BSEC differs with BB directive

The securities regulator differs with the central bank's verbal instruction regarding submission of day-to-day stock purchasing information by subsidiary firms of all banks to the Bangladesh Bank (BB), officials said Wednesday.
On the other hand, the central bank says that its aim is also to ensure development of the capital market in case of any kind of imprudent investment by the banks.
On February 22, 2012 the ministry of finance (MoF) requested all stakeholders through a letter to maintain communications, consultation and coordination with the securities regulator before making any decision or issuing statement on issues relating to the country's stock markets.
The officials of the Bangladesh Securities and Exchange Commission (BSEC), however, have stressed the need for coordinated move with the central bank saying that the BB should not take any capital market related decision without prior consultation with the securities regulator.
A policy maker of the securities regulator has said that in an upcoming meeting, which will be held with the central bank on March 2 next, the securities regulator will clear its stance on capital market related decisions.
"As the banks' regulator, the central bank can seek any kind of information from the banks. But the decision of seeking day-to-day information on stock purchase by the subsidiaries of the banks can create panic in the market," the BSEC Commissioner Professor Helal Uddin Nizami told the FE.
He said as per previous understanding the central bank should consult with the securities regulator before taking any capital market-related decision.
"The central bank definitely will realize the sensitivity of the capital market before taking any kind of decision," Nizami added.
When asked, a senior official of the central bank said that they are also working for the development of capital market.
"It's a duty of the central bank to monitor the banks' investments as many of them are already beyond their investment limit. We should remain alert about excessive investment so that any wrongdoer cannot indulge in activities harmful for the capital market," said a senior BB official.
He said in fact the central bank has no required manpower to monitor the banks' investment on day-to-day basis.
"Nevertheless, we should remain alert to avert any kind of imprudent activities by the banks," the BB official said.
He also said that at the upcoming coordination meeting the central bank will also try to clear its capital market friendly attitude.