The Dhaka bourse wants to sell new broking licenses to the companies having a minimum paid-up capital of Tk 100 million though the paid-up capitals of many existing brokers are still below Tk 30 million.
The board of the Dhaka Stock Exchange (DSE) has approved some recommendations including this minimum paid-up capital of a company willing to get TREC (Trading Right Entitlement Certificate) paying registration fee and application form fee worth Tk 50 million each.
The recommendations will be submitted to the securities regulator as part of the regulatory process of finalising rules required to issue new broking license.
Of 250 brokerage firms of the DSE, the paid-up capitals of six are still below Tk 10 million, while 15 brokerage firms have paid-up capital worth Tk 10 million each.
According to DSE information, 93 brokerage firms are doing business with paid-up capitals ranging between above Tk 10 million and Tk 50 million each.
Asked about the gap between the paid-up capitals of many existing firms and the amount proposed for new ones, Md. Rakibur Rahman, a DSE director said they have also stressed importance on increasing the capitals of existing ones.
"Following some recent occurrences of embezzling clients' funds, the firms having insufficient paid-up capital have been asked to increase their capitals," said Mr. Rahman, also a former DSE president.
He said the existing firms having insufficient capitals will have to increase their capitals up to Tk 50 million by June, 2021 and up to Tk 100 million by June, 2022.
"The existing firms must increase their capitals for the sake of their clients' investment safety," said the DSE director Mr. Rahman.
The board of the premier bourse has approved the exchange's recommendations as the securities regulator sought public opinion on the draft rules titled Bangladesh Securities and Exchange Commission (Trading Right Entitlement Certificate) Rules, 2020.
The Bangladesh Securities and Exchange Commission (BSEC) published gazette notification on the draft rules on June 23 and sought public opinion of it.
In the draft rules, the securities regulator has proposed a paid-up capital of Tk 30 million for a company willing to get the stock exchange's membership.
Besides, the BSEC's draft rules have proposed a registration fee of Tk 0.5 million and application form fee of Tk 0.1 million.
Along with proposing a minimum paid-up capital of Tk 100 million, the DSE made the recommendation of setting the non-refundable registration fee for new broking license at Tk 50 million and security deposit at Tk 50 million.
Besides, the DSE has proposed application form fee of Tk 1.0 million and annual renewal fee of Tk 0.1 million.
"After conducting two board meetings, the DSE has finalised its recommendations to allow the companies having strong capital base for the interest of investors," a DSE official said.
The securities regulator enacted the risk-based rules on May 29, 2019 setting minimum capital requirement ranging between Tk 50 million and Tk 150 million for the stock brokers in accordance with the nature of their operations.
The BSEC enacted the rules taking into account the safety of investors.
The securities regulator had asked the stock brokers to submit a framework on their capital adequacy by June 30, 2020.
The DSE officials said the deadline of submitting the framework has been extended till December 31, 2020.
The implementation of the risk-based capital adequacy rules again came to light following the latest embezzlement of clients' funds by the owners of Crest Securities.
Md. Shahid Ullah, the owner of Crest Securities, decamped on June 23 embezzling huge amount of his clients' funds.
Initially it was found that Mr. Shahid Ullah misappropriated investors' funds worth Tk 180 million.
DB police nabbed Shahid Ullah on July 7 and the premier bourse has started its job of assessing investors' fund embezzled by him.
The DSE managing director Kazi Sanaul Hoq told a recent webinar that the stock brokers now will not get enough time to fulfill the capital requirements set by the securities regulator.
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