BSEC asks ICB to hand over management of Unit Fund

The securities' regulator has asked the Investment Corporation of Bangladesh (ICB) to hand over the management of the country's largest ever mutual fund--ICB Unit Fund-- to its subsidiary company within six months.
The regulatory order came in line with the securities rules regarding management of the mutual funds.
The ICB is not 'registered' as a fund manager and subsequently, the fund will have to be managed by ICB Asset Management Company, a subsidiary of the state-run ICB.
The Bangladesh Securities and Exchange Commission (BSEC) took the decision regarding management of ICB Unit Fund at a commission meeting and delivered the order through a letter sent to the corporation. The size of the ICB Unit Fund is around Tk 37 billion as of June 30, 2016.
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 Asset Management Company Limited (AMCL).
"The ICB will have to hand over the management of ICB Unit Fund to its subsidiary company, which is registered as a fund manager, within six months," said a senior official of the securities regulator.
He said the ICB will also have to submit monthly work plan set for shifting the management of ICB Unit Fund to the commission.
Before issuing the latest order, the securities' regulator recently asked the ICB to explain its 'position' regarding management of ICB Unit Fund.
After getting the corporation's reply, the BSEC finally ordered the ICB to hand over the fund's management.
The BSEC officials said the section 18 of the ICB Act has also the provision of managing MFs by the subsidiary company of the corporation.
"The fees for trustees and fund management cannot be raised before completing the process of shifting the management of ICB Unit Fund," the BSEC official said.
At the same time, the issuance of new units has also been barred by the order issued by the securities' regulator.
Asked, the managing director of the ICB, Md. Iftikhar-uz-Zaman acknowledged that they have received the regulatory order regarding hand over of management of the ICB Unit Fund.
"We will work as per the regulatory order. We have already started the job to comply with the regulatory order," Mr. Iftikhar-uz-Zaman told the FE.
The ICB itself has been managing the unit fund since 1981 when there were no rules for MFs in absence of any full-fledged 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 BSEC sources said, in 2007 the securities' regulator exempted the ICB Unit Fund from annual fee by setting some conditions.
The ICB Unit Fund, however, took registration in 2007 but its management was not shifted to the ICB AMCL.
After the inception, the ICB Unit Fund has been issuing lucrative dividends for its unit holders.
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