THE New Nation on Monday reported that the quality of investor protection has not improved even though the separation of ownership and management has been done on Bangladesh’s Stock Exchange Market. Analysts also added that demutualisation of stock exchanges in Bangladesh, one of the recommendations to bring transparency in the capital market, has been effected after the biggest ever crash in 2010 caused by insiders trading and manipulations.
The report also quoted experts who said that transferability of ownership from members to non members has been successful through demutualisation but inclusion of strategic investors on the Stock Exchange Board to get technology and ideas has not yet happened. Apparently, the regulatory framework of Stock Exchange should have been changed to ensure that and as it has not been done yet, both Dhaka and Chittagong Stock Exchanges have only a limited capacity to enforce their regulatory roles. Maintaining integrity, efficiency and transparency of stock exchange and supervision of the market should be its main task according to the report, but as broker members dominate the trading system, the situation is always biased against the ordinary investor.
The Dhaka Stock Exchange reportedly has changed their trading system recently claiming the new system has been based on the state of art technology but there has been no clarification on how it will protect the interest of the investors and what kind of built-in surveillance mechanism it has, added the report. Further reports added that in our country there is no transparency on the interface between the corporate management and the investor, though there maybe some transparency between corporate management and controlling share holders. The controlling share holders are few and mostly insiders, who are on the Board. Sponsors end up exercising absolute control over the management which serves their interest. In other words, the ordinary investors have no safe-guard and remain at the mercy of the insiders.
The government needs to put a more transparent trading system in place so that traders and people investing money can be safeguarded from the ills of the present trading system. After the disastrous losses incurred earlier, the government overlooking this sector would only mean the worst for the people of the country. Special penalties should be in place for people who nefariously conduct schemes that end up harming those who have invested in the stock exchange.
