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Brokers for amending existing book-building system

DBA urges to reduce certificate renewal fees

FE REPORT | July 27, 2022 00:00:00

DSE Brokers Association of Bangladesh (DBA) has demanded amendment of current book-building system.

Terming the existing system faulty, they urged the authorities concerned to amend the bidding system to attract big and well performing companies to the stock market.

Under the existing book-building system, share prices of a new company are derived based on a simple average of its asset value and yield analysis.

Prices can be predicted under the current method as a bidder cannot bid 1.2 times the value which is not favourable for listing well performing conglomerates.

Besides, first come, first serve basis is also not justifiable. The previous bidding method was open and competitive.

The DBA made their demands at the Eid reunion and discussion meeting held Monday at its club auditorium in Motijheel, says a statement issued on Tuesday.

DBA also urged to reduce certificate renewal fees to maintain the quality services and smooth operation in the stock market.

"Due to the recent bearish market situation and continuous drop in share prices, we are struggling to maintain the office expenses due to the decrease in daily trade while the unusual hike of renewal fees is a blow to us," said Md Sajedul Islam, senior vice-president of DBA.

DBA is a platform for trading right entitlement certificate (TREC) holders of the DSE, which has been working since 2014, after the demutualisation of the country's premier bourse on November 21, 2013.

Mr Sajedul, also the managing director of Shyamol Equity Management, said the Depository Participant (DP) certificate renewal fee has been increased to Tk 200,000 from the earlier Tk 4000 which is very unusual.

The renewal fees of stock broker and stock dealer certificates have been increased to Tk 50,000 from the earlier Tk 10,000 each.

Besides, the TREC certificate fee has been increased to Tk 100,000, from the earlier Tk 50,000.

The rate of renewal of DP, stock broker-stock dealer and TREC certificates increased between 100 per cent and 4900 per cent, which is unusually high.

They demanded to rationally reduce the current fees for renewal of DP, stock brokers and stock dealers and TREC certificates.

TREC holders also demanded the opportunity of cash transactions in the brokerage houses for the logical and urgent needs of the investors.

Regarding the market situation, he said the current crisis in the market is temporary.

"Very soon the market will return to the positive trend. Therefore, we should do our best to overcome the current crisis. We have not left the market; rather we have kept the market lively by supporting the market in various ways," said Mr Sajedul.

DBA President Richard D' Rozario presided over the programee where Senior Vice-President Md Sajedul Islam conducted the event.

Senior members including former president, senior vice president, vice president and directors of DBA were present on the occasion.

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