Asks BSEC to take steps to cut stock market’s dependency on banks
The capital market advisory committee at its second meeting on Wednesday expressed its concern over the growing criticism about the initial public offering approval process and Bangladesh Securities and Exchange Commission’s role in the process, sources present at the meeting told New Age.
The sources also said that the members of the committee recommended that BSEC should take steps to enhance capacity of the capital market intermediaries for reducing the capital market’s dependency on bank liquidity.
BSEC chairman M Khairul Hossain presided over the meeting where Bangladesh Bank executive director Noushad Ali Chowdhury, Bank and Financial Division additional secretary Gokul Chand Das, Investment Corporation of Bangladesh managing director Md Fayekuzzaman, Policy Research Institute of Bangladesh chairman Zaidi Sattar, Centre for Policy Dialogue executive director Mustafizur Rahman, Financial Express editor Moazzem Hossain, Dhaka Stock Exchange chairman Siddiqur Rahman Miah, Chittagong Stock Exchange chairman Muhammad Abdul Mazid and Bangladesh Insurance Association president Sheikh Kabir Hossain were present, among others.
BSEC commissioners Md Helal Uddin Nizami, Md Amzad Hossain, Arif Khan and Md A Salam Sikder attended the meeting.
Quoting Mustafizur Rahman meeting sources said, ‘There is a criticism among the stakeholders that companies are getting approval with high premium.’
‘If there is any lacking in legal and procedural system, the BSEC should address them to remove the questions among investors,’ he said.
M Khairul Hossain said that the commission has specific rules and regulations and guidelines to approve IPO and it followed all the procedures in this regard.
Mentioning that it has no involvement in fixing prices of IPO shares, Khairul said that the companies were allowed to raise fund from the capital market once they completed all the required procedures.
Referring to the capital market’s dependency on banks, Noushad Ali Chowdhury said, ‘The BSEC should take proper steps to lessen capital market’s dependency on the banking sector in a bid to ensure long-term stability at the stock market.’
‘In terms of liquidity supply, the capital market is mostly dependent on banks. To enhance the strength of the market, it is very much needed to increase the capital-base of the stock market intermediaries,’ ICB managing director Fayekuzzaman said.
About the sharp hike in the share prices of the newly-listed companies, Fayekuzzaman said, ‘It is important to ensure proper surveillance as such price hike results in losses for investors.’
Referring to the negative public perception of the over-the-counter market, he said that the BSEC should take steps to make the OTC market vibrant.
In the developed markets, reputed companies use OTC market to raise fund for meeting their urgent requirement, he said.
Muhammad Abdul Mazid said that the capital market advisory committee should include representative of the National Board of Revenue in it as the NBR is directly involved in the budget formulation.
Inclusion of the NBR representative in the committee will let the NBR to know about the impact of imposing new taxes over the capital market-related entities, he said.
‘We should not think that the enactment of the Financial Reporting Act alone will ensure transparent financial reporting of the companies,’ Mazid said.
‘Proper functioning of the Financial Reporting Council to be formed under the FRA would be very much important to ensure transparency,’ he said.
The BSEC in February 2011 formed the high-powered advisory committee after the market crash in 2010-2011.
The first meeting of the committee was held on July 25, 2011.
-With New Age input
