Country's eminent figure and former lead economist of the World Bank, Dhaka Office, Dr Zahid Hussain has urged the authorities concerned to take steps for preventing foul plays in the capital market to restore confidence of the general investors.
"If the issues of manipulated Initial Public Offering (IPO) issuance, scammed underwriting, opening of fictitious BO accounts and market rigging can't be stopped, then it is difficult to restore confidence in the market," he said.
The noted economist shared such views while giving an interview to BSS recently at his residence in the capital.
The stock market regulator formulated a large number of policies, rules and regulations and passed orders over the last 15 years citing the best interests of investors.
However, most have backfired, leaving the stock market reeling from a crisis of confidence. According to Dhaka Stock Exchange (DSE), the capital market was neglected, and even stakeholders failed to hold a single meeting for the past 15 years to resolve the problems and make policies for making it dependable as a source of investment.
In the last 10 years, IPO market worth only Taka 650 crore were floated. Market insiders said good companies are coming in a small number while the number of investors in the market has declined by half in the last 10 years.
There are even fewer active investors. Currently, the amount of foreign investment has fallen to below 1.0 percent. Although the amount of corporate bonds is reportedly one percent, in reality, it is not more than 0.51 percent.
Analysts pointed out faulty decisions in the last 15 years, including the imposition of floor prices, allowing mutual fund tenure extensions and stock dividends as their returns, and allowing companies with poor performance records to make initial public offerings.
As part of Bangladesh Securities and Exchange Commission's (BSEC's) move to bring back vibrancy in the market, the market regulator recently removed the floor price of most stocks.
The BSEC has also successfully implemented initiatives to restore confidence. These include strengthening market oversight and discipline, establishing a policy for independent directors, establishment of a market intelligence by following international standards, digital transformation of the market and expanding financial literacy nationwide. They are all in an early stage.
The authority has also taken initiatives to introduce new financial instruments to boost institutional investment, align tax and policy frameworks, and strengthen stakeholder engagement to create digital platforms for investor education.
BSEC has established a five-member taskforce dedicated to spearheading the capital market reforms. The task force's work is structured around 11 focus groups that have been formed to tackle key areas including regulatory improvements, governance, investors' protection, and market innovation.
Each focus group has its own Terms of Reference (ToR) which outline specific responsibilities for research, policy formulation, and recommendations in line with the overall reform agenda.
This collaborative approach ensures a holistic and thorough transformation of the capital market, addressing both macro and micro-level challenges. �BSS
