Continued thin trading at the bourses in recent months has worried brokers, who are in trouble to maintain their operational expenses.
They blamed Bangladesh Bank’s strong monitoring on banks investment in the stock market for declining the volume of trade.
The turnover declined sharply in the last three months and hit year low in the final week of the last month with coming down below Tk300 crore.
“The central bank’s strong vigilance held back institutional investment, pushing the turnover to abnormally low,” said Ahmad Rashid, managing director of Rashid Investment Services.
“This also put retailers on the sidelines. Poor volume of trade hit operational cost,” he said.
BB, however, has largely been held responsible for stock market debacle in late 2010 due to its lax monitoring on banks’ exposure to the stock market.
At that time the banks heavily invested in the stock market and made windfall profits at the cost of burning fingers of retailers. “This mainly had led the BB to be cautious this time,” said an official at the BB.
BB on February 25 asked banks to give a breakdown of daily investments in stocks in the monthly report submitted to the central bank on the 10th of every month. Before the directive, the banks provided their total investment figure to BB, which it believed does not reflect the true picture.
The central bank also asked the banks to submit their plan on reducing their excessive exposure to the stock market in line with the bank company law and brokers to provide individual investor source of fund in line with the anti-money laundering law.
According to the bank company law, banks cannot invest more than 50% of their equity, including their subsidiary companies exposure, and the central bank gave them time until July 2016 to bring down their exposure.
According to the BB, as of December last year, banks and their subsidiaries’ exposure stands above 50% of their capital on average. It stands at 150% for many.
To find out causes for declining volume and its way out, the Dhaka Stock Exchange sit with the top 30 brokerage firms yesterday.
Dhaka Stock Exchange chief executive officer Swapan Kumar Bala said the volume of trade declined alarmingly in the recent months. This worried brokers and many subsidiary companies have to sale their shares instead of buying to adjust their exposure.
Brokers also demanded to step up monitoring of listed companies, allowing opening new branch, implementation of trading settlement to two days from existing three days and introducing work station, he said.
