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Demutualisation plan to be finalised this month

  • Published at 06:19 pm September 11th, 2013
Demutualisation plan to be finalised this month

The securities regulator is making efforts to finalise the demutulisation guideline by this month in line with the Act passed in parliament around five months back.

A meeting will be held today between Bangladesh Securities and Exchange Commission (BSEC), Dhaka Stock Exchange (DSE) and Chittagong Stock Exchange (CSE) to discuss the guideline.

“After the detail deliberation, the regulator would approve the demutulisation scheme proposed by the stock exchanges earlier,” said a BSEC official on Wednesday.  

The commission will start negotiation with the stock exchanges to remove inconsistencies, if any, in their proposed scheme, he said. The regulator has some observation over the DSE’s valuation and some other issues.  

The two stock exchanges submitted their comprehensive plan within the deadline of July, 2013 to prepare the basic documentation, which included revaluation of assets and liabilities, preparation of the five year plan, development plan and papers regarding segregation of regulatory and commercial functions.

The Demutualisation Act is aimed at separating the managements from the ownerships with a promise to bring transparency to the stock market.

The law required the stock exchanges to be demutualised within 90 days of its promulgation and the BSEC will approve it within the next 60 days.

The DSE and CSE submitted their scheme to the BSEC at the end of July last for regulatory approval.  According to the proposed scheme, the prime bourse has been valued at around Tk42bn and the port city bourse at Tk6.35bn.

Without premium, the valuation of each brokerage house of the Dhaka bourse has been set at Tk71.5m, while Chittagong bourse at Tk42m. Valuation by local and international firms also takes into account fixed deposits and other tangible assets.

The DSE has 250 members or broker houses and the number is 148 for CSE. The bourses proposed 19-member boards, majority of whom will come as independent directors.

Presently, the stock exchanges are operating as non-profit companies with a mutualised structure where the members have ownership as well as trading rights.

This structure creates conflict of interests as members predominantly control the affairs of the stock exchange which results in lack of transparency in the operations and compromises investor interest.

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