'Capital market stakeholders say the ATB will create a legal platform for companies outside the capital market. Diversification of the market, and more investment options, will help investors make the right decision'
The Bangladesh Securities and Exchange Commission (BSEC) is going to introduce the Alternative Trading Board (ATB) — to replace the Over the Counter (OTC) market and bring transparency and accountability to share trading for companies outside of existing boards.
Currently, the shares of listed companies are traded at the main board under the Dhaka and Chittagong stock exchanges—and the OTC market. Stock market regulator BSEC has already introduced a Small Cap Board.
Usually, non-compliant companies are traded at the OTC market but its lengthy and cumbersome process is causing the unwilling to trade.
By mainstreaming non-compliant companies, and bringing transparency to their trading as well as increasing brokers’ participation, the commission has taken the decision to introduce an ATB.
In June, the BSEC drafted, “Bangladesh Securities and Exchange Commission (Alternative Trading Board) Rules, 2018,” and posted it on its website, seeking comments from stakeholders. Concerned people are requested to submit their opinions, via the prescribed form, by July 16 this year.
According to draft rules, all types of securities outside the stock exchange’s main board and the small capital company’s platform, will be switched to the new platform ATB.
The trading facilities for the new board require an issuer to apply to the stock exchanges. While the issuer may appoint a merchant banker to submit the application to the exchanges, the exchange shall accept or reject the application within 30 working days of its receipt.
Capital market stakeholders saythe ATB will create a legal platform for the companies outside the capital market. Diversification of the market, and more investment options, will help the investors make the right decision.
Former chief executive officer of the Chittagong Stock Exchange and Managing Director of Maslin Capital Limited Wali-ul-Maroof Matin told the Dhaka Tribune, “This rules [proposal] is most important for macroeconomics. It will help make the OTC market vibrant. The capacity of the stock exchange needs to be increased for the implementation of the rule.”
He also suggested lowering the charge, compared to the main market, for share trading.
According to the draft, the issuer has to apply to the exchange to avail trading facilities of its securities in the ATB. Once the rules come into effect, “Securities and Exchange Commission (Over-the-Counter) Rules, 2001,” will be repealed.
ATB facilities and process
According to the draft rules, the stock exchange will discontinue the ATB facilities for any securities at ATB, with effect from the date of listing, or relisting, of the concerned securities in any other platform with any exchange—or at the request of the issuer company concerned.
The exchange, as needed, may discontinue, halt, or suspend at any time, the purchase or sale of any securities at the ATB—if it is deemed to be in the interest of the investors and the capital market, after providing the issuer concerned with an opportunity to be heard.
Buy or sale of securities at the ATB shall be conducted by, or through, an exchange stock-dealer or stock-broker.
The exchange will prominently display the following in front of its designated counter, or in its computerized system, as the case may be, on each trading day: A full list of the securities available at ATB; the quantity of each security available for sale and purchase, and the unit price offered by the seller or buyer.
The stock dealer or stock broker shall place the order in the system, as per the prescribed process of the exchange, and settle the contract following the applicable settlement procedure.
The Stock Exchange shall determine all fees, commission, charges, etc. for the purpose of these rules—subject to approval of the commission.
The Exchange shall determine, occasionally, the: reporting, disclosure, information, and other requirements —subject to the approval by the commission.
For the purpose of these rules, the exchange may, with prior approval of the commission, publish the “ATB Operational Handbook” covering the requirements of these rules, which shall be considered as part of these rules.
Penalty for contravention
Without prejudice to other penal measures available under any law, contravening any provision of these rules shall attract penal provisions under the Securities and Exchange Ordinance, 1969. The commission may exempt any person, or class of persons; or any securities or class of securities; or any transaction or class of transactions; from the operation of any of the requirements of these rules.