Capital losses also contributed to exodus of investors who did not bother to renew their accounts paying annual fee
A total of 281,158 beneficiary owner (BO) accounts were closed in July due mainly to non-payment of annual account renewal fees by the stock investors amid sluggish stock business.
Besides, capital losses also contributed to exodus of investors who did not bother to renew their accounts paying annual fee, stakeholders have said.
July is the month for clearing annual BO account renewal fees. The DSE officials concerned say the number of defaulting BO account holders in the given month was the highest this year, as never in the last decade did the number cross two lakh.
In the middle of July, the free fall of stock prices caused the broad index-DSEX of the prime bourse to drop to the lowest level in the last 30 months. The index lost more than 500 points in the last few months as spooked investors continued their selling fearing further fall in the market, say market operators.
According to the Central Depository Bangladesh Ltd (CDBL) data, the number of active BO accounts was 28,09,850 on June 30, but the figure declined to 25,28,692 on July 31 this year.
Dhaka Stock Exchange Brokers' Association (DBA) president Shakil Rizvi has told Dhaka Tribune that investors are not paying fees as they could not make profit and faced huge losses.
About closing such a big number of BO accounts, he says that good companies are not going public, and BSEC did not approve a single IPO since April 30.
Investors usually open new BO accounts to apply for IPO shares. Only a small number of BO account holders are typically involved in secondary market, market operators say.
“If good companies do not apply for the IPO, we must look into the matter and continue our efforts to bring them in the market,” Shakil Rizvi adds.
As of yesterday, out of a total 2,516,104 BO accounts, 1,844,925 belonged to males and 671,179 to female investors.
According to the CDBL data, currently 2,372,817 BO accounts are owned by Bangladeshi investors and 143,287 accounts by non-resident Bangladeshi investors.
A general investor of the stock market, Shofiqul Islam, says: “Our secondary market is not that good, so we have no earnings from stock market. Finally, I did not pay the annual account renewal fees."
Recently, securities market regulator the Bangladesh Securities and Exchange Commission (BSEC) asked stock brokers to scrap multiple BO accounts opened using a single National Identity Card, bank account and phone number to stop opening more than one account with same documents by October 21.
The instruction of the securities regulator may have also contributed to contracting the BO accounts, sources say.
AS per the existing rule, a person can open only a BO account using his/her national identity card, bank account and phone number.
The Bangladesh Securities and Exchange Commission reduced the renewal fee to Tk450 from Tk500 for each BO account in 2016.
Following the stock market crash in 2010, the number of new BO accounts dropped drastically. Many investors left the market, affecting the price indices and daily turnover of the country’s two bourses — DSE and the Chittagong Stock Exchange (CSE).
Opening a BO account with the CDBL through a depository participant is a must for trading shares at the stock exchanges.