The Bangladesh Securities and Exchange Commission (BSEC) has issued a directive saying that perpetual bonds which will be issued by the banks must be listed on the bourses through the direct listing method in order to increase liquidity in the market.
It was also made mandatory for market operators to make investments in listed debt securities, according to the BSEC directives approved at its meeting on Thursday.
The regulatory move came as part of the efforts to develop the corporate bond market.
BSEC officials said they have introduced the rules to increase liquidity and also encourage investors to invest in the bonds.
"Without the scope of exit through liquidation of investments, investors will not be interested to purchase the bond. That's why the securities regulator has paved the way for exchanging the units of the bonds," said Mohammad Rezaul Karim, a BSEC spokesperson.
Perpetual bonds are fixed-income securities with no maturity date and investors receive interest in the form of coupon payments.
Presently, the issuance and subscription of the perpetual bonds remain constrained in the banking industry.
The securities regulator has already allowed 11 banks to issue perpetual bond. The banks include The City Bank, Mutual Trust Bank, Trust Bank, Jamuna Bank and One Bank.
In its directive, the securities regulator has included a rule calling for subscription of 10 per cent of a perpetual bond through public offer.
According to another directive, the own portfolios of merchant banks and portfolio managers, asset management companies and stock dealers must have three per cent investment in listed debt securities.
They have been asked to comply with the directive within June 30, 2022.
The securities regulator has also said the portfolios of mutual funds must have three per cent investment in the listed debt securities.
The trustees of the mutual fund will ensure the compliance of mutual funds' investments made in listed debt securities, the BSEC officials said.
At its meeting, the securities regulator has also allowed Ring Shine Textiles, a listed company, to utilise Tk 400 million from its unutilised IPO proceeds.
The fund will be utilised for the payment of workers' retrenchment benefits and BEPZA dues, among others.
According to the BSEC officials, many investors of the company who had received pre-IPO shares through private offer are yet to pay the money.
"The company has been asked to confiscate those shares and the bonus shares issued against them for the purpose of reducing paid-up capital," they said.
At the meeting, the securities regulator also decided to issue the full-fledged merchant bank licence to Shanta Equity.
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