Investor grievances may ease with BSEC's new dispute settlement rules

Investor grievances in the capital market may soon see some relief, as the securities regulator has approved new dispute settlement regulations for the country's two bourses.

At a meeting on Tuesday, the Bangladesh Securities and Exchange Commission (BSEC) approved the Dhaka Stock Exchange (Settlement of Dispute) Regulations, 2025, and the Chittagong Stock Exchange (Settlement of Dispute) Regulations, 2025.

The move aims to fast-track arbitration, reduce the number of complaints against brokers and listed companies, and ease the commission's enforcement workload, BSEC sources said.

Investors told TBS that they often face minor issues involving brokerage houses and listed companies, but hesitate to file complaints due to fear or inconvenience. 

Even when complaints are filed, resolution often takes a long time or remains pending. The new system is expected to significantly reduce such problems, they said.

What changes do the new laws bring

Under the new regulations, each stock exchange will form an arbitration panel (dispute settlement board) and appoint a registrar, who will be a deputy general manager (DGM) or a higher-ranking officer of the exchange's regulatory division.

The arbitration panel will consist of retired judges, lawyers, and experienced capital market professionals. Investors will be able to file complaints using a prescribed form submitted to the registrar. The registrar will then facilitate discussions between the complainant and the respondent – such as a broker or a listed company – to reach an amicable settlement.

If no settlement is reached, the matter will be referred to the arbitration panel. Each party will select its own arbitrator from an approved list, and after hearing testimonies and reviewing relevant documents, the arbitrators will deliver a verdict.

The verdict may be made unanimously or by majority decision, with the majority opinion considered final.

If necessary, any party – the investor, broker, or company – may appeal to the BSEC or a court.

Investors will now be able to file complaints through both the BSEC's online complaint module and the respective stock exchanges' arbitration units. 

Minor disputes will be forwarded to the relevant exchange for resolution, which is expected to strengthen the arbitration departments of the exchanges. This system will also help exchanges better understand investor issues and improve their internal governance structures accordingly.

A much-needed change

According to stock exchange officials, the initiative to introduce such a dispute settlement mechanism has been pending since 2019. The regulations will come into effect after being published in the official gazette.

BSEC Spokesperson Md Abul Kalam told TBS, "Once the arbitration panels are functional, many investor complaints will be resolved at the preliminary stage, thereby reducing the pressure on the commission."

He added that the BSEC currently has to investigate and hold hearings on a large number of complaints. "If these regulations had been in place earlier, many disputes could have been settled at the exchange level," he said.

According to him, many cases of investor fund misappropriation by dishonest brokers could have been prevented if such a mechanism had existed before.

He further noted that under the Securities and Exchange Ordinance, 1969, stock exchanges are empowered to formulate their own regulations for dispute resolution. Therefore, the arbitration panels' verdicts will carry a strong legal basis, he added.