Latest SEC move on renewal of BO accounts likely to bring transparency in share trading

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Refayet Ullah Mirdha
Stock market operators said the latest move by the Securities and Exchange Commission (SEC) on renewal of Beneficiary Owners (BO) accounts will bring more transparency in share trading.
"Fixation of Tk 300 as annual maintenance fee for each BO account will make the real investors more accountable and bring more transparency in share trading," said a chief executive officer (CEO) of a brokerage house Monday.
He said although many BO accounts will become inactive after the deadline for renewal expired on September 30 the real investors will stay and play a constructive role in the market.
"The cancellation of mostly inactive BO accounts does not necessarily mean that there will be a negative impact in the market. If anybody wants to do business he can open fresh BO accounts on payment of required fees. This will rather bring more dynamism and transparency in the market," he said.
He said it will take time to figure out about how many investors have renewed their BO accounts and how many BO accounts have been closed for failing to renew.
In the first place, the Depository Participants (DPs) office will inform the Central Depository Bangladesh Limited (CDBL) about the total number of operating BO accounts, he said.
The CDBL will then supply the number of active BO accounts to the SEC, he said adding it will take more or less one month's time to find out the actual figure on the BO account holders after the renewal of the accounts.
Talking to the FE, a senior official of the CDBL said the process of dropping the BO accounts that have not been renewed has started. As per the existing rules the CDBL will not recognise the BO accounts that have not been renewed, he said.
However, many DP offices have paid the renewal fees on behalf of the investors to protect the interest of their clients. Later the DPs will adjust the amount from the BO accounts of the investors, he said.
When asked DSE CEO, Salahuddin Ahmed Khan said the time is now premature to comment on whether or not there will be any impact on the market for the cancellation of a significant number of BO accounts.
He said at least 300,000 BO accounts may face closure due to the SEC decision in this connection.
Talking to the FE, a SEC source said the capital market watchdog did not take any fresh decision about the extension of the deadline for the renewal of the BO accounts on payment of fee.
According to sources, currently there are around 1.6 million BO account-holders.
According to the new rules, out of Tk 300 deposited against each of the BO accounts, the CDBL will get Tk 150, DP Tk 100 and the SEC Tk 50.