Chittagong Stock Exchange, the country’s second bourse, plans to launch a separate trading platform for low cap companies and the SME (small and medium enterprise) segment to facilitate start-up firms.
“A proposal relating to establish a separate trading platform for low cap companies and SMEs (small and medium enterprises) segment have been submitted to the securities regulator,” said CSE Chairman Md Abdul Mazid at a press conference on its recent activities and present market situation at his Dhaka office yesterday.
He said the new platform will offer easy access to finance SMEs and offering much relaxed listing requirements than the country’s main exchanges.
CSE has submitted a set of proposals to the Bangladesh Securities and Exchange Commission (BSEC) for consideration to further strengthen and bring more transparency in the stock market.
“CSE has proposed a change in the existing market maker regulation to make it realistic and functional for increasing market depth and liquidity in CSE,” Mazid said.
The proposals included OTC (over the counter market) market reconstruction, and setting up derivative market.
About the present IPO procedure, the CSE Chairman recommended bringing about some changes in the listing regulation to ensure listing of good companies.
“Before giving nod to an IPO (initial public offering), no physical inspection is made, which might give opportunity to the issuer to fabricate some information,” he said.
He said the process of IPO in our country is on disclosure basis. As a result, what is submitted by the issuer company, the auditor and the issue manager to BSEC get approval by comparing to the checklist, he said.
“In the country like China, any new IPO gets approval by merit basis. If IPO also get screened in our country by merit basis, good companies may come into market and the investors will be benefitted,” he said.
CSE has been working together with NSE India to introduce CSE IPO Index, the Shariah index and the CSE benchmark index by mid-September this year depending on necessary regulatory approval.
On the present market situation, the CSE Chief said the economy of the country and overall investments environment of the country is also a major reason for low investors confidence and poor turnover of the capital market.
Recent market behavior shows that many investors have now become day- traders, he said, adding that “we need mid-term and long-term investors in our market and, for this, investors’ education now became mandatory.
Bangladesh Bank (BB) directives to the banks to adjust the capital market exposure to 25% of the total of components of core capital in the share market by 2016 has been reportedly instrumental for the poor turnover in the capital market, he said.
He said recently the central bank asked the financial institutions to reduce the single limit exposure to their subsidiary companies. Thus, these institutions are reducing their existing investment in the capital market, he said.
According to the CSE, the total number of BO (Beneficiary Owners’) accounts now stands at 55.27 lakh.
