BSEC Member Abdul Halim said on Monday that the stock exchange regulator was working to punish any willful wrongdoing for short-term gains by brokerage houses, which are injecting distrust among the investors.

He said that many small investors have been affected by two incidents in stock markets in 1996 and 2010. Since then, rules and regulations have been reformed, and punitive action has been taken, he said, adding that the Bangladesh Securities and Exchange Commission (BSEC) has been working to gain the investors’ confidence back.

“Despite such effort, some malpractices remain among the brokerage houses as they are committing suicidal activities for short-term gains,” he said..

Halim made the statement while he spoke at a virtual discussion on the share market on Monday as part of the observance of the World Investor Week.

The BSEC commissioner gave an example, saying that in 2015 the DSE team visited a brokerage house and found irregularities. The Board of Directors of the company had gaven loans to their relatives, officers and employees, violating rules.

“It gave margin loans to purchase 'Z' category shares, and those who do not have money in the code got the opportunity to buy shares. They also gave loans to those people who did not have a contract with their brokerage house,” Halim said.

“They (owners of the brokerage house) thought we didn't know much about law,” he said. 

Read: Takes 6-12 months to identify a share market manipulator in existing system: BSEC Chairman

After discovering faults, they said that it was a mistake, he said, adding that they  want another chance to correct them.

But, he said, many other brokerage houses have also been committing similar ‘mistakes’.

He said some houses even bought and sold shares before depositing the cheques of the investors.

“Share trading has been done through different accounts of the same person just for increasing commission,” he said.

He said some brokerage houses even mortgaged the customer's money in the bank and loans have been taken against it.

Such houses provide false information to investors while they even do not care about giving incorrect information to regulators.

He warned that the people who deal with technology should also be honest.

According to the World Bank's 2021 report, the contribution of the country's capital market to the GDP is 27 per cent, and the size of our GDP is a little more than $416 billion. The GDP is expected to cross $600 billion by 2025 if the trend of growth continues, the projection said.

The capital market will be a sector worth $300 billion or Tk30 lakh crore by then if things are on the right track, it said. 

 

DSE Chairman Yunusur Rahman presided over the discussion while Acting Managing Director of DSE Saifur Rahman Majumder moderated the program.