BSEC approves draft act on clearing and settlement company

The securities regulator has finalised the draft act aiming to establish a separate clearing settlement and company for both the bourses, officials said.
The draft has incorporated a provision, among others, for   formation of an 11-member board for the proposed Clearing and Settlement Company.
The proposed paid-up capital of the company will be Tk 5.0 billion, where both the stock exchanges will have majority amount of stakes.
"The commission Tuesday approved the draft act finalised based on two reports. Now we will seek opinions from stakeholders on it," a senior official of the Bangladesh Securities and Exchange Commission (BSEC) told the FE.
He also said after getting opinions from the stakeholders the draft act would be sent to the ministry concerned for next course of action.
A clearing company is an institute that provides clearing and settlement services for the bourses.
Presently, the bourses themselves are performing the job of clearing and settlement with the help of Central Depository Bangladesh Limited (CDBL) in absence of any separate entity.
As per the draft act, the board of the company will include majority number of independent directors.
The chairman of the company will also be selected from independent directors.
Among 11-member board will be comprised of six independent directors, two directors nominated by both the stock exchanges, two directors from shareholders and managing director (MD).
The list of shareholders of the Clearing and Settlement Company will include both the stock exchanges, CDBL, Banks, Insurance Companies, Non-Banking Financial Institutions (NBFIs) and strategic investors.
The securities regulator has ensured majority stakes for both the stock exchanges in the Clearing and Settlement Company.
As per draft act, both the stock exchanges will hold maximum 70 per cent shares and no exchange will be allowed to own above 49 per cent shares.
Among other eligible share holders, the CDBL and strategic investors will hold maximum 10 per cent shares each and other shareholders will also own maximum 10 per cent shares.
No NBFI or strategic investor will be allowed to hold more than two per cent individually.
Arif Khan, a BSEC commissioner, said the regulator has moved to establish the Clearing and Settlement Company as part of its continuous move to diversify the stock market.
"Both the bourses have already been demutualised. Demutualised stock exchanges should have clearing company for its acceptability across the world," Mr. Khan said.
He also said if enacted, the proposed clearing company would help cope with the increased volume of transactions in the bourses after introductions of new products.
The officials of the Dhaka Stock Exchange (DSE) said the establishment of Clearing and Settlement Company would accelerate trading activities of the bourses.
They said after establishment of the company, the bourses will perform trading activities only.
"The proposed company will shoulder the risk managements along with executing clearing and settlement job," the DSE official said.
He said the establishment of Clearing and Settlement Company is also required for introducing different products such as derivatives and Exchange Traded Fund (ETF).   
[email protected]