Open-end mutual funds to be listed

Mohammad Mufazzal | Published: July 02, 2015 00:00:00 | Updated: November 30, 2024 06:01:00

Open-end mutual funds (MFs) from now on will be able to be listed with the main bourse as per the regulatory approval, officials said.
The Bangladesh Securities and Exchange Commission (BSEC) has included the listing provision for open-end MFs in the revised guideline on conversion of closed-end MFs into open-end ones.
The securities regulator paved the way of listing for open-end MFs in an effort to ensure more acceleration and transparency in transaction of such MFs.
The BSEC officials said the revised guideline on conversion will be published soon in the form of gazette.
"We have approved the conversion guideline including the provision of listing for open-end MFs. The provision will also be included in the rules of MFs and listing regulation gradually," said Prof. Helal Uddin Nizami, a BSEC commissioner.
He said presently the units of open-end MFs are traded through the offices of the Asset Management Companies (AMCs) and their sale centres.
"After the listing of open-end MFs, investors will need not to go physically to offices of AMCs as the transaction will be executed like other listed securities on the main bourses," said Prof. Nizami.
To be listed with the main bourses, the units of the open-end MFs must be dematerialised instead of existing paper units.
"The units of open-end MFs should be dematerialised from paper units as part of the forward looking measures of the regulatory body," Prof. Nizami added.
The purchase and re-purchase process of the units of the open-end MFs is absent in listing regulation.
"After inclusion of such process in listing regulation, the bourses will be able to give listing to any open-end MF," said a BSEC official.
He said after listing with the exchanges, the units of open-end MFs will be purchased at a price equivalent to respective net asset value (NAV) calculated on weekly basis.
And the unit holders will sell their units on five per cent discount of the respective NAVs of the MFs.
"The regulator will decide whether the NAV of a listed open-end MF will be calculated on weekly or daily basis," the BSEC said.
Moin Al Kashem, managing director of the Prime Finance Asset Management Company, welcomed the regulator's initiative taken for listing of open-end MFs.
"In other countries, open-end MFs are listed with the stock exchanges. Previously, we also tried to convince the regulator to introduce listing provision for open-end MFs. I think the regulator's initiative will help boost the transaction of open-end MFs," Mr. Kashem said. Â
The securities regulator last week set revised deadlines for redemption or abolition of 10 closed-end MFs managed by the state-run Investment Corporation of Bangladesh (ICB) and AIMS of Bangladesh.
Â As per the revised conversion guideline of MFs, the board of AMC will first take the decision on redemption or conversion of closed-end MFs into open-end ones.
Then the decision will be placed at the board of the Trustee.
"Trustee and AMC will hold a meeting before 150 days of suspension of trading a closed-end MFs. At that meeting it will also be decided who will bear the cost of redemption of conversion of MFs," the BSEC said.
The Trustee and AMC will hold a general meeting for unit holders and the decision of that meeting will be treated as price sensitive information.
Presently, there are 11 open-end and 41 closed-end MFs in the country's stock market. Among 41 closed-end MFs, 10 will have to be abolished or converted to open-end ones by December, 2016 in accordance with regulatory directive.
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