SEC, bourses talk book-building pricing issues

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Mohammad Mufazzal
Officials of the country's bourses held a meeting with Securities and Exchange Commission (SEC) chairman Zia-ul Haq Khandakar Tuesday to discuss the matter relating to higher participation of institutional investors for setting the indicative price of a company share under the book building method.
The representatives of the Dhaka Stock Exchange (DSE) and Chittagong Stock Exchange (CSE) said they support the SEC move in bringing changes in the method for fixing the market price of share that will be in consistent with the company fundamentals.
Two SEC members Mansur Alam and Yasin Ali and senior vice president and vice president of the DSE and CSE were present at the meeting.
"The book building method has become controversial as the companies try to get a high prices by their chosen institutional investors.
This is why the DSE and CSE are supporting the SEC move," DSE Vice-President Md. Rafiqul Islam told the FE.
The SEC move followed two cases, in which the indicative prices of the companies were found not consistent with the company fundamentals due to participation of a small number of eligible investors in fixation of prices under the bidding process.
In a recent meeting the SEC decided in principle to ensure participation of all eligible institutional investors in the bidding for setting an acceptable indicative share price of a company. A company should obtain quotations from at least 15 institutional investors.