing one of the best regulatory frameworks for enhancing accountability and transparency in the operation of the capital market.
"We are not observing any mention-worthy achievement on the part of the demutualised exchange. This exchange is yet to create a position that would help lure any international strategic partner," said Ahmad Rashid Lali, a former DSE vice-president.
He viewed that the selection of the right type of board members could have played a pivotal role particularly in the case of some impractical decisions delivered by the central bank.
"However, I own the board as the DSE itself submitted the list of independent directors. But the role of the board is not visible in formulating time-befitting rules, including the listing regulations," Mr. Lali told The Financial Express.Â Â
Asked whether the time that the demutualised exchange has passed is sufficient for achieving any major success, Lali said there is nothing called 'honeymoon' period on the capital and financial markets.
DSE managing director Dr. Swapan Kumar Bala said the demutualised exchange is working independently to reach the cherished objectives playing by the rules. And some remarkable achievements have also been ensured by now.
"The success of the demutualised exchange will have to be counted from February 14, 2014, the day when the incumbent board started acting under the rules of demutualisation," Mr. Bala told the FE correspondent.
He said earlier the exchange was not able to reach any concrete decision about the selection of vendor for adopting the automation of trading platforms due to some members' preference to different vendors.
"But after the demutualisation our management efficiently finalised the decision of choosing the vendor considering the choice of majority number- brokers and the board gave its consent to those. This is the first visible success of the demutualised exchange," he said.
Bala further claimed that the second success of the demutualised exchange was finding solution to some complexities that had earlier surfaced centering the allotment of spaces in the DSE Tower, which is constructed in Nikunja, among the influential members.
"Under the demutualised board the exchange is working to ensure maximum utility of the Tower space without attaching any priority to the interest of the influential brokers," the DSE managing director said.
He alleged the previous boards had worked in accordance with their choice and led the exchange for the sake of their publicity and personal image building.
"But the present board so far has not showed such kind of tendency. The members of the previous boards were involved in different committees and influenced the activities of the management." Bala said.
About the success of the demutualised exchange over the market development, Mr. Bala said recently the premier bourse and other stakeholders were at loggerheads following the approvals to two IPO proposals.
"One of those two companies had concealed some irregularities in their prospectus submitted to the securities regulator. Due to the outstanding level of understanding developed between the board and the regulator, one of our independent directors told the BSEC that we cannot ignore the objection raised by a single investor," Mr. Bala said.
The former DSE vice-president, Mr Lali, has also said the demutualised board failed to control the expenses of the exchange.
In this connection, the DSE managing director said the unnecessary expenses are very much under control.
Echoing the DSE managing director's view, Chairman of Chittagong Stock Exchange (CSE) Dr Muhammad Abdul Mazid said the previous boards had arranged parties in different places of the country expending the money of the exchanges. "But the boards of the demutualised exchanges have no such opportunity."
"Fourteen independent directors of both the bourses have no business on the exchanges. As a result, they are talking about any kind of issues with the securities regulator without thinking about their own interest," Mazid said.
He said the previous boards sometimes had backtracked on taking some decisions considering their own interest. "But the independent directors of the incumbent board have nothing to lose."
He said previously the managements did not feel comfort to seek information from the houses of influential brokers as those ones were involved with the boards.
"But, presently, the exchanges can visit and seek information from any brokerage house, no matter whether the broker is influential or not. This is qualitative change in the demutualised exchange," Mr. Mazid said.