ADB appoints consultant

Syful Islam The Asian Development Bank (ADB) has appointed a consultant to conduct a study on demutualisation of stock exchanges in Bangladesh to support the government's effort in further developing the capital markets in the country, officials said. The consultant will work under the joint supervision of the ADB and in close consultation with the Securities and Exchange Commission (SEC), they added. In March this year the government has issued directives to the country's two stock exchanges to accomplish demutualisation by the end of 2011. The consultant, Anderson Gideon Wilson, is scheduled to submit the study report within February next year. The move is to assist in the demutualization process by helping the stock exchanges introduce the best international practices in their governance structures including alternative trading system and electronic communication networks together with developing physical facilities of stock exchanges and their trading floors. Once the bourses are transformed from a mutual to a demutualised structure, it will bring a change in the ownership structure and legal and organizational forms. Officials said that the consultant will develop a demutualization plan, address in details the valuation, scheme and timing for the demutualisation based on international best practices considering a key aspect of allocating shares upon demutualisation prior to listing. The demutualization aims enhancement of the stock market in terms of value, liquidity, market perception, efficiency and independence considering the interests of all stakeholders. Months back finance minister AMA Muhith asked both the stock exchanges to move with a detailed plan on demutualization by December this year. Sources said the Chittagong Stock Exchange has planned to complete its demutualisation within the next 40 weeks. To the connection some CSE officials have visited various stock exchanges of Australia and some other countries. On the other hand, the Dhaka Stock Exchange said it would complete the demutualisation process by December 2012. Demutualisation is the process by which a customer-owned mutual organisation or co-operative changes legal form to a joint stock company. As part of the demutualisation process, members of a mutual usually receive a 'windfall' payout, in the form of shares in the successor company, a cash payment, or a mixture of both. The basic objective of demutualisation of stock exchanges is to keep away the brokers in the management of the stock exchanges and to convert the exchanges into business entities so that they are professionally managed.