MCCI for amendment in rules

FE Report The Metropolitan Chamber of Commerce and Industry, Dhaka (MCCI) has suggested for amendment in rules to allow the transfer of portfolios from merchant banks with or without margin loans. "The existing mutual fund rules do not allow the transfer of portfolios from merchant banks with or without margin loans. So, such transfer would require change in rules. The Securities and Exchange Commission (SEC) will need to examine legal and procedural aspects before granting the permission," the MCCI said in its review of Bangladesh Economy during the period of July-September 2011. The MCCI observation came on making the Tk 50 billion 'Bangladesh Fund' a successful tool for investors in the stock market. "The Investment Corporation of Bangladesh (ICB), supported by all state-owned banks, floated a Tk.50 billion 'Bangladesh Fund' to help the market get back the much-desired buoyancy, but it is yet to produce any visible impact on the market," the leading chamber noted. In such a situation, the idea of launching of a similar fund under private initiative was made public on 29 September 2011. The Federation of Bangladesh Chambers of Commerce and Industry (FBCCI), owners of the listed companies, the two stock exchanges and a platform of retail investors are reportedly backing the initiative. This fund will be a mutual fund where both investors and merchant banks, if they wish so, will be free to transfer their portfolios against margin loans by accepting the terms and conditions of the fund. In exchange, the fund will issue units equivalent to the 'purchase value of the portfolio and also a premium for the prevailing market value of the shares'. This transfer mechanism is designed to provide 'relief' to both troubled investors and merchant banks and ease the liquidity crisis in the market. The MCCI said country's capital market continues to be in a state of uncertainty. Nearly a year has elapsed since the collapse of the market after an unprecedented bull run but there is little sign of its recovery. Whenever the market shows an upward trend, the strong sale pressure, particularly from the retail investors, pulls it down in no time. This has been more of a regular feature of the market these days in the absence of any meaningful step by the securities regulator or the government to prop up the sagging morale of the investors.