Plea to introduce spot settlement of listed corporate bonds

The premier bourse has sought a directive from the securities regulator to introduce the spot settlement of the listed corporate bonds to make such instruments more transaction-friendly as per global practice, officials said.
Presently, T+2 and T+3 trading cycles are applicable for the listed corporate bonds although the trading cycle of the listed treasury bonds has been reduced to T+0 known as spot settlement.
"Globally the settlement of debt instruments are completed as per the T+0 trade cycle as the market price of such instruments fluctuates along with the interest rates of the money market," said a senior official of Dhaka Stock Exchange (DSE).
He said earlier DSE had reduced the trade cycle of listed treasury bonds to T+0 from the T+2 and T+3 as per a directive issued by the Bangladesh Securities and Exchange Commission (BSEC).
"That's why we have sought the regulatory directive to equalise the trade cycle of corporate bonds with the cycle of treasury bonds," the DSE official said.  
The DSE officials Monday called on BSEC the policy makers so that the issue of proposed trade cycle for the corporate bonds can be placed in the commission meeting soon.
Presently, there are three corporate bonds listed with the premier bourse. These are: ACI 20% Convertible Zero Coupon Bonds, SUB 25% Convertible Bonds of BRAC Bank Limited and IBBL Mudaraba Perpetual Bond.
On the other hand, the number of listed treasury bonds is 221.  
Meanwhile, the premier bourse sent a letter to the securities regulator on December 10 last mentioning the existing complexities of the listed bonds.
According to DSE officials, presently some 221 listed treasury bonds exist only in name and in market capitalisation as investors prefer to purchase such bonds from banks and other places to avoid the complexities in the secondary market.
The market capitalisation of treasury bonds listed with the DSE is around Tk 549.38 billion, making up 16 per cent of the capitalisation.
The DSE officials said it is easier for the investors to purchase treasury bonds from the banks and post offices without opening BO (beneficiary owner's) accounts and they are also not required to pay tax and transaction fee in such places.
That's why the premier bourse has sought regulatory help to remove existing complexities of the listed treasury bonds to boost the turnover value.
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