BSEC promises T+1 settlement, AI surveillance, fundamental listing

The Bangladesh Securities and Exchange Commission (BSEC) has unveiled an ambitious roadmap to rescue the country's capital market from a decade of stagnation, promising to dismantle the "analog" hurdles of the "paper age" and transition into a technology-driven institutional powerhouse. 

Infograph: TBS

Speaking at an open discussion titled "The Current State of the Bangladesh Capital Market and Way Forward", organised by the DSE Brokers Association of Bangladesh (DBA) at DSE Tower today (31 August), BSEC Chairman Masud Khan outlined a "Mega Plan" featuring digital share trading, T+1 settlement, AI-powered surveillance and mandatory market participation for large companies. 

He identified the "IPO drought", liquidity crunch and lack of investor confidence as the major challenges facing the market, and said the regulator aims to shift it from a "retail-dominated, rumor-based" environment to one driven by professional analysis and valuation.

Masud, who has 46 years of corporate leadership experience, said the current government is perhaps the most market-friendly in Bangladesh's history. He cited the FY2026-27 budget's market-oriented measures, particularly the treatment of the 15% tax on individual dividend income as a "final tax liability".

He said such structural changes are needed to encourage informed investment rather than herd behaviour.

Reflecting on his first two months at the regulator, Masud said the removal of the floor price on his second day in office was a pivotal step towards restoring free-market dynamics.

He said MSCI (Morgan Stanley Capital International) has decided to resume publishing the Bangladesh Index from November, while the resolution of Beximco Pharmaceuticals' GDR listing issue on the London Stock Exchange within a month of his tenure has helped restore the country's international credibility and could encourage other large local companies to pursue global listings.

Trading to go fully digital

Masud described the current system of using physical documents for buy and sell orders as a "horror story", saying it creates scope for signature forgery and fund misappropriation.

He said BSEC will introduce digital order placement through mobile apps, bringing the process in line with global practices.

The regulator will also digitise its internal file management and adopt IAS 34 to allow "condensed" quarterly reporting, which Masud said would reduce excessive regulatory queries to listed companies.

Easier IPO, direct listing

Addressing the IPO drought that has persisted since 2024, Masud said the existing public-issue rules are discouraging entrepreneurs from entering the capital market.

He said BSEC is overhauling direct-listing rules, previously restricted to government companies, to allow all companies, including large multinationals and profitable local firms, to list directly.

The mandatory offloading requirement will also be reduced from 25% to 10%. BSEC is additionally planning a "hybrid" capital-raising model combining IPO and direct listing, which Masud said could be approved within seven days for fundamentally strong companies.

To further institutionalise the market, BSEC is formulating rules to bring "Public Interest Entities" (PIEs) into the capital market. The category would cover companies using Tk300 crore or more in public funds through equity or bank loans.

Masud also indicated that a new law could require major multinational branches, including Standard Chartered and HSBC, to register as local companies and eventually list on the stock exchange.

T+1 settlement, AI surveillance

BSEC is moving towards a T+1 settlement cycle, with a long-term goal of T+0, or same-day settlement.

Masud said he is in discussions with Bangladesh Bank to extend Real-Time Gross Settlement (RTGS) hours to facilitate the cash side of stock transactions.

He has also given the Dhaka Stock Exchange (DSE) one year to shift its surveillance department to an AI-based automated system. The system would use automatic triggers to detect and halt suspicious trading, reducing human intervention and potential bias, he said.

Masud called on market stakeholders to support the reforms, saying BSEC would not intervene in price levels but would remain focused on ensuring a fair, transparent and internationally compliant market.

DSE cuts bond listing fees

DSE Managing Director Nuzhat Anwar and Chairman Mominul Islam expressed support for coordinated reforms.

Mominul said the DSE board had reduced listing fees for bonds by up to 80% to encourage fixed-income trading on the main board.

He also said the DSE is working to resolve the long-standing issue of investors whose funds are trapped in closed brokerage houses, estimating that 95% of affected investors would be repaid in full by the end of this year.

Meanwhile, Riad Mahmud, president of the Bangladesh Association of Publicly Listed Companies (BAPLC), urged BSEC to act as a "vanguard" for listed companies.

He said the worsening energy crisis is now a direct threat to industrial survival and called for BSEC and Bangladesh Bank to work together to ensure listed companies receive priority in working-capital financing to protect production and jobs.

He also urged the regulator to remove legal barriers preventing stronger corporate groups from taking over sick or non-operational listed companies.