SEC urged to allow more issues to cool down overheated market
Wednesday, 27 January 2010
FE Report
The share market stakeholders called upon the authorities Monday to take immediate steps to increase the supply of shares in the market, which is getting overheated with every passing day.
The appeal was made in a meeting between the Securities and Exchange Commission and the representatives of brokerage houses in the SEC office. SEC Chairman Ziaul Haque Khondker chaired the meeting.
Bangladesh Merchant Bankers Association (BMBA) also echoed the same view in its meeting held the same day.
Both the meetings agreed that there was no abnormal situation prevailing in the market at the moment. But the problem lay in the mismatch between supply and demand. They stressed that immediate supply of fresh shares was needed to stabilise the market.
However, the stakeholders urged the SEC to expedite the process of approving the mutual funds and the initial public offerings (IPOs), awaiting the nod of the securities regulator.
Considering the growing demand for shares at present, the facility of direct listing should be opened up to the private companies, said the meeting.
Sources said more than 30 mutual funds, IPOs of six companies and direct listing of three companies are awaiting the SEC approval.
The SEC is in a dilemma over disposing of those applications because of the Finance Ministry intervention, which drew sharp criticism from the stakeholders.
Banks and non-banking financial institutions (NBFIs) sought extension of time for separating brokerage houses from their mother institutions.
Earlier, the SEC directed banks and NBFIs to set up brokerage houses as separate subsidiaries by March 31 next.
The BMBA in its urgent meeting decided not to disburse any loan against overvalued scrips.
"Prices of some scrips do not support their fundamentals. We decided not to provide loans against such stocks," said M Fazlur Rahman, president of the BMBA.
"There is no alternative to increasing the supply of shares right at the moment. The concerned authorities should take the matter into account in the interest of the investors and the market," he said.
The share market stakeholders called upon the authorities Monday to take immediate steps to increase the supply of shares in the market, which is getting overheated with every passing day.
The appeal was made in a meeting between the Securities and Exchange Commission and the representatives of brokerage houses in the SEC office. SEC Chairman Ziaul Haque Khondker chaired the meeting.
Bangladesh Merchant Bankers Association (BMBA) also echoed the same view in its meeting held the same day.
Both the meetings agreed that there was no abnormal situation prevailing in the market at the moment. But the problem lay in the mismatch between supply and demand. They stressed that immediate supply of fresh shares was needed to stabilise the market.
However, the stakeholders urged the SEC to expedite the process of approving the mutual funds and the initial public offerings (IPOs), awaiting the nod of the securities regulator.
Considering the growing demand for shares at present, the facility of direct listing should be opened up to the private companies, said the meeting.
Sources said more than 30 mutual funds, IPOs of six companies and direct listing of three companies are awaiting the SEC approval.
The SEC is in a dilemma over disposing of those applications because of the Finance Ministry intervention, which drew sharp criticism from the stakeholders.
Banks and non-banking financial institutions (NBFIs) sought extension of time for separating brokerage houses from their mother institutions.
Earlier, the SEC directed banks and NBFIs to set up brokerage houses as separate subsidiaries by March 31 next.
The BMBA in its urgent meeting decided not to disburse any loan against overvalued scrips.
"Prices of some scrips do not support their fundamentals. We decided not to provide loans against such stocks," said M Fazlur Rahman, president of the BMBA.
"There is no alternative to increasing the supply of shares right at the moment. The concerned authorities should take the matter into account in the interest of the investors and the market," he said.