Despite regulatory clearance and the availability of a trading platform, it remains unclear why open-ended mutual funds have yet to become tradable online.
The Chittagong Stock Exchange (CSE) completed setting up an online trading platform nearly a year ago and also conducted a mock trading session. According to the CSE, trading in open-ended funds could begin within just seven days.
Currently, equity securities and units of close-ended mutual funds can be traded digitally in the secondary market. However, transactions in open-ended mutual funds are still executed manually.
To purchase units of open-ended funds, investors must apply to the relevant asset managers and transfer funds to them. The purchased units are then credited to investors' BO accounts. A similar procedure is followed when investors wish to sell their holdings. They must apply to the respective asset managers and inform their brokers so that the units can be transferred to the asset managers' accounts.
"We have given a brief on the platform to the securities regulator. We have demonstrated how it works and collected feedback. We also have rectified errors based on the feedback," said AKM Habibur Rahman, chairman of the CSE, in a telephonic conversation with the FE.
Moreover, the port city bourse held a meeting with more than 50 asset managers and conducted mock trading on the platform.
"At the time, the SEC had no rule for online trading but now it has," said Mr Rahman, adding that trading can begin if asset managers and the CSE reach an understanding regarding the operation of the platform.
"We are currently contacting asset managers," added the CSE chief.
The chief executive officer and managing director of VIPB Asset Management Company Limited, Mr Shahidul Islam, said he was aware of the trading platform but did not explain why asset managers were not using it.
"Yes, we know that there is a platform but we are yet to get the update," he said.
To simplify the process of trading open-ended fund units, a separate clause was included in the revised mutual fund rules published in November last year. The previous rules did not contain such a provision.
According to the new rules, open-ended mutual funds must be traded on an online platform endorsed by the Bangladesh Securities and Exchange Commission (BSEC) or the stock exchanges.
The revised rules also require online trading in open-ended funds to begin within six months of the publication of the rules.
However, the managing director of the CSE, M. Shaifur Rahman Mazumdar, said the new rules might imply that asset managers themselves could also set up a trading platform for open-ended funds.
"We have found that asset managers are not interested in online trading in open-ended funds," he added.
Abul Kalam, spokesperson for the BSEC, told the FE that the market watchdog is ready to facilitate online trading.
"We have made a clear rule to start an online platform. We have also given a time bound. We are also ready to present our position if the CSE arranges any meeting with asset managers.
"We are also ready to extend any further help to any of the parties if required," added Mr Kalam.
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