Experts hail BSEC for strengthening capital market

The securities regulator worked in all major areas including reforms and enforcement actions in 2015 to strengthen the platform of the capital market, experts and official said.
The major regulatory reforms made in 2015 include the amendments brought to Rules of Public Issue, Mutual Funds (MFs), IPO (initial public offering) process, DSE Listing Regulations and Market Makers.
In 2015, the securities regulator formulated Rules of Alternative Investment, Private Placement of Debt Securities, Clearing and Settlement Company, Exchange Traded Fund (ETF), Conversion of Closed-end MFs, Separate Trading Board for small and medium cap companies.
The officials of the Bangladesh Securities and Exchange Commission (BSEC) said clearing company would get a shape in next June, and the rules of separate trading board for small and medium cap companies would come into effect by February.   
Former chairman of the securities regulator Dr AB Mirza Azizul Islam appreciated the regulatory moves for reforms and enforcement actions taken in 2015.  
"The securities regulator has become more proactive in exercising its power in case of conducting reforms and enforcement actions," Mr Islam said.
The major enforcement action was taken against the LR Global, an asset management company (AMC), which allegedly invested in restricted sectors by breaching the securities law.
To bring disciples in MF sector, the regulator has also brought amendment to the Rules of MFs incorporating the provision of getting management fee based on per AMC's performance.
If the amendment comes into effect, the AMCs will also have to disclose their areas of investments.  
The securities regulator imposed an aggregate amount of penalty worth above Tk 37 million on different companies for breaching the securities rules in 2015.
Arif Khan, a BSEC commissioner, said over the year the regulator worked to restore investors' confidence through the reforms brought in the securities rules along with conducting enforcement actions.
"We worked in all important areas such as companies' corporate governance, stakeholders' due diligence, audit functions and public issue to strengthen the platform of the capital market," Mr Khan told the FE.
He said the outcomes of the regulatory reforms would be visible in the near future.
According to BSEC Executive Mohammad Saifur Rahman, the securities regulator has advanced more to introduce new products in the market.
"The BSEC has signed an MoU with the Securities Exchange Board of India (SEBI) in 2015 to exchange views for the development of the market," Mr Rahman said.
On December 28, the securities regulator approved the amendment brought to Securities and Exchange Commission (Public Issue) Rules, incorporating tough conditions to ensure more accountability and responsibilities on the part of issuing companies, issue managers, auditors and other stakeholders.
As per the revised rules, the companies seeking premiums must go public under book building method.
Only the companies interested to offer their stocks at face value will be allowed to float IPOs under the fixed price method.
The securities regulator approved the revised listing regulation of bourses on May 27 empowering the exchanges in seeking information in many areas like additional disclosure, information documents clarification from the companies willing to go public.
To avoid the window-dressing balance sheets, the securities regulator formed a panel of 36 audit firms for the listed companies.
The listed companies are now to compulsorily conduct auditing job selecting any one from the BSEC auditors' panel.
Later, in the amendment brought to Rules of Public Issue, the securities regulator included the provision of auditing by the BSEC panel for the companies willing to go public.
Newly-listed companies earlier showed the tendency of issuing bonus shares without expansion plans just after going public. And the directors of those companies sold considerable amount of bonus shares.
On November 30, the securities regulator imposed two-year lock-in on the bonus shares owned by directors and individual shareholders having at least 5.0 per cent shares of newly listed companies.
The lock-in period will come into effect from the date of publishing the IPO prospectus.
The newly-listed companies earlier witnessed abnormal price hikes within first five trading days in absence of any circuit breaker.
Credit facility was also one of the reasons behind the abnormal price hike of newly-listed companies.
To avoid such kind of volatility in share prices, the securities regulator put restriction on margin loan facilities for first 30 trading days on newly-listed companies.
On October 6, the securities regulator approved the draft of Clearing and Settlement Company incorporating the provision of appointing majority number of independent directors.
The Special Tribunal for capital market started its operation in June through the initiatives taken by the securities regulator.
Of 22 capital market-related cases, recorded in the list of tribunal, the verdicts of four cases were delivered.
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