New products to help increase turnover of stock market

The premier bourse will introduce new products to help increase turnover of the capital market.

The new products-- exchange traded fund (ETF), derivatives and options-will also bring diversifications in the capital market.

 "We will introduce the new products to successfully face new challenges so that we can make profits for the shareholders of the demutualised exchange," Dr. Swapan Kumar Bala, the managing director of the Dhaka Stock Exchange (DSE), said while sharing the DSE's future plan of actions in an exclusive interview with The FE.

 "To set new goals, our prime focus is to introduce new products that will increase more turnovers for the capital market. DSE must ensure the efficient corporate governance and attract foreign investments through coordinated efforts," Mr. Bala said.

 "Another significant task is to find out a resourceful strategic investor and the DSE has already started searching for those one."

He said, historically every exchange had some hiccups in achieving their goals. "DSE has a seven- year business plan to achieve the desired goals. We hope that the premier bourse will be able to execute its plan timely as all economic indicators are positive."  

To attain the target of the demutualised exchange, Mr. Bala has stressed the need for proper implementation of business plan which also includes future strategies and roadmap.

 "Services, product pricing and fee structure, human resource planning, capital expenditure planning, financial projections and relevant legal and regulatory issues are also needed to properly implement the business plan of a demutualised exchange," Mr. Bala said.

He said to attain the new targets of demutualised exchange, the DSE has already started its activities by organising series of meetings with the securities regulator which has taken initiatives to form an automated clearing corporation for the capital market.

When asked whether the DSE management presently is working independently, Mr Bala said after the demutualisation only the legal framework of the exchange has been changed to ensure good governance.

"New departments and committees have been put in place for regulatory functions. The DSE management has been working independently."

Asked whether all DSE brokers would be treated equally in case of taking measures for violating rules, Mr. Bala said, "As I have already mentioned that a regulatory affairs committee has been formed. This is completely separated from the exchange's business functions. This committee will take necessary measures in that regard as per the regulations."

According to the DSE managing director, the major crisis which is prevailing in the capital market is the shortage of liquidity.

"We must address the liquidity crisis, the core crisis of Bangladesh capital market. On the other hand different regulatory bodies cannot deny their responsibility for their decisions on overlapping directives, notifications and circulars regarding the capital market."

Mr Bala said market-friendly policies and expansionary measures will have to be implemented through a fruitful interaction with the regulators, especially the Bangladesh Securities and Exchange Commission (BSEC).

"In this connection, the exchanging views with stakeholders such as TREC (Trading Right Entitlement Certificate) holders, brokers, dealers are also necessary," he said.

Investors are being deprived of getting proper information due to companies' fabricated financial disclosures. In this connection, the DSE managing director requested the investors to file complaints with the regulatory authority by proving a copy to DSE if they find any unusual or inconsistent financial disclosure.

"I would also request the investors to follow the principles of investments," said Mr. Bala who has also stressed the enactment of the proposed Financial Reporting Act (FRA) and Financial Reporting Council (FRC) by upholding the spirit of quality audit reporting.

To focus the insufficient legal authority in DSE listing regulations, Mr Bala said there are specific regulations on different subject matter like Regulation 6(xxi) of the Listing Regulations of Dhaka Stock Exchange Limited for seeking information from the listed companies at any time.

 "Sometimes, mode of seeking/collecting information is not articulated categorically in the existing regulation. Moreover, there is no explicit provision for physical inspection to the listed companies. However, it is clearly mentioned in the proposed listing regulation which is under the BSEC's consideration," Mr Bala said.

Commenting on the frequent disruptions in DSE trading, Mr. Bala said technical glitches can happen any time anywhere. "Even in the developed exchanges, like Toronto Stock Exchange had problems. Or the Oslo Bors, Norway was closed at 11 o'clock on Wednesday, April 16, 2014 due to technical problems. On July 03, 2014, a technical glitch resulted in the Bombay Stock Exchange (BSE) shutting down trading operations for about two-and-a-half hours."