Bourses submit concept papers on demutualisation

FE Report The country's both the stock exchanges submitted Thursday the much-awaited concept papers on their proposed demutualisation to the finance minister, officials said. The leaders of both the bourses handed over their concept papers to the Finance Minister AMA Muhith at his office. During the submission of concept papers, Investment Corporation of Bangladesh (ICB) Managing Director Md Fayekuzzaman, Dhaka Stock Exchange (DSE) President Md Shakil Rizvi, Chitttagong Stock Exchange (CSE) President Mohammad Al Maruf Khan and former CSE President Fakhor Uddin Ali Ahmed were present along with their other high officials. On September 4 this year, the DSE and CSE presented their plans of demutualisation at a meeting in presence of the finance minister arranged to discuss the demutualisation process. At the meeting, some invited stock market experts expressed the opinion that at first it should be clear about the concept of demutualisation. Then the finance minister suggested the leaders of both the stock exchanges to prepare complete concept paper on the proposed demutualisation process. Afterward, both the stock exchanges prepared the concept papers on demutualisation following the suggestions made by the finance minister and the stock market experts. Meanwhile, the chairman of the Securities and Exchange Commission (SEC) said Thursday the proposed demutualisation process of both the bourses would be completed within nine months after the formulation of Demutualisation Act. The SEC Chairman Professor M Khairul Hossain said this while the leaders of both the bourses handed over the copy of their concept papers to him. "It's a very positive sign that both the stock exchanges have completed their concept papers after consulting with different key persons of the stock market," Professor Khairul said. He said it might be taken about three months in formulating the Demutualisation Act. Earlier Chittagong Stock Exchange (CSE) has included the provision of appointing an ombudsman in its concept paper (CP) of demutualisation to ensure more accountability and transparency in its activities, officials have said. After demutualisation, the ombudsman will independently oversee the activities of the stock exchange. The CSE president Mohammad Al Maruf Khan, who was the vice president of the bourse for two consecutive terms, said even the chief regulatory officer (CRO), to be employed after CSE's demutualisation, would be accountable for his activities to the ombudsman. As per the concept paper, the board of directors will comprise 24 members and the number of directors will be reduced gradually. "At the initial stage, twelve members will be elected from the existing members with a condition of fulfilling specific requirements. The remaining 12 board members will be picked from the existing members outside the floor with the condition of fulfilling specific requirements," Mr Khan told the FE in line with the concept paper. The CSE president said after the demutualisation, the stakes of CSE will be handed over to strategic investors in three stages. "Initially, the existing members will hold 100 per cent stakes. After two or three years, the existing members' stakes will be reduced to 51 per cent. And ultimately, their stakes will be reduced to only 26 per cent," the CSE president said.