The Bangladesh Securities and Exchange Commission has planned to finalise by this year the rules for establishing a clearing corporation for the capital market.
Formation of a separate clearing corporation is one of the important parts of the BSEC’s 10-year master plan and also a condition of the Asian Development Bank under its Capital Market Development Programme-2.
A clearing corporation, also known as clearing firm or clearing house, plays a key role in ensuring that executed trades are settled within a specified period of time in an efficient manner.
Settling transactions through separate clearing corporations is an international practice. But, the Dhaka and Chittagong stock exchanges are doing the job by themselves in absence of any such corporation.
A senior BSEC official told New Age recently, ‘The commission is now working on finalising the rules to form a clearing house and hope that it will finalise the regulations within the next two months.’
‘Before finalising the rules we will hold meeting with the stock exchanges and other stakeholders as we will allow entities other than stock exchanges to get ownership of the corporation,’ he said.
Along with the stock exchanges, banks, non-bank financial institutions, insurance companies will be allowed to get stake in the clearing house, the official said.
Stock exchanges will be allowed to hold up to 10 per cent shares respectively in forming the clearing corporation, he said.
The official also said that the commission might follow the spirit of demutualisation in allowing any entities to form the clearing corporation.
The Dhaka and Chittagong stock exchanges in September last year had decided to form a clearing corporation fully owned by them.
The commission, however, in March this year formed three separate committees with the task of preparing framework for establishing a clearing corporation, a derivative market and a commodity market.
Another senior official of the commission, who has recently visited India along with some other BSEC officials for inspecting the country’s stock exchanges’ infrastructure physically, told New Age, ‘Forming a clearing corporation is the first priority of the commission as it will be very much essential to form a derivative market and a commodity market.’
The commission has targeted to form a clearing corporation within 2016, but hopes that it will be possible to form it within the next year, he said.
The BSEC team, which has visited India, will submit reports to the commission about their finding on the country’s stock market infrastructure of a clearing corporation, a commodity market and a derivative market.
The committees’ reports will include their suggestions in forming a clearing corporation, a commodity market and a derivative market.
The BSEC committees during their visit also observed that there was no scope of forming any commodity market within next 2-3 years as it involved various ingredient and everything would have to go perfect, he said.
Without developing proper infrastructure for the commodity market it may create a disastrous situation around the country, the official said.
Finance minister AMA Muhith in 2010, while replaying to a questing about the capital market in the parliament, had said that the government had taken steps to set up a ‘clearing corporation’ immediately for speedy and smooth transaction in the stock market.
-With New Age input
