Brokers urge immediate stimulus to restore confidence in capital market

Leaders of the brokerage community have said that immediate stimulus measures are necessary to pull the country's stock market out of its current downward trend. 

Long-term or paper-based reforms alone cannot rebuild confidence, they said at a high-level meeting today, stressing the urgent need for bold, visible actions to restore investor trust.

The meeting, held in Dhaka, brought together Anisuzzaman Chowdhury, special assistant to the chief adviser, and leaders of the Dhaka Stock Exchange (DSE) and DSE Brokers Association (DBA).

Among others present were Bangladesh Securities and Exchange Commission (BSEC) Chairman Khandaker Rashed Maksood, Commissioners Md Mohsin Chowdhury and Md Ali Akbar, members of the Capital Market Reform Taskforce, board and management of DSE, representatives from the Central Depository Bangladesh Ltd (CDBL), and Central Counterparty Bangladesh Ltd (CCBL).

The meeting took place amid intense pressure from investors, many of whom have taken to the streets in frustration over the prolonged market slump. Protests have included symbolic demonstrations, such as displaying coffins and funeral shrouds, and calls for BSEC Chairman Rashed Maksood's resignation. 

Over the past 10 months, despite several government-led discussions, the capital market has failed to stabilise under his leadership, raising concerns over his ability to restore trust.

In this context, the DBA urged immediate and effective measures to stabilize the market.

During the meeting, DSE Chairman Mominul Islam presented a detailed analysis of the crisis. He outlined a range of structural issues, including poor coordination between the capital and money markets, lack of regulatory independence, slow digitalisation of IPO processes, weak frameworks for bonds and mutual funds, opaque financial disclosures, insider trading, and poor monitoring capacity.

He also pointed to macroeconomic factors driving the market downturn. These include high interest rates on government securities, falling corporate profits, prolonged negative equity positions, exchange rate volatility, and manipulative trading practices – all of which have shaken investor confidence.

To revive the market, Mominul proposed a comprehensive package of short-term relief and structural reforms. Among the immediate steps, he suggested a complete waiver of annual BO account maintenance fees, exemption of capital gains tax for individual investors, reduction of brokerage commission rates from 0.50% to 0.35%, tax-free dividend income of up to Tk100,000 from listed firms, and recognition of withholding tax as final tax.

He also recommended gradually easing the negative equity burden on retail investors, lowering the advance income tax on trades from Tk50 to Tk15 per Tk100,000, and allowing brokers to utilise 75% of dividends from clients' consolidated customer accounts, with 25% allocated to the Investor Protection Fund.

Further proposals included monthly coordination meetings between regulators and brokers, reducing the tax differential between listed and unlisted companies to at least 10%, mandatory capital market financing for long-term loans above Tk500 crore, and tax exemption on returns from asset-backed corporate bonds.

Mominul stressed the need to digitise the IPO and bond issuance process, expedite listing of strong local and multinational firms, and mandate the listing of profitable state-owned enterprises (SOEs) such as banks, insurers, and airlines within the next two years. He urged the inclusion of stock exchange representatives in all capital market-related committees.

Anisuzzaman Chowdhury assured participants that the government is fully committed to resolving the crisis. He acknowledged the challenges and said that while the economy is showing signs of recovery, the benefits would take time to reflect in the market. He also noted that BSEC is working to reform the public issue rules and ensure the listing of well-performing companies.

"Resolve issues that fall within your capacity," Anisuzzaman advised the market participants. "For problems that require higher-level intervention, inform the relevant agencies. The government is ready to extend all necessary support."

DSE Director Minhaj Mannan Emon echoed the urgency of the situation. He said that brokerage houses, not just retail investors, are facing immense pressure and financial distress. Emon called for immediate action to restore market confidence, including the removal of AIT on brokers, reduced BO account charges, investor-friendly tax policies in the upcoming budget, and fast-tracked listing of government firms.

Brokerage leaders believe that unless short-term, practical steps are taken immediately, investor confidence may continue to erode, dragging the capital market deeper into crisis.