BSEC asks ICB to explain its position

The securities' regulator has asked the state-run Investment Corporation of Bangladesh (ICB) to explain its 'position' regarding management of ICB Unit Fund, as the corporation is found not 'registered' as a fund manager.
The regulatory move came to bring the fund's operation under the existing rules and Act for the 'interest' of unit holders.
The ICB Unit is the country's largest ever open-end mutual fund (MF) having a size of above Tk 37.25 billion, according to audited financial statement as of June 30, 2015.
The fund has been disbursing lucrative dividends since  starting its operation in 1981.
The sources close to BSEC officials said, both the securities rules and ICB Act have the provision of managing MFs by the any company or statutory body registered with the securities regulator as an asset management company Limited (AMC).
"The regulator has found some non-compliance in managing the unit fund, as the ICB is not registered as a fund manager. That's why the corporation has been asked to explain its position in the light of specific rules and act," said a source of the Bangladesh Securities and Exchange Commission.
The source also said neither the securities rules nor ICB Act are being followed in managing the ICB Unit Fund.
"The section 18 of the ICB Act has also the provision of managing MFs by the subsidiary company of the corporation. The securities' regulator also wants to create a level playing field for the MFs," the source of the securities regulator said.
Asked, Md. Iftikhar-uz-zaman, managing director of the state-run ICB, said they are working to reply to the regulator's query.
"We are not able to speak about the issue at this moment. We are working to prepare our reply," said Mr. Iftikhar-uz-zaman.    
According to section 25 of the Securities and Exchange Commission (Mutual Fund) Rules, 2001, no company or statutory body will be appointed as fund manager unless they are registered by the commission as an AMCL.
The ICB has three subsidiaries - ICB Capital Management Limited, ICB AMCL and ICB Securities Trading Company Limited.
The ICB AMCL is managing all closed-end and open-end MFs, other than the ICB Unit Fund.
The ICB itself has been managing the unit fund since 1981 when there were not rules for MFs in absence of any regulatory body for the capital market.
After inception of the securities' regulator in 1993, Mutual Fund Regulation was formulated in 1997 setting the provision of getting registration of fund manager from the securities' regulator.
Later, the mutual fund rules came into effect in 2001. The section 16 (2) set for management of MFs said, "Any company or statutory body registered by the commission as fund manager shall have to be appointed for management and operation of every MF and its schemes."
According to BSEC sources, the ICB Unit Fund was not registered with the BSEC till 2006 despite the provision of getting registration for MFs in rules and regulations.
The sources said, in 2007 the securities' regulator exempted the ICB Unit Fund from annual fee by setting some conditions.
The Fund, however, took registration in 2007 but its management was not shifted to the ICB AMCL, the source said.
"In its reply the ICB will have to show that they had not violated condition."
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