Investors opened a total of 46,788 new BO (beneficiary owner's) accounts in the six months through February, higher than in the previous six months, for various reasons, including optimism surrounding post-election stock market.
In the previous six months to August last year, 33,019 new accounts were added to the system of the Central Depository Bangladesh Limited (CDBL).
Many investors opened separate or link accounts expecting a turnaround of the market after the national polls, said market operators. The presumption came to be true weeks after the election when the capital market experienced a steep rise both in turnover and broad index, owing to increased investor participation.
That, however, happened after the securities regulator had withdrawn the floor price of all listed securities, except for 35 stocks, on January 19 about 18 months after imposing the price restriction.
Md. Saifuddin, managing director of IDLC Securities, said the market witnessed higher turnover volumes following higher participation from investors.
So, a rise in turnover indicates that the number of BO accounts rose as investors predicted an upward trend of the market.
On the first trading day after the removal of the floor, the DSE broad index lost 96 points to close at 6240 on January 22.
Later, 207 points were added to the broad index within February 2 alongside a rise in daily turnover to over Tk 18 billion.
There were three IPOs in the last three months, which, according to Md. Ashequr Rahman, managing director of Midway Securities, encouraged opening of new BO accounts.
"There is a correlation between fresh BO accounts and IPOs," he said.
Of the newly-opened BO accounts between Sept 2023 and Feb this year, 31,644 have finally remained operable. The remaining accounts were closed.
The CDBL officials said an account which was closed once could not be re-opened. So, the accounts that have been added to the CDBL system are newly opened by investors.
At the end of February this year, the number of operable BO accounts stood at 1.78 million, up from 1.74 million six months ago.
Mr. Saifuddin said the number of BO accounts also increased ahead of tax return submissions so that investors could avail of the benefits of tax rebates against investments in the stock market.
"It was one of the reasons behind the rise in the number of BO accounts," he said.
The highest annual tax rebate on investments in listed securities was reduced to Tk 1 million in FY23 from Tk 1.5 million the year before. So, the maximum investment will be Tk 6.67 million a year, against which investor will get 15 per cent or Tk 1 million tax rebate.
Mr. Saifuddin also said some investors might have opened new accounts to transact Treasury bonds.
Echoing the views of market operators, Md. Raquibul Islam Chowdhury, general manager at the CDBL, said the upward trend of the market was the main reason behind the rise in BO accounts.
An investor is required to pay an annual fee of Tk 450 for maintaining a BO account.
Of the amount, Tk 200 goes to the public exchequer, Tk 10 to depository participants, Tk 100 to the CDBL, and the remaining Tk 50 to the Bangladesh Securities and Exchange Commission (BSEC).
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