Full-fledged stock brokers and merchant banks will have to maintain a minimum capital of Tk 15 crore and Tk 35 crore respectively if the new rules set by the stockmarket regulator are put in place.
At present, merchant bankers have to maintain Tk 25 crore as minimum capital while there is not limit for the stock brokers.
To put the rules into practice, a gazette will be published soon on the Bangladesh Securities and Exchange Commission (risk-based capital adequacy) Rules, 2018.
According to the draft, stock brokers and merchant bankers will get a two years time to raise their capital base to the level stipulated in the rules.
At least 80 percent of the stock brokers would have to raise their capital if the new rules are put in place, a senior official of the BSEC said.
“So, they want the time to raise capital to be extended to at least five years.”
“Maintaining adequate capital is needed for the sake of the capital market,” said Mostaque Ahmed Sadeque, president of the DSE Brokers Association.
He said they are willing to maintain a minimum capital but they need time.
According to the draft, general stock brokers will have to maintain Tk 5 crore as minimum capital while for wholesale traders the figure is Tk 3 crore, margin financers Tk 5 crore, stock dealers Tk 2 crore and for full-fledged stock brokers Tk 15 crore.
Similarly, issue managers shall maintain Tk 5 crore as base requirement, underwriters Tk 15 crore, portfolio managers Tk 15 crore, proprietary fund managers Tk 5 crore and full-fledged merchant bankers Tk 35 crore.
Khairul Bashar Abu Taher Mohammad, secretary general of Bangladesh Merchant Bankers Association, said maintaining a risk-based capital is definitely needed for a mature capital market.
“We will try to comply with the rules by the time.”
Among other entities, asset managers and mutual fund managers will have to keep a minimum capital of Tk 10 crore or Tk 5 crore over the initial paid-up capital, whichever is higher.
Institutional portfolio managers will have to hold an additional Tk 2 crore over the base requirement.
All registered entities will have to submit a report to the regulator at the end of a month or a quarter, which could be no later than 15 days after the end of a month or a quarter.
The report should include comparison statement of comprehensive income, summary of bank loans, advances, credit facilities and other financial accommodation availed by registered entities, statement of total capital, computation of capital adequacy ratio and statement of liquid capital.