Chairman of the securities regulator Professor M Khairul Hossain has warned different eligible investors (EIs) of 'scrapping' their IPO (initial public offering) quota if they fail to carry out stipulated roles.
He issued the warning at a seminar titled 'Investment Education and DSE's Role in Protecting Investors' held in the capital on Tuesday evening as part of the World Investors Week 2018.
"The IPO quota will be scrapped if the EIs quote unjustified price in determining the cut-off price of shares of a company which is allowed to go public under book building method," he said, amid criticisms of quoting unjustified prices by the EIs.
The chairman of the Bangladesh Securities and Exchange Commission (BSEC) also warned the stockbrokers of scrapping their IPO quota if the fund of consolidated customers' account is set aside for their (brokers) own investment.
"The IPO quota of a stock dealer will be scrapped if there is no transaction in dealers' account."
Prof. Khairul said that a merchant bank, also the issue manager, will not be entitled to the quota facility if it fails to bring two IPOs in one year.
"The license of an asset manager will also be cancelled if it does not carry out due role as per the securities rules," he said.
Under the book building method, the securities regulator has kept 60 per cent quota for the EIs like banks, financial institutions, and asset management companies.
The general investors, including non-resident Bangladeshis (NRBs), are allowed to avail the remaining 40 per cent IPO quota.
Under the fixed price method, the EIs are entitled to 50 per cent IPO quota, while remaining 50 per cent quota is kept for the general investors, including NRBs.
While speaking about the investors' awareness, Prof. Khairul said the financial literacy is likely to be included in the curriculums of the secondary and higher education within next two years.
Professor Helal Uddin Nizami, a BSEC commissioner, said many investors are not interested in academic education for reducing their investment risks.
"Investors must have specific investment targets. They will also have to develop the culture of rejection and take part in transactions considering the companies' fundamentals," he said.
He said the securities regulator has to take decisions taking into account the decisions of other regulatory bodies like Bangladesh Bank (BB) and Insurance Development and Regulatory Authority (IDRA).
"The central bank is yet to resolve pending demands including revision of banks' exposure to capital market. But the stakeholders sometimes try to cut the head of commission without speaking about reluctance of other regulators," said the BSEC commissioner.
He said that the investors pay heed to rumours and think realising profits within three days. "How will they place demands in the BSEC if they are not aware of investment strategy and existing rules?"
The commissioner also said that some unscrupulous investors were spreading rumours ahead of the national election so that the investors offload their shares.
"Phone calls are being made house to house to spread rumours. Rumours are also being spread out centering the verdict of case," he added.
Chairman of Dhaka Stock Exchange (DSE) Professor Dr. Abul Hashem said the premier bourse would continue with its due role for the investors' safety.
KAM Majedur Rahman, DSE managing director, also spoke at the seminar, among others.
