T+2 Settlement Cycle Launch
More delay likely due to foreign portfolio managers’ objection
The introduction of the T+2 trading cycle at the Dhaka Stock Exchange will be delayed further because of objections of some foreign portfolio managers to the launch of the system with two-trading session maturity period, DSE officials said. A DSE senior official said, ‘We are fully prepared to introduce the T+2 as the gazette notification for the amended settlement regulations of the bourse have already been published.’
But, some foreign portfolio managers have informed the Bangladesh Securities and Exchange Commission, the stock market regulator, and the DSE that they might face problems in settling transactions under T+2 cycle, he said.
Following the objections from the foreign portfolio managers, the BSEC asked the DSE not to start T+2 trading cycle before working out the problems the managers may face, DSE officials said.
‘We will solve the problems soon,’ they said.
Asked, LankaBangla Securities chief executive officer Wali ul Islam told New Age, ‘The transactions by foreign investors are carried out depending on various channels which are used to T+3 settlement cycle. But, before introducing T+2 trading cycle, we should test and confirm that all the channels involved in the process are capable to settle transactions in T+2. So, it requires some time.’
On the other hand, there are differences between working hours of overseas investors and the trading hours at the DSE, he said.
‘Weekly holidays in Bangladesh and western countries will also make three day transaction difference,’ said Wali.
The port city bourse of the country, Chittagong Stock Exchange, on November 3 last year introduced T+2 settlement cycle after several attempts to start the system with the DSE.
DSE chief executive officer Swapan Kumar Bala in November last year had informed the BSEC that they had experienced noncooperation from 24 member-brokers as they used their own transaction system for settlement, which was the obstacle to introducing ‘electronic fund transaction’ on the bourse.
Following pressure from the regulator the DSE board in January this year decided to introduce T+2 trading cycle within February. The bourse failed to introduce the T+2 trading cycle in February became of the delay in publication of the gazette notification of the amended settlement regulations of the bourse.
At the November 3 last year meeting, Swapan had also informed the BSEC that including the 24 member-brokers, around 40 stock dealers of the bourse remained out of the auto bank instruction system.
The BSEC at the meeting asked the bourse to include the stockbrokers into the ‘auto bank instruction’ system as soon as possible.
Following the BSEC directive all the trading rights entitlement certificate holders converted their previous transaction system.
-With New Age input
