Brokers, merchant bankers to be allowed to issue bond

The stock brokerage firms and merchant banks is going to be allowed to raise fund to invest in the stock market.

The intermediaries will utilise the bond proceeds to invest in the stock market and provide margin loans.

Mohammad Rezaul Karim, spokesperson of Bangladesh Securities and Exchange Commission (BSEC), ensured that the regulator will step forward to allow them in response to the request of the leading stock brokers and merchant banks.

"We will take steps to allow them for the sake of the higher liquidity in the stock market," he told The Daily Star today.

The BSEC officials sat in a meeting with the stock brokers and merchant bankers today chaired by BSEC Commissioner Shamsuddin Ahmed.

"We are going to invest in the market stabilisaiton fund directly and indirectly in the market," he said, adding that some funds would be used to subscribe brokerage houses' and merchant banks' bond to support the market indirectly.

The BSEC passed a rule on the stabilisation fund in June that would be formed using the undistributed and unclaimed dividends of the listed companies.

The aim is to use the funds to safeguard the interest of the stock market and general investors.

The fund size would be around Tk 21,000 crore, according to the commission.

"We recommended the stock brokers and merchant banks not to issue cash dividend. Rather they should reinvest their profits as they logged higher profits recently," Karim said.

He said the market recently dropped due to profit taking tendency of the investors. "We hope the market would bounce back from Thursday."

Some people are spreading a news that BSEC Chairman Prof Shibli Rubayat Ul Islam is going to resign, he added. "It's just a rumour and totally baseless."