A delegation of Bangladesh Capital Market Investors Association (BCIA) met Bangladesh Securities and Exchange Commission (BSEC) Chairman Masud Khan at the commission's office on Sunday and placed an 11-point recommendation aimed at stabilising the capital market and restoring the confidence of local and foreign investors.
Handing over a letter to the BSEC Chairman, BCIA President Kazi Mohammad Nazrul said the country's capital market has been passing through an acute crisis due to what he said 15 years of plunder and mismanagement under the previous Awami League government along the incompetence of the Khondoker Rashed Maqsood-led commission formed during the interim government's tenure.
He expressed confidence that under Masud Khan's leadership, the newly constituted commission would be able to steer the market towards stability and open a new chapter for the economy.
On the draft margin rules recently published by the commission, the BCIA said the proposed framework creates disparity in the distribution of loans against different shares, and demanded that the margin loan amount be made uniform across all listed securities.
The association also called for listing state-owned enterprises and multinational companies on the bourses within the next three months, with 80 percent of IPO shares reserved for general investors, application amounts capped at Tk 5,000, and the lottery-based allotment system reinstated.
Referring to Dhaka Stock Exchange's recent move placing 62 companies under its "red zone" and issuing cautionary notices to investors, the BCIA said that before any of these companies are delisted, they should first be given two years to restructure.
It further recommended that directors of such companies be required to buy back all shares held by general investors at either the market price or the issue price, whichever is higher, before delisting proceeds.
The association pointed out that unlike most global bourses which are institution-driven, Bangladesh's market is dominated by retail investors, who account for roughly 80 percent of participation.
It therefore urged that investor representatives be given a greater say in market governance, with coordination meetings between the commission and general investors' representatives held four times a year.
Among other demands, the BCIA sought the introduction of a real-time monitoring system to instantly detect abnormal transactions and manipulative trading, along with punitive action against offenders.
It also proposed a special Tk 10,000 crore fund at 3 percent interest to boost market liquidity, to be channelled through ICB and various brokerage houses so that general investors can access loans at 5 percent interest for investment.
The association further demanded that mutual funds, described as the "lifeblood" of the market, be made to remain active, with each fund required to invest at least 80 percent of its assets in the market. Rather than extending the tenure of closed-end funds, it recommended converting them into open-end funds.
On corporate governance, the BCIA said listed companies frequently resort to irregularities and malpractice in their financial reporting, and called for implementation of the Financial Reporting Act, 2015 to ensure a transparent and accountable market.
It also pressed for the long-pending buy-back law to finally be enforced, noting that successive governments and commissions had promised but failed to implement it.
The association additionally proposed scrapping the existing categorisation of listed companies into A, B, N and Z categories, arguing that the classification creates unfair distinctions among shares.
Instead, it suggested introducing a rating-based system, such as A1, A2, A3 and A4, to help investors gauge the relative strength of companies.
BCIA said most investors in Bangladesh's capital market lack adequate knowledge about the market and often fall victim to misinformation and rumours, resulting in financial losses.
It called for arrangements to introduce internationally recognised certification for financial advisers to guide general investors.
“We hope the chairman will look favourably on implementing our 11-point recommendations to build a developed and prosperous capital market,” the BCIA president said.