FE Report
Divergent views have emerged over the success and failure of the country's two bourses since their demutualisation, made effective in November last year.
'Independence' of their board of directors is what the two bourses -- Dhaka Stock Exchange (DSE) and Chittagong stock exchange (CSE) -- have achieved, experts and a section of market operators said.
They said enhancement of market surveillance and proper control over the price manipulation of listed securities are yet to be achieved.
DSE managing director Dr. Swapan Kumar Bala, however, said the premier bourse has established the infrastructure to diversify the market by introducing new products.
"The exchange's effective management, digitisation drive and revenue diversification strategy are delivering tangible results," Bala claimed.
Both DSE and CSE completed one year of demutualisation on November 20, 2014.
"No progress other than the independence of the board of the exchanges is yet to be visible to me. It is also true that one year is very short time for attaining any visible success," said Faruq Ahmad Siddiqi, a former chairman of the securities regulator.
He said the basic objectives behind demutualisation will not be achieved until the shareholders and brokers are separated.
"The bourses were demutualised during a depressed period of the capital market. So, it is very difficult for the exchanges to get strategic partners. But their efforts for finding strategic partners is also not visible," Mr Siddiqi added.
On October 18, 2012 the Cabinet gave its approval to the draft of the demutualisation bill and on April 29, 2013 the Parliament passed the Demutualisation Act 2013 that separates bourses' management from ownership.
Later, on September 12, 2013 the securities regulator approved 13-member boards for each of the demutualised bourses and seven of the members were to be independent individuals. The provision has been made in a bid to making the operations of the exchanges more transparent and accountable.
As per regulatory approval, board of each of the bourse was formed comprising seven independent directors, four shareholder directors, managing director and strategic partner. The chairman of the board is also selected from independent directors.
Minhaz Mannan Emon, a former director of Dhaka Stock Exchange (DSE), said the independence of the board is the first visible benefit of demutualised exchange.
"Earlier, the boards of the mutualised exchanges were influenced more or less by some members. The number of those influential members may be very small," Mr. Emon said.
He said the incumbent management of the demutualised exchange is trying to minimise the operating cost of the bourses to enhance the benefit of shareholders.
"The management should get ready for strategic partners within the stipulated time frame," Emon added.
The DSE held first annual general meeting (AGM) of the demutualised exchange on February 11 last and recommended no dividend for the year 2013-14.
Managing director of Chittagong Stock Exchange (CSE) Wali-ul Maroof Matin said the demutualisation process will be completed fully when strategic partners and general TREC (trading right entitlement certificate) will be included in the exchanges.
"We have completed the homework on as to how investors' benefits will be protected. We hope the benefits of demutualisation process will be visible within the fiscal year 2014-15," Maroof added.
He said the board of demutualised exchange is more investor friendly and working to protect their interest.
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