DSE ponders changing rules to shake up ATB

| Updated: February 17, 2023 08:36:05

DSE ponders changing rules to shake up ATB

The Dhaka Stock Exchange has been considering bringing changes in the rules of the Alternative Trading Board (ATB) to boost investor participation and attract more companies to offload shares.

Since the launching of the ATB on June 4, the number of listed securities has remained static at 2 only -- one brokerage firm and one debt security.

Earlier, officials of the premier bourse said at least 20 securities were required for the platform to gain momentum. A month later, the authority has begun to ponder what went wrong and how to fix the problems.

"Investor participation has been slow and the exchange is thinking about addressing some complexities linked to trading," said M. Shaifur Rahman Mazumdar, acting managing director at the DSE.

There is a restriction on realising profits by investors if they sell securities within the three months after the purchase, he added.

In such cases, the rule says, investors or beneficial owners shall "make a report to the Exchange" and tender the gains to the investors' protection fund.

The provision was aimed at discouraging frequent transactions. The idea was that investors would not sell off holdings within the timeframe, and in urgent need for cash, they could get the principal amount forgoing any profit.

The money deposited to the protection fund would be used by the Exchange in settling investors' claims in event of bankruptcy of any brokerage firm or settling other monetary issues.

However, the DSE has found that investors were reluctant to trade on the board because of the provision.

"The board and the management think the restriction is a barrier to the increase in investor participation," said a senior DSE official.

Sources at the premier bourse also said the DSE had informally conveyed the policy-level complication to the Bangladesh Securities and Exchange Commission (BSEC) and is likely to prepare some proposals to make the ATB vibrant.

The platform is meant to allow investors -- both institutional and individual -- to transact non-listed and de-listed securities, corporate bonds, alternative investment funds, and open-end MFs digitally through their BO (beneficiary owners) accounts.

Mr Mazumdar said the ATB would not be as vibrant as the main board as it deals with non-listed securities. "But we don't want it to be stagnant either. If investor participation rises, companies will be interested in offloading their shares at the ATB."

Of the two listed securities, the board saw transactions of Tk 589 million worth of shares of LankaBangla Securities until Wednesday. On the other hand, Pran Agro Limited Unsecured Guaranteed Bond-I has not been traded yet.

Meanwhile, LankaBangla Securities was supposed to offload shares equivalent to 10 per cent of its paid-up capital within 30 working days from the day of listing.

According to company officials, it offloaded 9.84 per cent shares within the given time that expired on Wednesday.

"We tried our best to execute the selling of the stipulated amount of shares within the deadline. We could sell the remaining amount of shares if there were demands," said a senior official of LankaBangla Securities preferring not to be named.

The DSE lays importance on listing of quality securities on the board.

The objective of introducing the ATB was to facilitate the ownership transfer of non-listed companies reducing fraudulent activities.

Any non-listed firm registered with the Registrar of Joint Stock Companies and Firms (RJSC) will be allowed on the board. But the platform will not be used to raise capital; only shares will be exchanging hands in electronic form.

Investors will avail A+2 trading facility meaning they will be able to sell shares on the third day after purchase. They will also enjoy credit facility in purchasing units of open-end mutual funds.

The mandatory provision of disclosing price sensitive information (PSI) will be applicable to the securities on the board, but on a yearly basis.

As per the rules, a company will have to transfer up to 49 per cent of its stakes with 10 per cent transferred within the first month.

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