Integrated framework to be developed for listing MNCs, robust local companies: BSEC

The Bangladesh Securities and Exchange Commission (BSEC) has announced that an integrated framework will be developed to bring both foreign multinational companies and robust domestic firms into the country's stock market.

Khondoker Rashed Maqsood, chairman of the BSEC, made the announcement at a discussion titled "Current Status of Bangladesh Capital Market," organised by the DSE Brokers Association of Bangladesh, held in the capital today.

To this end, a committee comprising representatives from the Financial Institutions Division (FID) of the finance ministry, BSEC, and the Bangladesh Bank will be formed, he said.

Maqsood further stated that the longstanding issue of negative equity in the stock market has become a serious concern. He likened it to cancer for the market and emphasised that there is no alternative to resolving it.

The event was attended by Anisuzzaman Chowdhury, special assistant to the chief adviser (with the rank of state minister for finance), as the chief guest. Other distinguished guests included ICB Chairman Professor Abu Ahmed, DSE Chairman Mominul Islam, CDBL Chairman Tapan Chowdhury, and FICC President Javed Akhtar.

The BSEC chairman said that the committee will define the core policy framework for listing multinational companies in the capital market. The committee will also work on how to encourage both foreign and local fundamental companies to shift from the money market to the capital market – essentially reducing their reliance on bank financing and turning to the stock market for funding.

He added that the committee may be formed within this or next week and will also focus on developing the bond market.

At the event, brokerage representatives pointed out that negative equity remains a major issue in the current market and urged immediate action to resolve it. In response, the BSEC chairman said the commission is actively working to address the problem and has already made progress. However, he acknowledged that it will take a few more years to fully overcome it and that only the government can provide a permanent solution. BSEC is working toward achieving that goal, he said.

The BSEC chairman emphasised that mutual funds are supposed to be a pillar of the capital market, but their influence remains minimal. Everyone knows the current poor state of mutual funds and the reasons behind it. A task force is already working on the issue and has made some recommendations to strengthen their role in the future.

Maqsood noted: "We are recovering from a fragile economy. The fact that policymakers have brought us this far is nothing short of a miracle. We meet and discuss market issues regularly. Managing the index is not our job; our responsibility is to create effective policies. We aim to leave a reform footprint that the next government can build on."

He added that the task force has also submitted a report on ensuring good governance in the market. If governance can be established properly, the market will become significantly stronger.

Highlighting market malpractice, Maqsood said, "There are companies with a real capital of Tk100 crore that have shown Tk285 crore in their balance sheets to raise funds. This has devastated investors. It's the auditors' job to identify such cases, but there are four other regulatory bodies besides BSEC – most notably, the IDRA and the FRC. The IDRA is revising several regulations to bring insurance companies into the market."

Anisuzzaman Chowdhury, special assistant to the chief adviser, said: "It is not easy to clean up 15 years of mismanagement. But we have taken responsibility and are working. Previous governments failed to integrate the capital market into the mainstream economy."

Professor Abu Ahmed, chairman of ICB, said: "We will not allow manipulation in the market – it will be transparent. The public must be involved. Stock market movement has slowed due to high interest rates. As long as I'm at ICB, not a single taka will be lost. No manipulators will be given space."

Tapan Chowdhury, managing director of Square Pharmaceuticals and chairman of CDBL, stated: "Many investors have lost everything in the stock market, which is unacceptable. Many don't even understand balance sheets – we have a responsibility towards them."

He added, "If a company does not need funds, why would it come to the market?"

Recalling a past initiative, he said: "When Square Pharma went public, my father, Samson H Chowdhury, wanted to give free shares of Square Textiles to investors as a token of gratitude. But the government blocked the move. Later, he took the matter to the High Court and distributed the shares after winning the case."

He added, "Our capital at that time was only Tk90 crore. Today, Square Pharma alone has a market capitalisation of Tk18,172 crore. Investors played a major role in this. That's why my father always prioritized their interests."

DSE Chairman Mominul Islam remarked: "Almost every time I speak at the DSE, the index drops by 30-40 points. But today [Wednesday], it's in the positive. Due to high interest rates, investors are moving money from the equity market to the treasury and bond markets. In Pakistan, 35% of all market transactions are in government securities."

DSE Director Minhaj Mannan Emon said: "We need psychological reassurance from policymakers. Whenever we see the BSEC chairman engaging with us, the market improves. Finally, he is with us, and the market is also recovering. On behalf of brokers, we thank him for reducing AIT from 5 paisa to 3 paisa – something no one could achieve in 15 years. He also resolved our long-standing issue with CCA commissions. We only want your continued support."

Javed Akhtar, chairman of Unilever Bangladesh, said: "The listing process for the stock market is still overly complex and time-consuming. It needs to be simplified further, although BSEC has already started working on it."

He added, "Our stock exchanges must have investment capacity if we are to list large multinational companies."