Brokers with a deficit in clients’ accounts to face the music
The BSEC is also likely to limit facilities brokerage firms receive from stock exchanges
Brokerage firms having a deficit in their accounts dedicated to dealing with clients' money are going to face punitive measures including cancellation of the initial public offering quota facility as the market regulator moves to ensure the security of investors' funds.
The Bangladesh Securities and Exchange Commission (BSEC) is also likely to limit facilities brokerage firms receive from stock exchanges. The dividends the firms get as members of the stock exchanges will also remain withheld pending their regulatory compliance.
According to officials familiar with the matter, the BSEC is set to issue an order in this regard soon.
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As per the upcoming restrictions, the brokerage houses will also be barred from opening digital booths and branches.
Similar restrictions will be imposed on any brokerage firm which fails to pay the Beneficiary Owners (BO) Account maintenance fees to the Central Depository Bangladesh Limited (CDBL).
Sources said the commission observed that some brokerage firms remain non-compliant by making a shortfall in their consolidated customers' accounts.
They said such non-compliant eventually paves the way for embezzling investors' money at times. Now, the regulator remains more aware of this and is trying to bring down the incidences of such non-compliance.
Usually, both Dhaka Stock Exchange and Chittagong Stock Exchange monitor their member organisations regularly.
Still, some brokerage firms remain non-compliant and embezzled their clients' money.
Tamha Securities allegedly embezzled around Tk140 crore by secretly introducing a parallel software database to report fake cash and securities balances, and fake buy-sell order execution updates to clients and the regulator.
The firm was withdrawing from investors' funds from 2013 until the closure of its operation three months ago.
Banco Securities and Crest Securities are two other brokerage firms accused of embezzling investors' money using the same tactic.
A dozen brokerage firms including Shah Mohammad Sagir Securities, Dawn Securities, Sylhet Metro City Securities, Trendset Securities, and Moharram Securities Limited have also allegedly embezzled investors' money similarly. But the bourses are yet to settle the investors' claims, market experts said.
They said the stock exchanges should have real-time entry access into the brokerage firms' IT systems for effective monitoring, and also, they should be made a signatory in the brokers' consolidated customer bank accounts so that no client money is improperly taken away.
