Govt plans new body to help execute stock market reforms
Nazmul Ahsan | Friday, 25 February 2011
Nazmul Ahsan
The government has moved to form a high-powered committee next week to assess liquidity crisis in the stock market, analyse margin loan regulations and find loopholes in the share trading system, officials said Thursday. The move comes as part of a fresh government measure to prevent manipulation in the country's two stock exchanges and bring stability in the market following the recent crash in share prices. The committee will have representation from the central bank, Investment Corporation of Bangladesh, Securities and Exchange Commission, Dhaka Stock Exchange, Insurance Development and Regulatory Authority, Association of Bankers and Merchant Bankers' Association. An official said the body will monitor the liquidity crisis now dogging the capital market and help execute the decisions of two other specialised committees the government had set up for the capital market. "We hope to form the body early next week to expedite capital market reform and help implement decisions that have been already taken by other bodies or are being mooted to boost stability in the market," a top finance ministry official said. "Major stakeholders of the capital market are being included in the committee so that they can be part of the decision making process or help the government detect loopholes in the system," he added. The central bank had come up with the idea of setting up the committee to review the market amid persistent volatility in trading, he said, adding the ministry has taken the move in line with Bangladesh Bank's suggestions. The stock market has been on a free-fall since December 5 last year when it hit a record high of 8918.51. In the past two and a half months, DGEN, the benchmark index of Dhaka Stock Exchange lost more than 35 per cent. According to its draft terms of reference (ToR), the proposed committee will oversee activities of the two previous bodies, monitor implementation status of the decisions taken by them and recommend further course of action. The finance ministry had earlier set up the two bodies -consultative committee headed by BB Governor and advisory committee led by a member of SEC -to suggest reforms for the capital market. However, many decisions taken by the committees have not been implemented properly or in time, affecting the overall health of the bourses and allowing speculators to manipulate the system, the official said. The new committee will review the decisions of the two bodies with the stakeholders and private sector representatives It will be empowered to intervene and sensitise in the process of formulating any policy relating to the share market and identify unscrupulous market players to protect the interest of investors, he added. A joint secretary of the finance ministry is expected to head the new seven-member committee, another official said, adding the body will be officially formed next week. Besides, the draft ToR said the proposed committee will evaluate the liquidity crisis, now seen as a key snag in the market, analyse existing margin loan regulation and loopholes in the entire trading system.
The government has moved to form a high-powered committee next week to assess liquidity crisis in the stock market, analyse margin loan regulations and find loopholes in the share trading system, officials said Thursday. The move comes as part of a fresh government measure to prevent manipulation in the country's two stock exchanges and bring stability in the market following the recent crash in share prices. The committee will have representation from the central bank, Investment Corporation of Bangladesh, Securities and Exchange Commission, Dhaka Stock Exchange, Insurance Development and Regulatory Authority, Association of Bankers and Merchant Bankers' Association. An official said the body will monitor the liquidity crisis now dogging the capital market and help execute the decisions of two other specialised committees the government had set up for the capital market. "We hope to form the body early next week to expedite capital market reform and help implement decisions that have been already taken by other bodies or are being mooted to boost stability in the market," a top finance ministry official said. "Major stakeholders of the capital market are being included in the committee so that they can be part of the decision making process or help the government detect loopholes in the system," he added. The central bank had come up with the idea of setting up the committee to review the market amid persistent volatility in trading, he said, adding the ministry has taken the move in line with Bangladesh Bank's suggestions. The stock market has been on a free-fall since December 5 last year when it hit a record high of 8918.51. In the past two and a half months, DGEN, the benchmark index of Dhaka Stock Exchange lost more than 35 per cent. According to its draft terms of reference (ToR), the proposed committee will oversee activities of the two previous bodies, monitor implementation status of the decisions taken by them and recommend further course of action. The finance ministry had earlier set up the two bodies -consultative committee headed by BB Governor and advisory committee led by a member of SEC -to suggest reforms for the capital market. However, many decisions taken by the committees have not been implemented properly or in time, affecting the overall health of the bourses and allowing speculators to manipulate the system, the official said. The new committee will review the decisions of the two bodies with the stakeholders and private sector representatives It will be empowered to intervene and sensitise in the process of formulating any policy relating to the share market and identify unscrupulous market players to protect the interest of investors, he added. A joint secretary of the finance ministry is expected to head the new seven-member committee, another official said, adding the body will be officially formed next week. Besides, the draft ToR said the proposed committee will evaluate the liquidity crisis, now seen as a key snag in the market, analyse existing margin loan regulation and loopholes in the entire trading system.