The TA will help prepare a Financial Markets Governance Programme (FMGP).

Building on a Capital Market Development Programme loan approved in 1997, the assistance will lay the groundwork to encourage good governance in the financial market.

The aim is to raise investor confidence, enable Bangladesh to compete effectively for funds in the international markets, and encourage greater investments in its domestic market.

The ADB will target activities that strengthen regulatory and supervisory capacity, improve governance and operations of market intermediaries, boost corporate governance and public disclosures, raise accounting and auditing standards to comply with international norms and enhance market knowledge, institutional capacity, and skills of market participants.

The Securities and Exchange Commission, the two stock exchanges, the mutual funds and asset management companies (including in particular the Investment Corporation of Bangladesh), and non-bank financial institutions are the major market regulators and intermediaries that the TA will diagnose in depth to improve governance.

The assistance will review conditions that give rise to an uneven level playing field between government-owned institutions and private companies, and between non-bank financial institutions and banks.

In order to enhance market competition, the TA will suggest feasible ways to make incentives and market access uniform across different financial institutions. Actual and potential conflicts of interest will be identified, and remedial measures to eliminate or safeguard against conflicts of interest will be proposed.

The total cost of the TA is estimated at US$690,000 of which the government will contribute about US$140,000.

The Finance Division of the Ministry of Finance will be the executing agency for the TA. A steering committee including various ministries, professional bodies, and chambers will be set up to monitor and guide the TA, which is expected to be carried out over five months from January 2004.