CDBL to remain open for 3 more days to settle BO accounts
Tuesday, 9 October 2007
FE Report
The Central Depository Bangladesh Ltd (CDBL) will keep its office open on October 10,11 and 19 to facilitate the depository participants (DPs) of Dhaka Stock Exchange (DSE) and Chittagong Stock Exchange (CSE) to settle their respective beneficiary owner's (BO) accounts of investors.
"We took the move to help the DSE and CSE DPs in assessing the number of actual BO account-holders although the deadline expired September 30 last," a CDBL source told the FE.
Market operators, however, said that the latest CDBL move will not bring complete benefit to the DPs as a six-day holiday on account of Shab-e-Qadr and Eid-ul-Fitr begins tomorrow (Wednesday) in the stock exchanges.
"We are concerned as there will be no staff in the brokerage houses on the occasion of the country's largest festival and that's why we are hopeful that the CDBL will further extend the time-limit on final settlement of BO accounts," a DSE source said.
A large number of investors failed to deposit Tk 300 as annual fee charged for the maintenance of BO accounts until September 30 last as there was poor publicity from the end of the CDBL.
According to sources, at present there are around 1.6 million BO account-holders.
A DSE DP said 80 per cent of his company's BO account-holders have been able to deposit the maintenance fee until date.
"But so far I know a large number of BO account-holders of other DSE DPs are yet to response," he said.
He said the DPs are facing trouble in contacting the non-resident Bangladeshi (NRBs) BO account holders within such a short period.
According to market sources, the maintenance fee was imposed to bring a 'qualitative change' in the operation of BO accounts in the stock market.
The annual mandatory fee was also imposed through a gazette notification in late-June this year in a bid to discourage use of 'shady BO accounts' during initial public offerings (IPOs).
"Imposition of the annual maintenance fee will discourage the opening of BO accounts by using other persons' information. Besides, the institutional investors will also be benefited," one SEC source added.
A large group of fictitious investors participate in the IPOs through more than one BO account, which ultimately cuts the actual investors' competitiveness, market sources said.
Since the primary shares for the last couple of years have been fetching a handsome return on investment, the craze among the investors to hit the IPO jackpots is very strong.
Most of the newly listed companies in recent years were traded at a premium rate against their respective offered prices within the first few days of their debut tradings.
"Investors are getting handsome returns against their primary investment in the newly listed companies as the issues are priced several times higher against the face value levels after making the debut tradings creating a craze among the BO account holders," said a DSE source.
Investors joined the mad rally of BO account opening when the SEC made it mandatory in late 2004 with the IPO of Exim Bank.
The sources said of the annual fee of Tk 300, the CDBL will receive Tk 150, a depository participant will get Tk 100 and the SEC will get Tk 50.
An official of the Securities and Exchange Commission (SEC) said the capital market regulator will take a portion of the fee to be self-sufficient as well as to reduce the financial dependence on the government.
The Central Depository Bangladesh Ltd (CDBL) will keep its office open on October 10,11 and 19 to facilitate the depository participants (DPs) of Dhaka Stock Exchange (DSE) and Chittagong Stock Exchange (CSE) to settle their respective beneficiary owner's (BO) accounts of investors.
"We took the move to help the DSE and CSE DPs in assessing the number of actual BO account-holders although the deadline expired September 30 last," a CDBL source told the FE.
Market operators, however, said that the latest CDBL move will not bring complete benefit to the DPs as a six-day holiday on account of Shab-e-Qadr and Eid-ul-Fitr begins tomorrow (Wednesday) in the stock exchanges.
"We are concerned as there will be no staff in the brokerage houses on the occasion of the country's largest festival and that's why we are hopeful that the CDBL will further extend the time-limit on final settlement of BO accounts," a DSE source said.
A large number of investors failed to deposit Tk 300 as annual fee charged for the maintenance of BO accounts until September 30 last as there was poor publicity from the end of the CDBL.
According to sources, at present there are around 1.6 million BO account-holders.
A DSE DP said 80 per cent of his company's BO account-holders have been able to deposit the maintenance fee until date.
"But so far I know a large number of BO account-holders of other DSE DPs are yet to response," he said.
He said the DPs are facing trouble in contacting the non-resident Bangladeshi (NRBs) BO account holders within such a short period.
According to market sources, the maintenance fee was imposed to bring a 'qualitative change' in the operation of BO accounts in the stock market.
The annual mandatory fee was also imposed through a gazette notification in late-June this year in a bid to discourage use of 'shady BO accounts' during initial public offerings (IPOs).
"Imposition of the annual maintenance fee will discourage the opening of BO accounts by using other persons' information. Besides, the institutional investors will also be benefited," one SEC source added.
A large group of fictitious investors participate in the IPOs through more than one BO account, which ultimately cuts the actual investors' competitiveness, market sources said.
Since the primary shares for the last couple of years have been fetching a handsome return on investment, the craze among the investors to hit the IPO jackpots is very strong.
Most of the newly listed companies in recent years were traded at a premium rate against their respective offered prices within the first few days of their debut tradings.
"Investors are getting handsome returns against their primary investment in the newly listed companies as the issues are priced several times higher against the face value levels after making the debut tradings creating a craze among the BO account holders," said a DSE source.
Investors joined the mad rally of BO account opening when the SEC made it mandatory in late 2004 with the IPO of Exim Bank.
The sources said of the annual fee of Tk 300, the CDBL will receive Tk 150, a depository participant will get Tk 100 and the SEC will get Tk 50.
An official of the Securities and Exchange Commission (SEC) said the capital market regulator will take a portion of the fee to be self-sufficient as well as to reduce the financial dependence on the government.