Securities Regulator's Approaching Decisions on Initial Public Offerings, Margin Policies, and Mutual Fund Regulations: Announcement by BSEC Leadership
In a significant step towards modernising its capital market, Bangladesh is focusing on sustainability and digitisation as key components of ongoing reforms. The Bangladesh Securities and Exchange Commission (BSEC) recently held a meeting with a delegation from the Asian Development Bank (ADB) to discuss these initiatives.
The meeting, chaired by BSEC Chairman Khondoker Rashed Maqsood, took place at the BSEC headquarters on 9 August. The ADB's Manohari Gunawardhena and Mohammad Rashed Al Hasan were present, along with senior BSEC officials.
Discussions during the meeting covered a range of topics, including market development issues such as reform implementation, modernisation of market infrastructure, upgrading the BSEC's surveillance and ERP systems, enhancing transparency and governance, and strengthening independent directors' capabilities.
The latest reforms aim at digitising and streamlining processes, with specific updates on margin rules, public issue rules, and mutual fund regulations contributing to market development. For instance, the digital overhaul of the IPO approval process is expected to reduce lobbying and shorten timelines. Stock exchanges have been granted initial approval authority, while ensuring BSEC oversight. Listed firms must now declare dividends before AGMs to avoid delays.
The budget has also introduced fiscal incentives, such as reducing BO account maintenance fees and broker turnover tax, and increasing the corporate tax gap between listed and unlisted firms to encourage listings.
While these reforms are progressing, experts consider them incremental rather than revolutionary, emphasising the need for swift implementation and a long-term vision. Comprehensive and bold measures to reform margin trading rules, mutual fund frameworks, and overall governance are still evolving.
Crucially, the ADB has expressed interest in providing technical assistance for sustainable market reforms and development in Bangladesh. The BSEC looks forward to working with the ADB to jointly implement and modernise reform initiatives in the future.
In addition to these measures, attracting strong local, foreign, and multinational companies to the bourse is a goal of the capital market reforms in Bangladesh. The introduction of commodity exchange and derivative products is also part of the reform agenda.
The focus on sustainability is another highlight of the ongoing capital market reforms in Bangladesh. The promotion of sustainable finance is a key component of these reforms, with the aim of supporting long-term economic growth.
These reforms, as part of a broader strategy, are expected to promote transparency, investor confidence, and sustainable capital market development.
[1] Source: Finance Minister AHM Mustafa Kamal's budget speech 2021-2022 [2] Source: BSEC press release [5] Source: ADB press release
The discussion between BSEC and the ADB touched upon the enhancement of transparency and governance in the industry, focusing on modernizing market infrastructure, upgrading surveillance and ERP systems, and strengthening independent directors' capabilities in the finance and business sectors. The ADB also expressed interest in providing technical assistance for sustainable market reforms, emphasizing the promotion of sustainable finance to support long-term economic growth, particularly in the banking-and-insurance sector.
