Stockbrokers call for minimal regulatory intervention

Branding the capital market as "artificial" due to the introduction of a 3% circuit breaker for share price declines, stockbrokers have called upon the securities regulator to avoid unnecessary intervention in order to maintain market sustainability.

In a meeting with the Dhaka Stock Exchange (DSE) today (15 May), representatives of the DSE Brokers Association (DBE) said the regulatory body is frequently interfering with market affairs and the market cannot sustain under such artificial conditions. 

They said the capital market should be allowed to operate based on the principles of supply and demand.

Brokers have also called for the inclusion of the option to invest black money in the capital market in the forthcoming budget to enhance liquidity.

DSE Chairman Dr Hafiz Md Hasan Babu briefed reporters after the meeting held at the old building of DSE in Motijheel.

Hasan Babu said DBA representatives have also urged against imposing taxes on capital gains. They called for taking action against share manipulation and listing reputable companies in the capital market. The regulatory body should not make unilateral decisions on market matters without discussions with stakeholders.

"Stockbrokers called for no unnecessary interventions in the market and let the market operate freely. They said artificial market conditions hinder the sustainability of capital markets," Babu continued.

"Brokers have also proposed restructuring and amending listing regulations, granting some authority to capital market operators, and urged against making abrupt decisions regarding share category changes," he said.

When questioned about why DSE is listing underperforming companies, Babu responded, "We are discussing with the commission the idea that the IPO process should be entrusted to DSE. If this becomes a reality, we anticipate that robust IPOs will emerge after thorough evaluation and analysis. Certain reforms will be necessary concerning IPOs."

Babu said although the DSE has the authority to take legal action against listed companies, this power remains underutilised. Certain actions cannot be executed even when needed, as they require consultation with the commission, resulting in delays. Efforts are underway to address this issue.

Regarding the current market challenges, the DSE chairman highlighted the absence of long-term investments. 

He said numerous promising companies are not entering the capital market due to the minimal tax differentiation between listed and non-listed entities, a factor that he believes should be revised upwards. 

He expressed optimism that an adjustment in this area would attract interest from many reputable companies.

As part of the ongoing efforts for the long-term advancement of the capital market, the DSE is engaging with stakeholders. Following discussions with the CEO Forum and Merchant Bankers Association, the DSE convened a meeting with the DBA. Discussions will also be held with the top 20 brokers. 

The DSE aims to gather input from stakeholders and present it to the Bangladesh Securities and Exchange Commission (BSEC).