What challenges lie ahead for the new BSEC leadership?

A newly appointed leadership team at the Bangladesh Securities and Exchange Commission (BSEC) has taken charge, inheriting a capital market struggling with a two-year IPO drought and weakened investor confidence.

The commission – led by a new chairman and three commissioners after the resignation of the previous board – faces the immediate task of restoring stability in a market where nearly one-fourth of listed companies are now classified as "junk".

Market participants are calling for stronger transparency, strict enforcement of securities laws, tougher action against manipulation, and the listing of high-quality multinational and state-owned enterprises to rebuild trust.

Following the August 2024 mass uprising and the formation of an interim government, a new commission was appointed to oversee the market. During its tenure, the previous regulator introduced reforms including crule changes, enforcement actions against manipulation, and fines exceeding Tk1,500 crore, though recovery remained minimal. Bond issuance was encouraged, but IPO activity stayed frozen, limiting fresh capital inflows.

Three months into the BNP-led government, Masud Khan was appointed chairman alongside three commissioners. With over 45 years of corporate experience, Khan acknowledged the scale of the challenge in a Facebook post, citing the need to restore investor confidence, deepen the market, and meet high stakeholder expectations.

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"Reviving the market and placing it on a strong and sustainable footing will not be easy," he wrote, noting that past reform efforts highlight the complexity and risks involved.

He outlined priorities including institutional strengthening, attracting quality issuers, improving governance and transparency, expanding digitisation, promoting investor education, and balancing regulation with flexibility, summed up in his principle: "regulate where necessary, simplify where possible."

Market expert and former Bangladesh Merchant Bankers Association (BMBA) general secretary Muhammad Nazrul Islam said the new commission's priorities include reviving IPOs, ensuring a level playing field, and taking strong action against manipulation. 

He also stressed reducing reliance on bank-led financing and restoring eroded investor confidence.

Stakeholders have urged closer coordination between the BSEC, Bangladesh Bank, National Board of Revenue (NBR), and the Financial Reporting Council (FRC), along with safeguarding the operational independence of the Dhaka Stock Exchange (DSE) and Chittagong Stock Exchange (CSE).

A brokerage managing director, speaking anonymously, said recent regulatory changes have increased compliance burdens and called for selective easing of margin loan, mutual fund, and IPO-related rules.

Investors have also demanded a 100-day action plan from the new commission to stabilise the market and restore integrity. At a press conference at the Capital Market Journalists' Association (CMJA) office, the Bangladesh Capital Market Investors Association welcomed the new leadership but called for urgent reforms.

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Their demands include an investigation into past irregularities, action against manipulators, stronger governance, investor-friendly reforms, and measures to attract both domestic and foreign investment. 

They also sought suspension and review of the 2025 margin loan and mutual fund rules, protection of shareholder rights in merged banks, and a zero-tolerance stance on manipulation.

According to Dhaka Stock Exchange (DSE) data, 123 of the 391 listed companies are in the Z category, including 31 long-closed firms and around 40 facing severe going-concern risks, effectively non-operational.

Total market capitalisation stands at Tk6.93 lakh crore, with equities accounting for Tk3.48 lakh crore and debt securities Tk3.42 lakh crore.