Coordinated regulatory regime a sine qua non

Mohammad Mufazzal | Published: May 14, 2014 00:00:00 | Updated: November 30, 2024 06:01:00

Muhammad Abdul Mazid

The first priority of the chairman of the demutualised stock exchange is to help bring transparency in capital market, help creating an enabling environment to restore and strengthen the confidence of investors at large and small and medium investors in particular.
Dr Muhammad Abdul Mazid, the former chairman of the National Board of Revenue (NBR) and the incumbent chairman of Chittagong Stock Exchange (CSE), shared his future plan of actions in an exclusive interview with the FE.
"My next plan is to help bring the regulators and bourses in close proximity to create a coordinated regulatory regime for the capital market."
Mr. Mazid said as the CSE chairman he is working independently as part of the spirit of demutualised exchange. "My role is to help stock exchange to function without any pressure from any corners. I have a good environment here to work independently."
"The spirit of demutualization is also to enhance confidence of the investors promoting a transparent capital market," said Mr. Mazid, also the chairman of South Asian Federation of Exchanges.
While stressing on greater coordination among the regulators he said, "The Ministry, the Bangladesh Bank (BB) and the BSEC individually or collectively should consult and review ideas before initiating any directives, rules and regulations to avoid any kind of misunderstanding."
In his answer to a question whether the securities regulator evaluates the exchange's opinions on the pre-IPO and draft prospectus of the companies willing to go public Mr. Mazid said, "CSE is continuously verifying issues and sending comments to BSEC. The enforcement is the responsibility of BSEC."
While mentioning the required coordination between the regulator and exchanges, the CSE chairman said, "A regulator should work as a facilitator for any stock exchange for the sake of capital market and investors as well."
To detect violations in financial reporting, Mr. Mazid has felt the necessity of introducing intelligent software which is being used in many developed countries by the securities regulator and stock exchanges. "The cost of the software is huge. The BSEC, DSE and CSE may purchase this kind of software to ensure better compliance in listed companies."
According to the CSE chairman, the prevailing major crisis includes the lack of investors' confidence coupled with tiny or almost zeros investment by the banks.
The CSE chairman has put light on ensuring corporate good governance inside management as well as inside the board of directors to ensure pro-active regulatory compliance and enforcement for the sake of transparency and accountability in a demutualised stock exchange.
He said the securities regulator and both the bourses should work closely with ministry of commerce and ministry of finance as well to offload government shares in stock market.
"The regulator may enact some regulation making it mandatory to come to public for multinational companies after doing business in Bangladesh for 10 years," the CSE chairman said.
He has also stressed more relaxed regulations by the central bank for the foreign investors. "At the same time central bank should be watchful so that foreign investors only invest for midterm and long term and not for the short term gain."
While speaking on as to how the demutualised exchange can be a profitable organ Mr. Mazid said the profitability is largely dependent on market condition. "Definitely we have a forecast of achieving profitability by increasing our market share to at least 20 per cent. We have developed business plan and the board has been facilitating the management to achieve that target."