Foreign experts to be brought in for reforming stock market; report submission within three months

In a bid to reform the stock market effectively, the government has decided to bring in a team of foreign experts. These experts, with no vested interest in Bangladesh's capital market, will be tasked with delivering actionable reform recommendations within three months.

The decision was made at a high-level meeting chaired by Chief Adviser Muhammad Yunus today (11 May), Press Secretary Shafiqul Alam said at a press briefing after the meeting.

The meeting was attended by Finance Adviser Salehuddin Ahmed, Special Assistant to the Chief Adviser Anisuzzaman Chowdhury, BSEC Chairman Khondoker Rashed Maqsood, and Secretary of the Financial Institutions Division Nazma Mobarek.

At the start of the meeting, BSEC Chairman Maqsood gave a brief presentation outlining the progress and reform measures taken in the stock market over the past nine months.

Based on the discussion, the CA issued five key directives aimed at revitalising and modernising the market.

"Many vested interests exist within the stock market," Press Secretary Shafiqul said at the briefing.

"Even when reform initiatives are taken, they are often obstructed by these groups. To counter this resistance, a team of foreign experts—free from any local conflicts of interest—will be engaged. They will propose ways to modernise the market and protect investors and stakeholders, with a report due within three months," he added.

Ex-BSEC says CA directives not readily implementable

Faruq Ahmad Siddiqi, former chairman of the Bangladesh Securities and Exchange Commission (BSEC), told The Business Standard that none of the directives given by the Chief Adviser are immediately implementable. 

"However, since he has chaired the meeting as the head of the government and issued some guidance, it could help restore a degree of investor confidence," he said.

Commenting on the meeting participants, Siddiqi noted that no representatives from market intermediaries or stakeholders were invited. 

"The chief adviser only heard from BSEC. He didn't get to know what market participants want or what problems they are facing. As a result, the meeting was one-sided. If he had listened to both stakeholders and intermediaries, he would have gained a more complete picture of the stock market. That would have helped him make more informed decisions."

On the issue of listing government-owned and multinational companies, Siddiqi pointed out, "This discussion has been ongoing for over 15 years, but we haven't seen effective action. It's not possible to list these companies overnight simply on the Chief Adviser's directive. However, visible steps must be taken as soon as possible to set an example."

Regarding the idea of bringing in foreign experts for market reforms, he commented, "On paper, Bangladesh is classified as an emerging market, but in reality, it functions more like a frontier market, which has its own unique challenges. 

Experts from Wall Street or developed markets may not understand these complexities. It would be more effective to engage professionals who have prior experience working with emerging or frontier markets.

Earlier, on 7 October last year, the new commission under the interim government formed a task force to get recommendations for the needed reforms in the capital market.

Dhaka University professor of economics Mohammed Helal Uddin, Dhaka Stock Exchange's former managing director KAM Majedur Rahman, former president of the Institute of Chartered Accountants of Bangladesh AF Nesaruddin, BUET professor of computer science and engineering Md Mostofa Akbar and Dhaka University associate professor of accounting and information system Al-Amin have been made the taskforce members.

Later, in January, a 10-member 'Capital Market Reforms Focus Group' was formed with the aim of ensuring overall development of the stock market, increasing investors' confidence and good governance of international standards.

On 18 March, the government established a high-level four-member committee to strengthen the BSEC and foster the development of the country's capital market.

The committee, led by Anisuzzaman Chowdhury, while the other members are Professor M Sadiqul Islam of Dhaka University's Department of Finance and the additional secretary of the FID, with BSEC Commissioner Farzana Lalarukh serving as the member secretary.

However, market intermediaries have alleged that members of the task force and focus groups have vested interests in the stock market. They have criticised the decision to form a reform committee with such individuals.