Listed firms ask for market maker licence to support stocks

In the absence of buyback rules, the listed companies' association has called upon the securities regulator to issue market maker licences so that they can play a role in stabilising the capital market.

The Bangladesh Association of Publicly Listed Companies (BAPLC) made the request at a meeting on Monday when the Bangladesh Securities and Exchange Commission (BSEC) asked the companies to invest in the secondary market to raise the participation of institutional investors.

BSEC Commissioner Shaikh Shamsuddin Ahmed chaired the meeting, where Anis Ud Dowla, president of the association and chairman of ACI Group, was present.

The term market maker refers mainly to firms that buy and sell securities to maintain a balance between the demand and supply of the shares in a bid to keep the secondary market stable.

At the meeting, a member of the association said listed companies cannot buy their own shares as the Companies Act does not contain a provision of buyback. So the companies cannot play any role in adjusting the share price up and down. Therefore, any listed company can play a role in this regard by forming a subsidiary or associate company with a market maker's licence.

A buyback, also known as a share repurchase, is when a company buys its own outstanding shares to reduce the number of shares available on the open market.

Companies buy back shares for a number of reasons, such as to increase the value of remaining shares available by reducing the supply or to prevent other shareholders from taking a controlling stake.

BSEC spokesperson and Executive Director Rezaul Karim said the commission has assured them that it will be considered if they apply for the licence.

According to BSEC sources, the BAPLC has been requested to take measures to invest in listed companies to provide liquidity support to the stock market.

In that case, the commission advised the association leaders to invest in two ways. Founders and directors of a company will buy shares of their company by making an announcement. And companies will form their own portfolio and buy shares of companies other than their own.

The BSEC spokesperson said that if the listed companies, and entrepreneurs and directors invest in the current situation, the commission believes that they will benefit and it will be a support to the capital market as well. This will benefit the common investors as well as the shareholders of the companies.

He also said that the accounts of June-closing companies are currently being audited. And at this time, the sponsors and directors of such companies are prohibited to buy shares. In such a situation, the commission will consider a case-to-case basis if one applies to buy shares now.