The Dhaka Stock Exchange (DSE) Limited has sought low-cost funds through a financial stimulus package to meet operational expenses of brokerage houses and merchant banks amid the Covid-19 pandemic.
A four-member delegation of the DSE board of directors, led by its chairman Md. Eunusur Rahman, put forward the request at a meeting at Bangladesh Bank (BB) headquarters in the city on Tuesday, with Governor Fazle Kabir in the chair.
The central bank advised the DSE delegation to seek the support from the Ministry of Finance (MoF), according to meeting sources.
"We'll soon submit a proposal to the MoF," Shakil Rizvi, a director of the DSE told the FE, adding that the issue will be discussed at the next meeting of the board of directors that is scheduled to be held this month.
A senior official at the BB said the central bank may provide a refinancing facility if the government announces a stimulus package for offsetting the adverse impact of the Covid-19 on their businesses.
The DSE delegation also sought interest waiver on margin loans provided by the merchant banks and brokerage houses for six months to minimise the losses of the market participants, they added.
The amount of such loans would be around Tk 15 billion.
Regarding the interest waiver on margin loans, the BB official said that the central bank advised the delegation to discuss the issue with the Bangladesh Securities and Exchange Commission (BSEC).
The meeting also discussed different other issues, including starting trade of the government securities at the DSE.
The central bank along with Tata Consultancy Services (TCS) is now working to modify the market infrastructure (MI) module, an automated trading platform, to facilitate trading of the government securities in the country's prime bourse.
"We'll sign a non-disclosure agreement with the DSE shortly as part of starting trade of the government securities in the prime bourse," the central banker said while replying to a query.
A tripartite committee with representation from the BB, the BSEC and the DSE has already submitted its recommendations in this regard to the authorities concerned.
"We expect trading of the government treasury bills (T-bills) and bonds to start at the DSE within three months," Mr. Rizvi said.
Currently, three T-bills are being transacted through auctions to adjust the government borrowings from the banking system. The T-bills have 91-day, 182-day and 364-day maturity periods.
Furthermore, five government bonds with tenures of 02, 05, 10, 15 and 20 years respectively are traded on the money market.
Talking to the FE, Kazi Sanau lHoq, managing director of the DSE, said actually it was a courtesy meeting with the BB governor.
"We've sought support and cooperation from the central bank to keep the country's capital market stable," Mr. Hoq added.
He also said the central bank assured the DSE of continuing its policy support for ensuring sustainable development of the capital market.
However, the securities regulator is going to allow operations of brokerage firms abroad to facilitate direct participation by non-resident Bangladeshis (NRBs) in the trading of stock exchanges.
The Bangladesh Securities and Exchange Commission (BSEC) will consider the option of opening outlets abroad to ensure physical involvement of NRBs with the capital market.
The NRBs currently conduct share trading through authorised persons and sometimes they feel discomfort as they physically are not able to deposit and withdraw their hard-earned money.
"Trading outlets will be opened for the NRBs who don't use mobile apps. App users will also be able to deposit or withdraw funds through overseas outlets," said BSEC director Mohammad Rezaul Karim.
The NRBs will be benefited availing the outlet facility as they will not depend on others in case of depositing or withdrawing funds, he added.
"Apart from participating in real-time trading, the NRBs will also be able to apply for IPO (initial public offering) shares directly," cited Mr Karim, also a BSEC spokesperson.
He said stock exchanges have been asked about the regulatory consideration in allowing foreign trading outlets.
"Interested brokerage firms will be able to open trading outlets abroad on completion of formalities by the BSEC and the central bank," commented Mr Karim.
He said the regulator will sit with the central bank to pave the way for trading through foreign outlets.
"The funds, deposited by an NRB to purchase securities, will be included in the books maintained by the head office of a particular brokerage firm at a conversion rate of foreign currency."
Similarly, an NRB will be able to withdraw his money from any foreign outlet at a conversion rate after selling his securities, Mr Karim observed.
Dhaka Stock Exchange managing director Kazi Sanaul Hoq said the country's capital market will witness further participation from the NRBs if foreign outlets of brokerage firms are allowed.
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