For the past two weeks, the movement of major indices in Bangladesh's stock market has been influenced by speculations over possible meetings between the regulators and subsequent policy changes, according to experts.

As such, most retail stock investors were busy trying to turn these speculations into reality instead of analysing the potential and fundamentals of listed companies before making their decisions, they said.

A rumour had previously spread that a meeting would be held on December 7 at the finance ministry in front of AHM Mustafa Kamal, the finance minister, to mitigate the ongoing rift between Bangladesh Bank and the Bangladesh Securities and Exchange Commission (BSEC).

In just five days leading up to the meeting, the DSEX, the benchmark index of the Dhaka Stock Exchange, had ballooned by 345 points, or 5 per cent.

But when the Stock Exchange Coordination and Monitoring Committee comprising members of the BSEC, central bank and National Board of Revenue actually sat on the day, the finance minister was not present.

And when the announcement came that no concrete decision was reached at the meeting, the index started to fall.

On December 8, the DSEX shed 96 points within the first two hours of the day.

Then, another rumour surfaced that the two regulators would sit in front of the country's topmost authority to settle their issues.

So, the index began climbing again.

"Rumours of these meetings created expectations among investors so the index followed it. If their expectations are not meet though then the crisis will evolve," said Faruq Ahmad Siddiqi, a former chairman of the BSEC.

Investors are also hopeful of an announcement that could change bank exposure guidelines and widen the lenders' scope to invest in stocks.

"But this is not a sustainable solution for the market," he added.

Instead, the stock market should rise on its own power, not on the basis of bank investment. Besides, many banks do not invest in shares even if they have higher investment capacities.

The former BSEC chairman went on to say that many well performing companies are still not in the stock market and so, effective measures are needed to bring them in.

"The market index was in a falling trend but some artificial movement pushed it up and this is not a good sign," Siddiqi said, adding that the regulators should have held discussions to prevent such a crisis.

With this backdrop, many market analysts are asking why investors should suffer amid a tussle between the BSEC and Bangladesh Bank.

This begs the question, is there no superior authority to shoulder the responsibility of pacifying the tug of war between two regulators that is affecting general investors as well as listed banks and non-bank financial institutions (NBFIs).

But rather than solving these issues, the authorities seem to launch new and contradictory policies almost every day, impacting the whole financial sector in the process.

BB-BSEC DISPUTES

A few weeks back, the BSEC ordered all listed companies, including banks and NBFIs, to deposit their undistributed dividends to the stock market stabilisation fund.

It also allowed banks and NBFIs to declare dividends from the current year's profits despite having cumulative losses. However, the central bank ordered them not to follow the BSEC's orders.

The dispute rose when, after a meeting with Bangladesh Bank, the BSEC said the central bank would change its bank exposure policy by allowing cost basis exposure instead of market value.

Now, the investors are looking forward to hear the end of the tussle, and that the central bank would soften its regulations.

In such a situation, the fight took a new turn as the BSEC curtailed banks' power to cancel payments to perpetual bond holders.

Perpetual bonds are bonds with no maturity date. Although they are not redeemable, they pay a steady stream of interest forever and because of the nature of these bonds, they are often viewed as a type of equity and not a debt.

In protest, Bangladesh Bank a sent letter to lenders in the country, saying the BSEC's condition is at odds with central bank guidelines on risk-based capital adequacy.

Questions then came as to why the two regulators are in a face-off even though their goals are same -- to present a stable economy by ensuring a vibrant stock market.