3yrs Into Chinese Partnership: DSE yet to see notable tech advancement
Nearly three years have passed since welcoming a Chinese consortium as a strategic partner, but the Dhaka bourse is yet to secure any significant technology transfer from the Shenzhen and Shanghai stock exchanges.
The deal, which the country's premier bourse inked on May 14, 2018, selling 25 per cent stakes, bore promises of many technological upgradations to transform the Dhaka Stock Exchange (DSE) into a leading bourse in the region.
The partnership offered to bring about an electronic platform disclosing listed companies' corporate information, simple analytics tools, an interactive question-answer system, and an online complaint portal.
The consortium had also agreed to provide a trade-matching engine, surveillance software and extensible business reporting language.
But none of the technological enhancements saw the light of day due to the Dhaka bourse's manpower shortages, the use of Mandarin language in the technologies, and the modus operandi being different in Bangladesh.
The Chinese consortium gave its commitment to provide many technologies, and they were prompt too. Hence, the DSE's duty was to adopt it, said the bourse's former managing director, KAM Majedur Rahman.
Rahman was the CEO of the bourse when the deal was signed.
Some of the Chinese consortium's proposals bore prospects of bringing truly revolutionary changes for Bangladesh's capital market, such as automated management of the DSE and information disclosure processes, he said.
So, the bourse needs to speed up the adoption process, he said, adding that one year was lost for the pandemic. The management needs to act fast to bring about the applicable technologies.
The consortium provided two solutions to the DSE: an information disclosure system and a financial data exchange platform.
The DSE has already developed some features of the information disclosure system, which is set to be commissioned, said DSE Chief Technology Officer Md Ziaul Karim.
Initially, 30 companies were incorporated into the system.
The DSE requested the consortium to modify the financial data exchange platform, reasoning that its features were not applicable for Bangladesh.
The modification requests intended to allow stock investors to transfer funds to brokerage houses quickly.
"They have modified it. So, we will conduct our study on it, and it needs to be approved by the finance ministry, the Bangladesh Bank and the BSEC [Bangladesh Securities and Exchange Commission] before being launched," said Karim.
The partners also offered to provide a trade-matching engine. Now, the DSE is using one of Nasdaq, the user agreement of which will expire in December 2024.
"We will take the Chinese matching engine in 2022 and start running it on a trial basis so that it can be officially worked within 2024," he said.
The surveillance system will also take the same amount of time to come about, said Karim.
The technological offers were free for use for 10 years. In monetary terms, they would have cost the DSE $37.11 million.
Once the period is over, the DSE will have to bear the cost. So, a cost-benefit analysis is also necessary, he said.
"The products offered were not made for us and not readymade. The technology has language issues," he added.
"As their scenario and needs are not identical to ours, some features also needed to be changed. To maintain and operate new technologies, we need manpower, but the IT department has a shortage of it," Karim pointed out.
"We have the expertise to initiate the new technology, where adequate manpower is also needed," he added.
The DSE was unable to launch modern technologies, so investors are being deprived, said stock investor Torikul Islam yesterday.
"What we actually got from the strategic partner is nothing," he lamented, sitting in front of a giant screen at a brokerage house, Shakil Rizvi Stock.
Only stockbrokers gained some money selling the DSE's shares, Islam said.
The consortium bought 45 crore, or 25 per cent of the DSE's shares at Tk 22 each, for which the brokers got around Tk 947 crore.
The BSEC should ask the bourse to get a hold of suitable technologies from them, Islam added.
The DSE launched a new CNI-DSE Select Index in 2019 to attract foreign portfolio investments. It was jointly designed and developed by Shenzhen Securities Information Company and the DSE as a part of the technological collaboration plans.
The new index has been on display at the Shenzhen Stock Exchange to help foreign investors become more informed about Bangladesh's stock market.