• Monday, May 25, 2020
  • Last Update : 06:36 pm

Over 200,000 BO accounts closed in three months

  • Published at 09:24 pm March 30th, 2020
BO account
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The number of active BO accounts was 27,66,217 on January 1, which declined to 25,64,967 on March 25

More than 200,000 beneficiary owner (BO) accounts have been closed in less than three months of this year amid sluggish stock business.  

According to the Central Depository Bangladesh Ltd (CDBL) data, the number of active BO accounts was 27,66,217 on January 1, which declined to 25,64,967 on March 25.  

In the middle of this month, the free fall of stock prices caused the broad index-DSEX of the prime bourse to sink to its lowest level in the last seven years amid investors’ nervousness over the spread of coronavirus pandemic in the country. 

The index lost more than 1,000 points in the last few months as investors continued their selling, fearing further fall in the market, said market operators.  

Capital losses also contributed to the exodus of investors who closed their accounts, stakeholders remarked.  

Salauddin Sobuz, a stock market investor, said: “Our secondary market is not that good. So we have no earnings from stock market, rather many of us incurred huge losses in the stocks business. The harsh reality made me close my BO account."

Market operators said the investors usually opened new BO accounts to apply for IPO shares, while only a small amount of BO account holders were typically involved in secondary market. 

On closing such a big number of BO accounts, they said good companies were not going public.

A top official of a local brokerage house told Dhaka Tribune that many BO accounts were closed during the January-March period due to non-payment of their maintenance fees, regulatory move of limiting one BO account against a single national identity card and bearish market outlook. 

According to the CDBL data, out of a total 2,564,967 BO accounts, 1,880,454 belong to male and 684,513 to female investors. 

Currently 2,419,817 BO accounts belong to Bangladeshi investors and 145,150 accounts are held by non-resident Bangladeshi investors.

Earlier, Bangladesh Securities and Exchange Commission (BSEC) asked stockbrokers to scrap multiple BO accounts which were opened using a single NID , bank account and phone number by October 21.

The instruction of the securities regulator may have also contributed to the closure of a large number of BO accounts, sources say.

As per the existing rule, a person can open only a single BO account using his/her national identity card, bank account and phone number.

Opening a BO account with the CDBL through a depository participant is mandatory for trading shares at  stock exchanges.

BSEC also reduced the renewal fee to Tk450 from Tk500 for each BO account back in 2016.

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