Bourses differ on ministry's market moves
A joint committee of Dhaka and Chittagong bourses has differed on some of the finance ministry's decisions about capital market, saying these decisions would hinder the market growth.
The committee at a meeting in Dhaka yesterday also came down on the policymakers for not involving the market stakeholders such as stock exchanges, merchant banks and listed companies' association prior to taking any decision on the capital market.
It is difficult for the policymakers to understand the technical and sensitive issues of the market, the committee pointed out.
“Before taking any decision on stock market, there should be discussions with the stakeholders, especially with the Dhaka and Chittagong bourses,” Rakibur Rahman, who presided over the joint committee meeting, told journalists.
The finance ministry at a meeting on November 5 took several decisions on capital market and directed the Securities and Exchange Commission to implement those.
Referring to the ministry's decision about allowing IPO floatation by new companies with offering shares equivalent to 40 percent of paid-up capital, Rahman said the decision, if implemented, would discourage many companies with high paid-up capital to join the market.
“Instead of 40 percent, it can be fixed at 25 percent for the companies having paid-up capital up to Tk 500 crore. For the companies with paid-up capital above Tk 500 crore, the IPO size should be 15 percent of paid-up capital,” he suggested.
On the ministry's decision of allowing mutual funds gradually, he said the directive will slow down the growth in the mutual fund segment. “The more mutual funds the market will get, the more it will be stable, as such funds create both demand and supply in the market.”
“Private placement during mutual fund floatation should not go. However there should be at least one year lock-in for private placement holders to avoid unusual transaction of mutual funds at their debut,” said Rahman, also president of Dhaka Stock Exchange.
He said uniform face value and lot size should be determined for existing and new companies jointly by the SEC, DSE and CSE.
About another decision of not allowing listing of private companies directly, the DSE president said, instead, rules can be changed or amended so it can be a win-win situation. However the DSE had earlier opposed direct listing of private companies.
The DSE and CSE also sought authority to open branch office of brokerage houses and give approval to authorised representatives.